Eighty-five percent of Americans consider sports event contracts to represent a form of gambling, according to a survey published by the American Gaming Association (AGA) on Wednesday.
Sports event contracts have become popular at prediction markets, which sportsbooks argue act as unlicensed gambling operators.
Key Takeaways
- Prediction platforms offering event contracts don’t need state licensing.
- State regulators have taken issue with the growth of sports event contracts.
- Several top sportsbooks have already secured prediction partners.
While there was a slight difference between the percentage of respondents who viewed event contracts as a form of gambling and those who believed they should follow the same regulations as online sportsbooks, 80% of subjects believed in regulation.
Eighty-four percent also said event contracts should only be available at state-licensed sportsbooks instead of Commodities Futures Trading Commission (CFTC)-licensed prediction platforms.
Additionally, 70% of respondents believe that sports event contracts exploit legal loopholes, while 69% indicated each state should be allowed to determine what event contract markets are legal.
The opinions represented by the survey mirror those expressed by state regulators across the country, many of whom have either begun or encouraged regulatory action - to varying levels of success - against prediction platforms.
The regulatory battle
Sports betting is legal and operational in 38 states and Washington D.C. Sports betting platforms must obtain licenses in each jurisdiction before they offer betting odds to the public.
Prediction platforms offering sports event contracts differ in that so long as they act in accordance with the regulations established by the CFTC, they do not need to obtain state licenses. They argue they aren’t subject to state regulation.
“Consumers expect prediction markets to follow the same rules and safeguards as state-licensed sportsbooks,” said AGA President and CEO Bill Miller. “This research makes clear: Americans know a sports bet when they see one—and they expect regulators and policymakers to treat them accordingly.”
States have taken a variety of approaches to dealing with prediction platforms. Those include writing to the CFTC, sending cease-and-desist orders to different platforms, and taking platforms to court.
Many states did not successfully stop prediction platforms from operating in their jurisdictions, though Maryland and New Jersey advanced to court.
A New Jersey judge granted a temporary injunction requested by Kalshi, overruling the state’s cease-and-desist order. The New Jersey Division of Gaming Enforcement appealed the decision and submitted an amicus brief signed by 34 state attorneys general and the AGA.
In Maryland, a judge ruled against Kalshi’s request for a temporary injunction, thereby upholding the cease-and-desist. Kalshi and the state’s regulator reached an agreement for the state to halt the enforcement of its cease-and-desist order and the prediction platform to withdraw its request for a new temporary injunction.
Sportsbooks team up with prediction platforms
Amid the controversy, sportsbooks have already responded to the increase in popularity of prediction platforms.
Underdog partnered with Crypto.com last week, making it the first platform to offer fantasy contests, sports betting odds, and event contracts.
FanDuel, meanwhile, partnered with CFTC-licensed CME Group in August, allowing it to launch sports event contracts.
