The leader of one of the industry's sports betting titans claimed that the rise of prediction markets could convince non-legal betting jurisdictions to adopt legislation.
“It’s definitely something that (states are) talking about, and it’s early days, so hard to say at this point that it’s catalyzed anything,” DraftKings CEO Jason Robins said during the company's 2025 Q1 earnings call on May 9. “We haven’t seen any states say, ‘Yeah, we’re going to do this now.’ Definitely, though, I think step one is getting their attention to start having those conversations, and we’re seeing that happen.”
While sports betting currently is legal in 39 U.S. states, prediction platforms such as Kalshi service all 50 states.
Prediction platforms take off
The push for sports betting legalization in the remaining 11 states, namely California and Texas, has resulted in millions of dollars in campaign efforts. Sportsbooks stand to gain nine figures in revenue and billions in wagers if they expand into these population-dense states.
Because prediction platforms allow users to purchase contracts associated with the outcome of sports events, such as whether the Dallas Cowboys will win the Super Bowl, they give users in states without legal sports betting the chance to still wager on sports. That could result in states passing legalization to ensure they can regulate their market, even if it is unwanted.
“As the markets continue to grow, that’s going to be a powerful lever,” Robins said. “This is happening whether you want this to or not.
“Do you want to do this in a way that makes sense, whether you’re a California tribe or a state that hasn’t legalized yet, that allows you to prosper? Or do you want to watch it happen somewhere else? I think that’s something everyone is talking about now.”
Another alternative is sports betting platforms such as DraftKings offering prediction markets. FanDuel and PENN Entertainment (ESPN Bet) said during earnings calls this week they were monitoring the growth of prediction platforms.
“It’s worth reminding, we do operate the world’s largest sports betting exchange. We know this space well,” FanDuel CEO Peter Jackson said. “The Betfair Exchange has for many years given us very good insights in terms of how this stuff can play out.”
PENN CEO Jay Snowden said that prediction markets would only provide a minor boost in states with legal sports betting, though he said that PENN would explore adding prediction markets if the opportunity presented itself.
Back and forth with state regulators
Prediction markets have proven to be extremely controversial recently.
Several state gaming regulators have sent cease-and-desist orders to platforms they believe offer unlicensed sports betting by circumventing state laws.
Platforms offering contracts responded by claiming their markets were licensed by the Commodities Futures Trading Commission (CFTC), the federal regulatory body to whom they report. They also argued they did not have to abide by state regulations if they are federally regulated.
The NBA recently sent a note to the CFTC encouraging it to apply greater oversight to licensed platforms, suggesting that they pose a threat to the integrity of their games.
“While exchanges and brokers operate under the general auspices of the CFTC, that broad-based financial oversight does not include the kind of sports-specific controls and protections that are the hallmark of state sports gambling regulations,” wrote Alex Roth, the NBA’s vice president and assistant general counsel of league governance and policy.
These concerns mirror those of many state regulators. On top of not getting the tax revenue kickback based on these platforms’ revenue, amateur and professional sports do not have the normal safeguards they do with licensed sportsbooks.