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FORT LAUDERDALE, Fla. – As regulators, lawmakers, and courts continue debating whether prediction markets should be treated like sports betting, several gaming industry executives say consumers may be focused on a far simpler question: Can they place a wager and get paid if they win?
- Gaming industry execs said many consumers care more about their winnings than whether a betting product is regulated by state gaming authorities or federal agencies.
- Prediction markets have intensified a long-running industry challenge of convincing customers that consumer protections and regulatory safeguards provide meaningful value.
- The debate comes as prediction markets continue expanding amid active litigation, new CFTC rulemaking proposals, and growing expectations that the legal dispute could reach the U.S. Supreme Court.
That theme emerged repeatedly during a panel discussion at SBC Summit North America this week, where operators, suppliers, and regulators debated the rapidly evolving prediction market landscape and the broader challenge of convincing consumers that regulation matters.
The discussion comes as prediction markets have become one of the most disruptive forces in U.S. gaming, drawing legal challenges from states, tribal gaming groups, and sportsbook operators while attracting growing consumer interest and billions of dollars in trading volume.
While much of the industry’s public debate has centered on jurisdictional questions and regulatory oversight, panelists suggested many consumers pay little attention to those distinctions.
“There are lots of people out there,” said Joe Brennan, a long-time sportsbook operator. “They don’t really care whether they play with a licensed operator, regardless of the vertical, or a non-licensed operator, as long as they believe they will get their winnings paid out or they will get their deposits back if they choose to withdraw them.”
Gaming industry wrestles with new reality
The comments drew comparisons to the years-long effort by regulated sportsbooks to persuade customers to move away from offshore betting sites following the 2018 repeal of the Professional and Amateur Sports Protection Act.
Even after legal sportsbooks launched across dozens of states, operators spent years emphasizing consumer protections, geolocation controls, identity verification requirements, and dispute resolution processes as differentiators from offshore competitors.
Yet several speakers questioned whether those distinctions resonate with many customers.
“We had to convince people all over the place that betting offshore was different,” Brennan said. “You were being less protected than betting onshore, and did that matter to consumers? And I think sometimes within the industry we get within this bubble where we think, of course it does, and yet the numbers sometimes tell otherwise.”
The debate has become increasingly relevant as prediction markets expand into sports event contracts that closely resemble traditional wagers. Operators such as Kalshi and Polymarket have argued their products fall under federal commodities law rather than state gaming laws, while sports betting regulators have contended the contracts function as gambling products.
The disagreement has created competing narratives about regulation.
“They don’t know,” Brennan said. “There is an assumption if I see it on Facebook and I can use my ATM or my debit card or whatever or my Visa card or PayPal, it must be on the level.”
The discussion also highlighted growing frustration among some gaming executives who believe public conversations about prediction markets often overlook differences between regulatory frameworks and the existence of federal oversight. Others stressed that prediction markets are not unregulated.
“We can debate the issue of regulation and we can have those thorough discussions,” said Fanatics’ Brandt Iden, whose company operates both a prediction market and a traditional sportsbook. “But it is regulated. There is a regulator.”
Those comments come as gaming companies increasingly find themselves competing not only against traditional rivals but also against prediction markets, sweepstakes operators, social casinos, and offshore offerings. Several executives argued the industry’s challenge is not simply building compliance programs but effectively communicating their value to customers.
“What we have not cracked yet is how to convey all the messages about the upsides of playing within the regulated environment,” said Martin Lycka of Oden.gg, an esports betting platform.
Prediction market impact
The debate arrives during a pivotal period for prediction markets.
The federal Commodity Futures Trading Commission this week released a long-awaited proposed rulemaking framework for event contracts, providing the clearest indication yet of how federal regulators may oversee sports-related prediction markets. The proposal would permit many sports contracts while restricting certain categories viewed as particularly susceptible to manipulation, including contracts tied to player injuries and other events controlled by individuals.
At the same time, courts continue weighing challenges involving state regulators, tribal gaming interests, and prediction market operators. Recent federal court decisions have generally favored the position that federally regulated event contracts fall under the Commodity Exchange Act, though litigation remains active across multiple jurisdictions.
Industry observers increasingly expect the legal conflict to produce a circuit split that could ultimately require resolution by the U.S. Supreme Court.
For now, however, prediction markets continue expanding while regulators, lawmakers, and courts debate where the products fit within the broader gambling and financial-services landscape. And as that fight unfolds, some industry leaders believe the biggest challenge may not be convincing judges or legislators.
It may be convincing consumers that the distinction between regulated and unregulated products matters at all.
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