On the heels of FanDuel announcing plans to launch event-trading markets, the Ohio Casino Control Commission is warning sportsbooks against offering prediction markets.
Ohio’s regulator recently sent a letter to sportsbooks stating it would not allow prediction markets under the guise of sports betting without proper licensing. The letter, signed by OCCC Executive Director Matthew Schuler, was first reported by The Closing Line Monday.
The letter warned the future of operators’ licences would be threatened if they offered event trading without OCCC approval.
“The Commission understands that sports gaming licensees may be considering entering the prediction market landscape. Well-known sportsbooks have apparently explored making sporting event contracts available outside of the ambit of their licensure with the Commission,” the letter reads.
“If an Ohio sports gaming licensee chooses to offer sporting event contracts in Ohio through their own DCM or FCM (or those under common ownership or operated by a related entity), or decides to associate, coordinate, or otherwise partner directly or indirectly with entities offering or facilitating the offering of sporting event contracts in Ohio, the Commission will consider these choices as it evaluates the continued suitability of a sports gaming licensee, including key employee licensees, to maintain a licence.”
The OCCC previously sent a cease-and-desist letter last year to Kalshi, one of seven states to do so. Kalshi and similar platforms are regulated by the US Commodity Futures Trading Commission and argue that prediction markets are therefore legal in all 50 states.
Is the Ohio regulator reacting to FanDuel’s plans?
Last week, FanDuel parent Flutter Entertainment announced a joint venture with CME Group to launch an events-based markets product for FanDuel customers.
The companies did not mention sports events in their initial lineup, which will feature “yes/no” predictions tied to commodities like oil and gas prices and the S&P 500. FanDuel expects the product to launch later this year.
Flutter CEO Peter Jackson hinted at the initiative on a recent earnings call, saying the company is “watching the space very closely” and evaluating opportunities.
FanDuel is not alone. DraftKings CEO Jason Robins also recently discussed prediction markets on earnings calls.
Prediction markets gain traction despite scrutiny
Sportsbooks are watching prediction market operators closely. Platforms like Kalshi have attracted both investor interest and regulatory scrutiny, including state and federal lawsuits contending prediction markets illegally constitute sports betting.
Kalshi began offering sports event contracts in January and continues to expand its offerings – even in states where sports betting remains illegal, such as California and Texas.
Despite the scrutiny, American access to prediction markets is expanding. Robinhood announced last week it will offer Kalshi’s football contracts on its app this season.
The NCAA said last week it is “deeply concerned” about online prediction markets following Robinhood’s announcement, warning the practice could threaten competition integrity and student-athlete safety.
“We will continue to analyse developments of this market and work with industry leaders to help ensure guardrails and regulations to protect NCAA competition, student-athletes, coaches and officials,” NCAA Senior Vice President Tim Buckley told ESPN.
Ohio Casino Control Commission reacts as operators have begun showing interest in prediction markets.