The future of gambling could be a little derivative.
And while this might have once been a slight ("It's a little derivative, isn't it?"), for an industry that is always interested new customers, new verticals, and new markets, it's not slight at all.
If anything, it could be viewed as a necessity.
- Companies are increasingly exploring products tied to card packs, cryptocurrency prices, historical horse races, and sporting events.
- Prediction markets have sparked an intense debate over whether sports event contracts are financial derivatives regulated by the CFTC or sports bets that fall under state gambling law.
- Regulatory restrictions, high taxes, and limited betting options could be nudging operators to develop alternative products.
I went to the Global Gaming Expo (G2E) in Las Vegas a few weeks ago. While a lot of oxygen was expended on prediction markets, there were conversations about what else could be coming down the pike. Some of it may be bank-shot down the pike.
“Suppliers we spoke with at the conference and in recent weeks are beginning to evaluate products that replicate the iGaming experience but rely on outcomes derived from crypto perpetuals, advance deposit wagering (ADW), historical horse racing (HHR), and historical sporting events rather than traditional random number generation,” stock analysts from Citizens said in an Oct. 2 note.
The word I’m stuck on is “derived” – the future of gambling could involve something that is derived from something else.
It could be a form of gambling harnessed for another form of gambling. It could even be something that has long been associated with gambling that is being used for the purposes of new gambling. And, in some instances, it could be a thing we never really associated with gambling that some may consider gambling.
There was, for example, a marble racing game demonstrated at G2E. It could be coming relatively soon to a casino. The company that makes the game, Interblock, has an entire category of casino games that it says are "designed to engage new audiences," involving battleships, UFOs, and more.
After three years I was finally able to record and share Marble Run, the marble racing game from interblock. I was also told this should be in at least one Las Vegas casino next year. https://t.co/vqhMunegPm
— Marc (@MeltzVegas) October 1, 2026
The online gambling business is moving derivatively as well. In Oregon, DraftKings rolled out "DK Replay," a product that lets you bet on "hundreds of thousands of historical plate appearances."
Meanwhile, the Citizens analysts noted that HHR machines have been around for more than a decade, and that the Seminole Tribe’s Hard Rock Bet has already cleared around $1 billion in revenue from “using historical motor racing outcomes as the predetermined results driving slot machine spins.”
“While these products may technically fall under sports betting, we believe they highlight a potentially significant opportunity if executed correctly,” the Citizens analysts added.
So some products that are emerging are technically not casino gambling or iGaming, which may not be authorized in certain jurisdictions or not authorized to the extent some may prefer. Instead, it could be considered pari-mutuel wagering or sports betting, which may sit just fine with certain folks.
Packs are now live on @PrizePicks https://t.co/GTZToSyITe
— Aldrin Research (@AldrinResearch) October 14, 2026
There are arguably reasons behind all of this.
To start, what the consumer wants is always a moving target. Companies always have an eye out for attracting a new or different type of player.
Consider digital card rips or "packs" that are offered now by companies such as Underdog and PrizePicks. They could be of interest to a slightly different type of consumer for these companies, which have experience with pay-to-play daily fantasy sports, sports betting, and sports-related prediction markets. And the product is premised on trading cards; derived from something different than a football game.
Furthermore, not every state lets operators roam as freely or profitably as they’d like. Taxes can be high, betting menus can be limited, regulations can be restrictive. While most states permit some form of sports wagering, the opposite could be said for online casino gambling, which is something operators want to offer. So, within those confines, companies are trying to innovate their way to new growth.
It should also be noted there is at least some demand for these things, otherwise, they just wouldn’t exist. That demand and the interest in developing even more means that you, the consumer, could soon be offered the opportunity to participate. And it could also mean that regulators begin to ask more questions, because the historical lines that divided casino gambling, sports betting, financial products, and traditional pastimes are getting a bit blurry.
Agree to disagree (and then some)
Which brings us to the biggest debate about derivatives right now, which actually involves derivatives.
Sports event contracts offered by prediction markets are, according to the U.S. Commodity Futures Trading Commission (CFTC), a derivative. The value of the contract may be derived from a football game, and a federal regulator sees them as exactly that, derivative.
(One exchange, ProphetX, has even self-certified contracts tied to Circa's Survivor Contest.)
“These products are commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act and are within the agency’s exclusive jurisdiction,” CFTC Chairman Michael Selig said in a recent press release.
But is a hand of blackjack or a sports bet a “derivative”? Not according to a recent rule from the CFTC. The federal agency says “that casino-style gambling products, including wagers placed on sportsbooks and casino games, are excluded from the ‘swap’ definition.”
“Casino-style gambling products are not derivatives,” Selig said in another recent press release.
Case closed, yes? Well, not quite, according to the small army of state gambling regulators that maintain the trading of sports event contracts is just sports betting by another name. And, they add, a form of sports betting they haven’t authorized.
That legal battle royale is now sitting on the doorstep of the U.S. Supreme Court. Someday, SCOTUS may declare that the trading sports event contracts via prediction markets is or is not gambling.
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Think about it
So all of the above is taking us to some interesting places. You could even argue we've been there already; is not the value of a sports bet derived from the sport on which you bet?
With all that said, whether something is or is not actually a derivative or actually gambling is for lawmakers and/or judges to debate and decide. I just think that the future could involve us asking, “is this gambling?” a little more. In some instances, the question may be “wait, is that actually sports betting?” and perhaps even “well, is it iGaming, then?”
The price of bitcoin is always on the move; if I buy some now, am I gambling on the price going up? Horse racing is having a rough go of it lately, even in an age of abundant wagering. However, the sport may always have a home in a machine somewhere that derives potential payouts (or not) from old races. Is that a slot machine?
They say necessity is the mother of invention. And all that I’m saying here is that we're seeing companies that think they need to move derivatively to innovate. It's happened, it's happening, and it will continue to happen.
