The Massachusetts gaming regulator has joined a growing list of states warning licensed sportsbooks not to offer sports event contracts or partner with companies in the prediction markets space.
On Thursday the Massachusetts Gaming Commission gave sportsbook licensees notice that they are prohibited from offering sports-related event contracts in Massachusetts, either directly or via an affiliate. The MGC’s warning follows the state’s action against prediction markets earlier this year. Massachusetts Attorney General Andrea Campbell filed a lawsuit against prediction market operator Kalshi in September to stop sports event markets.
Thursday’s warning notes “several Massachusetts sports wagering licensees are considering or have begun the process of partnering with entities in the prediction market space”.
Both FanDuel and DraftKings have announced their plans to launch prediction market products with sports event trading. Those operators cite the ability to capture markets where traditional sports betting is not legal, such as California and Texas.
While the MGC’s warning is specific to offering the event trades in Massachusetts, it does note other regulatory action against the licensees related to prediction markets might also influence future action. This week in Nevada, FanDuel surrendered its sportsbook licences and approvals while DraftKings withdrew sports betting applications.
“In the event you offer sports-related event contracts in Massachusetts or direct patrons to such event contracts being offered in Massachusetts, the Commission may take steps up to and including revocation of your licence,” the letter reads. “In addition, to the extent any other regulator takes action against your licence due to your operation in the prediction market space, such action may inform decisions related to your suitability in Massachusetts.”
Growing list of regulatory warnings against prediction markets
The MGC’s warning adds to a list of regulator letters to licence holders, including action taken in Arizona, Illinois, Michigan, Nevada and Ohio.
At least eight states have sent cease-and-desist letters to Kalshi, contending the prediction markets constitute gambling without proper licensure. Kalshi argues it is legally operating nationwide under the federal purview of the Commodity Futures Trading Commission.
Massachusetts is also just one of several states involved in ongoing litigation about prediction markets. Kalshi recently filed suit against the New York State Gaming Commission, seeking to block enforcement of a cease-and-desist order it issued.
Kalshi has filed similar suits against Maryland, Nevada, New Jersey and Ohio. A coalition of 34 state attorneys general filed a brief in support of New Jersey’s case against Kalshi. Crypto.com and Robinhood are also involved in lawsuits.
Multiple tribes have also sued prediction markets. They argue the operators are violating the Indian Gaming Regulatory Act by offering event trades on tribal land.
FanDuel, DraftKings and others have faced similar warnings from multiple states contending that event trading constitutes unlicensed gambling.