NEW YORK - Prediction markets could be the most compelling argument yet for broader state legalization of sports betting and online casinos.
At least that's the hope.
- Industry leaders say prediction markets offering sports-related event contracts may push more states to legalize sports betting and online casinos to capture tax revenue and regulate activity already occurring.
- Executives from companies like BetMGM argue prediction markets function similarly to illegal sports betting and lack the responsible gambling frameworks used by state-regulated sportsbook operators.
- Some believe growing attention to prediction platforms could accelerate legalization efforts in more states, but restrictive proposals and legal battles over the status of sports event contracts are ongoing.
Yes, the sports betting and iGaming industry has always tried to make the case to state lawmakers that, hey, online gambling is already happening in your backyard - you’re just not getting anything from it or protecting your local consumers.
That argument was historically built around offshore sportsbooks and casinos, then later came dual-currency sweepstakes sites. Those boogeymen were helpful in getting the majority of states to authorize sports betting, and for a handful to give the nod to online casino games.
Most recently, though, prediction market sites are being added to this line of reasoning. The federally regulated exchanges are offering a de facto form of sports betting all over the U.S., and there is still concern they may one day “innovate” a way to offer iGaming-like products as well.
Sports Betting Alliance President Jeremy Kudon reaffirmed position that prediction markets could lead to more state-level sports betting and iGaming legalization, especially if PMs pursue event contracts on digital casino games
— Ryan Butler (@ButlerBets) March 10, 2026
While the legality of sports-related event contracts is being fought in the courts, their current legal status and increasing presence is something more state lawmakers have taken notice of. That may nudge more state lawmakers to go on the offense, rather than defense, Sports Betting Alliance chairman Jeremy Kudon suggested on Tuesday during a panel at NEXT.io’s New York Summit.
Asked about federal efforts to try to rein in prediction markets, Kudon noted he’d built a multi-state legislative practice “in large part because Congress doesn't usually get anything done.”
More likely, he said, is that the U.S. Supreme Court will weigh in on the legality of the sports-related event contracts offered for trading by the exchanges. Before that, Kudon added, you’ll see more states that have yet to legalize sports betting doing so, while other state legislatures look harder at authorizing online casino gambling.
“So I see this as a positive catalyst for the industry,” Kudon said.
BetMGM CEO Adam Greenblatt shared Kudon’s outlook. BetMGM, along with bet365, DraftKings, Fanatics, and FanDuel, is a member of the SBA.
Penny for your thoughts
Unlike DraftKings, Fanatics, and FanDuel, though, BetMGM has not launched its own prediction platform. Greenblatt has said previously that as the law currently stands, “sports prediction markets are, in essence, illegal sports betting.”
Greenblatt acknowledged there is a split among online sportsbook operators on prediction markets but noted that operators still work together on other things, namely promoting responsible gambling as members of the Responsible Online Gaming Association. That isn’t something prediction markets are really doing, he said.
The BetMGM CEO also predicted that over the next 12 months, the trend toward more legalization will accelerate as states search for tax revenue.
“When that penny really drops, I think we will see a tidal wave of adoption,” Greenblatt said.
The idea that prediction markets will nudge more states toward legalizing more forms of gambling has been increasingly kicked around over the past year, as the CFTC-regulated exchanges have grown larger and expanded their sports betting-like offerings.
Increased legalization hasn’t happened yet. Meanwhile, another batch of more restrictive proposals for sportsbook operators has been proposed in certain states, such as Michigan Gov. Gretchen Whitmer’s idea of an Illinois-like per-bet tax.
Still, there are some reasons for optimism. In Minnesota, for example, the latest legislative effort to legalize sports betting includes a shot across the bow at prediction markets.
BetMGM CEO Adam Greenblatt says during their latest business update that sports event contracts offered by prediction markets are not having an adverse impact on BetMGM's business. Impact isn't zero, but Greenblatt says their strong results speak for themselves.
— Geoff Zochodne (@GeoffZochodne) February 4, 2026
Kudon also pointed to the effort to legalize iGaming in Virginia and the recently failed attempt to authorize Georgia sports betting. Legislation in the latter state’s House of Representatives might have flopped, but it at least got on the floor for debate, which is an improvement over previous years, Kudon said.
Some lawmakers, Kudon suggested, were buying more into the “it’s already happening” argument because of prediction markets. They now see the rise of Kalshi and Polymarket and feel more pressure to authorize something of their own to capture some of the potential tax revenue currently being lost.
That could prod some states to ease up on the idea of further tax hikes for sportsbooks, Kudon suggested. It could also spur them to look again at legalization.
“I think that's the race, or the battle that states now find themselves in, and why I think we're going to see a wave of legalizations from these states,” Kudon said.
