Sportsbook operators are treading cautiously in the fast-growing business of prediction-based betting, unsure of the financial opportunity and wary of threats by regulators to revoke their gambling licenses.
Caesars Entertainment Inc., which owns some 50 casinos across the US, as well as a large online betting business, told investors this week it’s monitoring the predictions market, but not immediately entering the business.
“We will not put any of our licenses at risk,” Chief Executive Officer Tom Reeg said on an Oct. 28 conference call.
MGM Resorts International CEO Bill Hornbuckle echoed those comments the following day.
“For decades, the gaming industry has been highly regulated at the state level,” Hornbuckle told investors. “This intense scrutiny has been essential to ensuring the integrity of the gaming industry.”
What has casino operators and regulators concerned is the rise of exchanges like Kalshi Inc. and Polymarket, which let customers wager through contracts on future events, from football games to political races. That business has soared in recent months, and the operators of the markets have argued they fall under the jurisdiction of the federal Commodity Futures Trading Commission, not the state authorities that typically regulate and tax gambling.
The rising volume of the contracts has put a dent in the shares of gambling companies like DraftKings Inc., which has lost more than one-third of its value since August.
Regulators in states such as Nevada have told licensees that events contracts are wagers subject to state jurisdiction, and that operators put their licenses at risk even if they conduct such betting in other states. The American Gaming Association, the trade group for sportsbooks and casino operators, also argues in court filings and elsewhere that prediction markets should be regulated by states.
Court cases involving prediction markets are playing out in multiple jurisdictions, and many in the casino industry believe the issue will ultimately be decided by the US Supreme Court, possibly as late as 2027.
Some of the largest sports-betting operators are dipping their toes in prediction markets, trying to find ways that don’t inflame state regulators.
DraftKings this month acquired Railbird Technologies Inc., which operates a federally licensed exchange, but stopped short of saying it would offer sports bets on the platform. Instead, the company said an upcoming mobile product, DraftKings Predictions, would focus on events relating to finance, culture and entertainment.
Jason Robins, DraftKings’ CEO, told attendees at the casino industry’s Global Gaming Expo in Las Vegas earlier this month that prediction markets are most successful in states that don’t have legal sports betting, such as California and Texas.
“In a state with legal sports betting, it is apples and oranges,” Robins said. “The product of the sportsbook and what it’s able to do is so much stronger than the product of a prediction market.”
FanDuel, a division of online betting giant Flutter Entertainment Plc, plans to offer contracts based on financial products, such as the price of oil and the S&P 500, in a partnership with CME Group Inc.
Speaking at the same event, Flutter CEO Peter Jackson said the company already has experience operating the UK’s Betfair Exchange, where customers make sports wagers with each other rather than with a traditional bookmaker. He said it’s hard to offer promotions with the exchanges because the operators are just middlemen in contracts between two customers. He said it’s also more difficult to design parlays that combine wagers, a big moneymaker for sports-betting companies
“I don’t envy Jason Robins or Peter Jackson,” said Chris Grove, a partner emeritus at the betting research firm Eilers & Krejcik Gaming. “They have to defend their business and create an option for participating in these new businesses.”
Read more: Trump Media to enter booming prediction markets business
Others see a silver lining in the rise of prediction markets in that it may prompt more states to legalize online casino games like slot machines and blackjack. That business is more lucrative than sports betting and legal in only eight states.
“If prediction markets create tax revenue erosion concerns for states, this could accelerate online casino legalization as states seek more protected revenue streams,” Richard Schwartz, CEO of Rush Street Interactive Inc., another online betting company, told investors on Oct. 29.
© 2025 Bloomberg L.P.
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