Sports Prediction Markets Explained: Major Inquiries Clarified
In the ever-evolving world of financial technology, sports prediction markets are making waves. These platforms allow individuals to stake money on the outcomes of real-world events, from elections to movie review scores and sports. The nominee to lead the Commodity Futures Trading Commission (CFTC), Brian Quintenz, has shown support for these markets falling under CFTC control, given his position as a board member of Kalshi.
Two companies, Crypto.com and Kalshi, are currently leading the charge, offering sports prediction markets nationwide in the U.S. However, their operations are not without controversy. Prediction market contracts are priced at a fraction of a dollar, mirroring the live probability of an event outcome. Yet, the legal status of these markets is uncertain, with the public prosecutor's office responsible for the legal disputes not explicitly mentioned in available search results.
Maryland has had some success so far, as a district judge denied Kalshi's motion for a preliminary injunction. Nevada, Massachusetts, and other states are also involved in legal battles with prediction market platforms. The U.S. Court of Appeals for the Third Circuit is considering a case regarding the legality of sports prediction markets, with New Jersey receiving support from a group of 34 states.
If courts rule that event futures trading is gambling, financial technology platforms would face a significant setback. Their customer base would shrink to states where mobile betting has been legalized. Prediction market platforms often distance themselves from sportsbooks by highlighting how public sentiment drives their contract prices.
Polymarket, a popular international platform, plans to launch during the NFL season after acquiring a CFTC registered exchange and clearinghouse. It currently uses an independent cryptocurrency exchange called Polygon to execute trades internationally. Polymarket does not charge fees to international customers but expects to implement fees once it enters the U.S. market.
Meanwhile, traditional sportsbook operators are showing signs of moving closer to entering direct competition with prediction market apps. FanDuel, for instance, has announced a partnership with CME Group that will enable it to offer non-sports contracts, potentially including sports in the future.
Robinhood, which offers a broader suite of financial products, has seen its stock price gain more than 100% in the first half of 2025 due to its foray into prediction markets. The company, valued at over $70 billion, is a testament to the growing interest in these markets.
Prediction markets operate internationally and have been active in the U.S. for some time. They offer "yes" and "no" contracts, and winning contracts are paid out as a full dollar once the outcome is finalized. Sporttrade, which operates in just five states with oversight from state gaming regulators, is pushing for access to every state under the federal regulatory model.
However, the nomination of Brian Quintenz, who has advocated for sports prediction markets being under CFTC control, is in limbo after the White House put in a call to stall the process. The future of sports prediction markets in the U.S. remains uncertain, but one thing is clear - they are a billion-dollar industry with significant potential for growth.
Read also:
- Electric-powered vessels take to the waters of Maine
- Elon Musk accused by Sam Altman of exploiting X for personal gain
- Comparing the value of top electric scooters: Kinetic DX versus Bajaj Chetak versus TVS iQube - Which one offers the best bang for the buck?
- American Eagle's risque promotional effort featuring Sydney Sweeney leads to the brand being categorized as a 'trendy stock' among teenagers.
