TL;DR:
- Leading platforms like Kalshi, Coinbase, and Crypto.com formed a coalition to defend federal regulation.
- State regulators and the American Gaming Association (AGA) are attempting to classify these markets as illegal gambling.
- The sports betting industry is divided: DraftKings and FanDuel left the AGA to enter the sector.
The major prediction market platforms have formed a coalition to counteract lobbying pressure. Kalshi, Coinbase, and other platforms united as a coordinated response to state casino regulators who are attempting to exercise their authority over these platforms, alleging they are illegal betting platforms.
The platforms joined forces to create the Coalition for Prediction Markets. The main objective is to defend federal regulation and fight back against lobbying groups and state gaming regulators who seek to restrict their operations.
Regarding this, Kalshi founder Tarek Mansour indicated that the coalition was created to give prediction markets a voice against adverse lobbying groups and to protect the industry’s standards of transparency and customer protection. The sector has experienced explosive growth, recording billions in weekly trading volume and reaching over $150 billion in annualized volume.
Currently, these platforms are regulated at the federal level by the Commodity Futures Trading Commission (CFTC), which distinguishes them from state-regulated gambling operations. Nevertheless, the nascent industry is being attacked on multiple fronts.
The Prediction Markets Regulators Coalition Fights Back
The American Gaming Association (AGA), which represents major casino operators like MGM and Caesars, launched campaigns describing prediction markets as unlawful sports betting operating without proper state licenses.
States including Massachusetts, Washington, and New York have taken legal action against prediction market operators, arguing that contracts tied to sports events should be treated as gambling.
“Americans deserve clarity, not 50 conflicting interpretations,” stated Sara Slane, an Executive Board Member of the Coalition and Head of Corporate Development at Kalshi. The prediction markets coalition will focus on educating policymakers and the public about how they differ from traditional gambling.
Curiously, the sports betting industry is at a crossroads. DraftKings and FanDuel resigned from the AGA specifically because of disagreements over how prediction markets should be regulated.
Both companies view this sector as a significant growth opportunity. FanDuel even announced a partnership with CME Group to launch a prediction markets platform, while DraftKings acquired the Railbird platform.
This division shows that the value of prediction markets for decision-making and information is being recognized even by giants in the betting sector, despite lobbying attempts by the AGA.
