betting or fantasy sports operators are now embracing prediction markets as an opportunity. So FanDuel and DraftKings have announced their plans to launch prediction markets, including sports events, at least in all of those states where sports betting is not regulated.
At present there aren't specific laws in place. DraftKings and FanDuel aren't already there as licensees, so I think it's fair to say we're seeing the splintering of the
US.sports betting industry between traditional gaming companies that continue to view prediction markets as an existential threat and, frankly, a form of illegal sports betting. And while DraftKings and FanDuel are most prominent, other sports betting operators are also embracing sports prediction markets as an opportunity to expand their offerings, pushing their brands into additional states.
to play out. We'll see whether that escalates or whether there is a detente of sorts where state regulators decline to take aggressive action when their sports betting operators are offering prediction markets. So long as it's not in their own state. We’ve yet to see how this will go.
James Marrison: Are there rules about how platforms can present prediction markets compared to a traditional sportsbook?
James Kilsby: Not that I'm aware of. Not especially. And I think, again, these are areas that are to be defined. It's a brand new offering and we've already talked about the CFTC being hands off. So there aren't really restrictions in that regard. Tere is, I think it's fair to say, a difference in how sports prediction markets present themselves through their
JAMES KILSBY Chief Analyst & Vice President, Vixio
Federal approval from the CFTC is good for all 50 states, whereas FanDuel, DraftKings and others to date have had to accumulate state licences and there have been 25 or so states to date. So there has been a splintering in the sports betting industry around companies who view this as a threat and those who are now leaning towards it being an opportunity. Although I think the truth is it's probably a mix of both for all stakeholders in the area.
Federal approval from the CFTC is good for all 50 states, whereas FanDuel, DraftKings and others to date have had to accumulate state licences and there have been 25 or so states to date. So there has been a splintering in the sports betting industry around companies who view this as a threat and those who are now leaning towards it being an opportunity. Although I think the truth is it's probably a mix of both for all stakeholders in the area.
We're also seeing state regulators that have taken action in court to prevent Kalshi and Robinhood from operating in their jurisdictions. Tey are warning their own sports betting licensees not to participate in sports prediction markets or their licences will be at risk on grounds that they're participating in illegal gambling. So that is something that is yet
marketing. Tere are examples of that being different than how they describe themselves in court. Tey are presenting themselves as offering sports betting to consumers, whereas in court they are obviously clearly arguing that this is trading on the outcome of sports and not sports betting.
Te fact is that betting exchanges are subject to regulation in certain states and there are examples of a small number of betting exchange operators being licensed at the state level. So that does exist. But fundamentally, state regulated sports betting involves fixed odds sportsbooks. In the case of FanDuel and DraftKings, their sports betting offering sees them setting the odds and accepting the wagers, whereas a prediction market is a peer-to-peer platform. In these trades there is no house. Players buy and sell contracts and “set the odds” to use
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