NEW YORK — Prediction market companies could pursue sportsbook licenses, expand further into other financial products, or develop even more profitable offerings even if the Supreme Court rules against their sports event contracts, attorney Josh Sterling said Friday.
- Sportsbook licensing and expansion into other financial products could give prediction markets alternatives in case of an adverse ruling.
- A shift to state regulation could raise licensing and liquidity challenges for exchanges built around nationwide participation.
- Flutter and DraftKings see opportunities under different legal outcomes, while BetMGM expects prediction markets to lose.
Speaking at the NEXTPredict conference, the Milbank partner and former Commodity Futures Trading Commission official said an unfavorable ruling would leave operators with alternatives, even if it disrupted their current approach to offering sports contracts nationwide.
“They may have grown beyond event contracts, sports, into other areas that are even more promising for them as a business proposition,” Sterling said.
Different paths forward
Sterling, who previously led the CFTC’s market participants division, said his legal position remains that prediction markets fall under exclusive federal oversight. But he believes companies would be poised to adapt if the Supreme Court disagrees.
Potential alternatives include entering the state-regulated sportsbook market or developing products beyond sports event contracts. Sterling said the months or even years before a ruling would allow companies to continue building their businesses and expanding their offerings, all while building more credibility and brand recognition within the general public.
Much of the recent prediction market news has focused on legal battles over sports contracts, but speakers at this week's conference also highlighted opportunities in crypto, commodities, and other financial products.
Prediction Markets: - $1.5 trillion projected Total Addressable Market - 80% of trading volume is from sports - Kalshi is still the dominant player by market share [Via Bank of America at NEXT Predict]
— Ryan Butler (@butlerbetstrade) October 23, 2026
Meanwhile, the possibility that prediction markets pivot to state-level sportsbook offerings has already surfaced within the traditional gaming industry. At September’s Global Gaming Expo, discussion of a potential prediction market defeat included whether operators would need licenses from the same state regulators they are currently challenging.
Such a shift would change the regulatory framework under which companies compete. Prediction market operators argue their federally registered exchanges can offer sports contracts without separate state gaming approvals.
Several dozen state regulators have maintained those products constitute sports betting subject to their laws. It remains unclear if states would be willing to eventually license platforms they have spent months, and millions of dollars, trying to restrict or ban.
Prediction markets also rely on interstate liquidity to fulfill their contracts. A state-by-state restricted model could effectively curtail participation in all but the most populated U.S. jurisdictions.
New Jersey has asked the Supreme Court to resolve that dispute after the Third Circuit ruled in Kalshi’s favor in April. Conflicting appellate decisions have strengthened expectations of Supreme Court review, though the justices have not agreed to hear the dispute.
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Building beyond sports
Other panelists Friday described ambitions that extend beyond the event contracts at the center of the state disputes.
Gemini Titan general counsel Brigitte Weyls pointed to exchanges pursuing securities products and discussed single-stock futures. Kalshi head of litigation Jovy Dedaj said the company continues developing new products while seeking greater clarity from courts and regulators.
Those efforts could provide additional business opportunities, though the panel did not establish that diversification would replace revenue lost from restricted sports trading. Sports make up roughly 80% of all trading volume, per a Bank of America analysis shared at the conference.
Established sportsbook companies have also positioned themselves for different legal outcomes.
Flutter executives have described prediction markets as an opportunity to acquire customers in states without legal online sportsbooks while maintaining confidence in FanDuel’s traditional wagering business if courts narrow the exchanges’ regulatory advantages. DraftKings CEO Jason Robins has maintained that his company is set up for a “win-win” scenario, a position he reiterated Thursday.
Other gaming executives are bracing for a prediction market defeat. BetMGM CEO Adam Greenblatt, whose company doesn’t offer prediction markets, said this month that he expects the Supreme Court to reject the industry’s position, arguing its products exceed what Congress intended to authorize.
Stakeholders on both sides of the argument have maintained it is impossible to accurately project the Supreme Court’s ruling, or when or even if the justices will take the case.
Speaking at Friday’s event, Sterling rejected the idea that a Supreme Court ruling favoring prediction markets would eliminate state gaming regulation. Casinos and sportsbooks could continue operating, he said, though competition could force changes in states with limited sportsbook licenses.
In any scenario, Sterling argued, a Supreme Court decision would establish the framework for the next stage of competition rather than necessarily eliminate a business model.
“I don’t think it’s the end of the road for prediction markets if the Supreme Court issues an adverse ruling,” Sterling said, “just like I don’t think it’s the end of the world for the states if the court goes against them.”
