Major prediction platforms form a coalition to defend against regulatory attacks

Major prediction market platforms, including Kalshi and Coinbase, have formed a coalition as a coordinated response to state casino regulators trying to flex their authority on prediction markets. The regulators claim that these new markets are unlawful betting platforms. 

Kalshi, Coinbase, Crypto.com, and other prediction market platforms have entered into a coalition to defend federal regulation and fight back against state gaming regulators and lobby groups trying to restrict their operations.

Are states against prediction markets?

Kalshi, Crypto.com, Coinbase, Robinhood, and Underdog have announced the formation of The Coalition for Prediction Markets to protect safe, transparent, and federally supervised access to prediction markets.

According to Kalshi founder Tarek Mansour, the coalition was created to provide a voice for prediction markets against adverse lobbying groups and to protect the transparency and customer protection standards within the industry.

As it stands, nearly half of Americans under 45 have already used an online financial or prediction market. The industry has seen explosive growth, and platforms now record billions in weekly trading volume. Prediction markets have reached over $150 billion in annualized volume. They allow users to trade contracts based on real-world events ranging from sports outcomes to elections.

The platforms are currently regulated by the Commodity Futures Trading Commission (CFTC) at the federal level, which distinguishes them from state-regulated gambling operations.

However, the nascent industry is taking punches from multiple fronts.

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. The AGA and many of its members have warned that platforms with contracts tied to sports events undermine regulated betting.

States including Massachusetts, Washington, New York, and Connecticut have taken legal action against prediction market operators. Gaming regulators in these states argue that sports-related event contracts should be treated as gambling and subject to state licensing requirements.

“Americans deserve clarity, not 50 conflicting interpretations,” Sara Slane, an Executive Board Member of the Coalition and Head of Corporate Development at Kalshi, stated.

Matt David, the President of North America at Crypto.com and an executive board member of the coalition, described prediction markets as a way to help people and institutions make better decisions. The coalition will focus on educating policymakers and the public about how prediction markets differ from traditional gambling.

Is the sports betting industry getting along with prediction markets?

In November, DraftKings and FanDuel both resigned from the American Gaming Association specifically because of disagreements over how prediction markets should be regulated. Both companies view the growing sports prediction markets as a significant growth opportunity and are putting in efforts to break into it.

FanDuel announced it was partnering with Wall Street firm CME Group to launch a prediction markets platform in December. The platform will provide users with contracts for baseball, basketball, football, and hockey in all states, including those where sports betting remains illegal.

DraftKings acquired prediction market platform Railbird in October and plans to launch DraftKings Predictions. PrizePicks, Underdog, and Fanatics have all introduced or announced prediction market products.

Sources told CNBC that the AGA’s board was considering a rule change that would exclude any operator involved in prediction markets from membership.

Polymarket, one of the largest prediction market platforms globally, is notably absent from the new coalition, but according to the announcement, other companies are currently in discussion to join the collective.

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