The American Gaming Association (AGA) thinks that prediction markets – "no matter what they are called" – constitute a form of sports betting and, worse still, a form of sports betting designed to skirt state laws on gambling.
Continuing to attack the vertical, AGA has published a new tracker which displays, in real-time, how much states would have supposedly garnered from tax revenue had it not been for prediction market platforms’ operations in the country.
Millions continue to be lost in taxes because of prediction markets, AGA claims
At the time of writing, the sum had reached more than $123,000,000 and was growing in real time. In a statement on the page, AGA said:
"Prediction market platforms openly flout sports betting’s state and tribal oversight in offering sports event contracts. These platforms disregard vital consumer protections, generate no benefits for local communities, and threaten the integrity of games."
AGA alleges that prediction market platforms are using sports event contracts to purposefully skirt gambling laws and "ignore the voice of voters and elected leaders." The association further noted that licensed gaming operators partner with close to 8,400 state and tribal regulators to ensure transparency and help protect sports integrity while generating billions in community benefits.
Conversely, prediction market platforms are not beholden to these rules. The argument presented by such platforms has been that they are regulated under a different, federal mandate – overseen by the Commodity Futures Trading Commission (CFTC), but AGA disagrees.
"Prediction markets offering sports event contracts threaten this regulated model. These operators try to pretend they’re not enabling sports wagering – seeking to bypass the industry’s effective regulatory framework – but they’re not fooling anyone," the association shares in a statement on the tracker’s page.
In detailing the reasons for concern, AGA argues that prediction platforms are available in 50 states and to anyone over the age of 18. In contrast, 39 states allow sports gambling, and only 7 actually allow 18+ gambling.
Financial regulators are ill-equipped to regulate gambling products
AGA also objects to the "financial product" claim mounted by prediction market platforms and insists that this is tantamount to disguising gambling as "investing." Another issue is that prediction markets supposedly bypass state and tribal oversight and pass the regulatory baton onto the CFTC, but this is not a regulatory body that understands how gambling works.
AGA also insists that prediction platforms similarly lack critical consumer protections and points out that leagues and operators work hard to ensure that they protect the integrity of the game by sharing and analyzing data, tracking aberrant behavior, and more, whereas prediction markets are not beholden to that standard.
AGA also cites previous research in which respondents indicated that they believed sports event contracts were gambling, not financial instruments (85%), and 84% agreed that they should be offered by state-licensed sportsbooks only.
