The U.S. Federal Trade Commission (FTC) has begun a preliminary investigative review of the online sports gambling industry, the Washington Sun reports.
- U.S. online sports betting generates more than $16 billion in revenues annually.
- Concerns about gambling-related harm and sportsbook marketing are drawing regulatory attention.
- Prediction markets are not expected to be included in the FTC’s preliminary review.
Federal regulators have traditionally left much of sports gambling oversight to the states, so the review could signal greater federal scrutiny of sportsbook marketing.
The federal government has played a limited role in legal sports betting regulation. In 2018, the U.S. Supreme Court struck down the federal law that prohibited states from authorizing sports wagering, allowing each state to decide whether to legalize it. That decision helped fuel the expansion of legal U.S. sports betting. The American Gaming Association (AGA) State of the States 2026 Report showed that commercial sportsbooks generated more than $16 billion in revenue in 2025, up 22.6% over 2024. Even though prediction markets could encroach on the sports betting market, the AGA found that sports betting and iGaming executives remain confident in the industry’s continued growth.
The Washington Sun reports that the FTC’s early-stage review is expected to focus on potentially deceptive advertising by major sportsbooks.
Separately, recent lawsuits and complaints from lawmakers have raised concerns about sportsbook marketing. In one case, a gambler is suing FanDuel and DraftKings, alleging that their VIP marketing encouraged him to continue gambling and contributed to losses of nearly $2 million. One of the VIP perks Terry Thompson received was a personalized video featuring MLB star Bryce Harper. Three U.S. congressmen wrote to MLB and its players' association, raising concerns about players’ involvement in promotions targeting problem gamblers. Harper was unaware how his recorded clip was to be used.
Earlier this year, a class-action lawsuit in Massachusetts was allowed to proceed over allegations that a DraftKings promotion constituted misleading advertising. The plaintiffs claim the terms and conditions for a $1,000 deposit-bonus offer were unclear, leading bettors to make $5,000 deposits without receiving a bonus.
Prediction markets may be excluded from probe
While prediction markets offer products similar to those of sportsbooks, they may be spared from the FTC investigation. The Commodity Futures Trading Commission (CFTC) has proposed rule changes that could define certain event contracts as swaps, rather than sports bets, under federal law. That distinction could affect how prediction markets are treated.
President Donald Trump has also praised prediction markets, saying they will "thrive" during his administration.
Meanwhile, Donald Trump Jr. and his venture capital firm have financial interests in leading prediction market operators Kalshi and Polymarket.
However, the FTC’s approach to prediction markets remains uncertain, particularly as the platforms face separate questions over federal and state regulatory authority.
