Sports Markets Are Heating Up
Part VII: From courtrooms to boardrooms—betting on the future of sports markets
The prediction markets are moving fast!
If you’re just joining us, welcome. And let’s be crystal clear: We’re not a breaking news outlet, and that’s by design. Our differentiator and competitive edge is slowing down, breathing deep, and diving into the issues that matter. Timely coverage is good. Timeless coverage is even better, and that’s what we are striving to do with our analysis and insights.
Originally we planned to continue our analysis of Judge Abelson’s Maryland decision–specifically Reason #2, touching on electronic trading facilities and the technicalities around preemption. But the landscape has shifted so quickly and dramatically, we decided to hit pause to capture this moment instead. Even crypto didn’t move this fast. Let’s go rapidfire, shall we?
First, Some Shout-Outs
How do you even track this stuff? Who’s worth following?
→ Dustin Gouker writes two newsletters, Event Horizon and The Closing Line. Highly recommended.
→ Andrew Kim, a frequent guest columnist for Gouker’s newsletters is sharp and active on X.
→ Dan Wallach covers all things gambling law and policy. Also active on X.
We don’t agree with them on everything; in fact, we disagree with most people on most things, and we believe civil disagreement is healthy. However, it’s still important to reference who your sources are and discuss the finer points of the content.
Notable Developments In The Courts
Isn’t Maryland old news? Technically, no–the latest ruling in that case is less than two months old. But these are not ordinary times. SInce Judge Abelson handed the state a win, these things happened:
→ Another tribal suit, this one out of Wisconsin.
→ Oral argument was held at the Third Circuit (this is the New Jersey case in which we filed an amicus brief). Commentary from Andrew Kim (via Event Horizon), Dan Wallach, and an ex-Kalshi trader.
→ Massachusetts also became quite active.
Who Will Head The CFTC?
→ Josh Sterling (Milbank), Kalshi’s lawyer, is being vetted for the CFTC Chair. Yes, the same lawyer who said: “People are adults, and they’re allowed to spend their money however they want it, and if they lose their shirt, that’s on them.”
→ SEC Chair Paul Atkins is also in the mix, though legal hurdles remain.
→ Brian Quintenz’s chances seem to be fading. Releasing private messages didn’t help.
Shoot First, Ask Questions Later
→ Josh Sterling again, this time representing Sleeper, sent a letter to the Office of Inspector General accusing the CFTC of “violating the law.” The subject line of his letter included these words: Abuse, mismanagement, waste… and he’s now a top candidate to lead the agency? That’s a 10-day arc we haven’t seen before.
Deals, Deals, Deals
→ Allwyn is acquiring a majority stake in Prizepicks, valuing the company at $2.5 billion. Concurrently, one Prizepicks affiliated company was approved as a futures commission merchant.
→ FanDuel partnered with CME group. No word on sports event contracts yet, but when a sports gambling platform (yes, daily fantasy sports is gambling, too) marries a derivatives marketplace… you do the math. What do you suppose their child will look like?
→ Underdog partnered with Crypto.com to offer sports prediction markets in 16 states, mostly where state-regulated sports betting doesn’t exist.
Underdog’s CEO, Jeremy Levine on the partnership:
Great Expectations
→ Investors are watching. Jefferies hosted a call featuring Dan Wallach:
We can’t help but wonder whether “all potential outcome scenarios” included the one we believe is correct under the law.
There can be no sports gambling on a CFTC-regulated exchange, and, as inconvenient as it may sound, none at all in any state, on any platform. If residents of New Jersey–or any other state–wish to legalize sports gambling, the appropriate course is through Congress.
→ Robinhood’s prediction market business is already estimated at $200 million and Piper Sandler raised its price target from $120 to $140.
→ Interactive Brokers Chair Thomas Peterffy is bullish as well, though his focus is not sports–despite sports contracts dominating prediction market volume (see Kalshi’s recent numbers).
Get’em When They’re Young…
→ Kalshi is aggressively targeting college campuses. A post went up… and then quietly disappeared (they deleted it).
However You Get ’Em…
→ Polymarket never met a contract it didn’t like. If you thought the Astronomer CEO exit by the end of July contract (by Kalshi) was bad taste, think again. Polymarket put this one out and they have already grossed $2.4 million in the process:
Which May Create Business Opportunities
→ Birches Health raised $20 million to help combat gambling addiction. There should be no doubt as to what’s happening right now; sports gambling proliferates under the guise of prediction markets, and there is a legitimate concern (and a business opportunity) that gambling addiction will become worse. On that note, we are looking forward to reading Everybody Loses by Danny Funt.
Some Long-Form Work
Yes, prediction markets are moving fast. We probably missed a few developments as well, but if you want to go down this rabbit hole here’s a few more resources:
→ Andrew Kim’s recent Event Horizon summary is solid–though probably ready for an update.
→ Molly White’s Citation Needed has a long-form piece on prediction markets.
→ CNN released a documentary on sports betting (10-min trailer, audio, rush transcript).
Last, But Not Least: What About Maryland?
Maryland is now in the rearview, but objects in mirror are closer than they appear. Kalshi will likely win in New Jersey and Massachusetts is TBD. Maryland remains the only case where the state landed a meaningful punch. Judge Abelson’s opinion could be the key that unlocks a Supreme Court showdown, especially if affirmed by the Fourth Circuit (briefing schedule).
Final Thoughts: We enjoyed writing this post. We hope you had fun reading it. Q4 is packed with milestones, and we’ll be here to help you make sense of it all.
Let’s close with one final nugget on Polymarket:
Will SCOTUS accept a sports event contract case by July 31, 2026?
See that jump over there? Low volume, probably just noise. But with everything happening in this space, it’s hard to argue against a prediction that SCOTUS will intervene; the likelihood of that scenario being realized seems to be getting stronger and stronger.
After all, the future of sports gambling in America is what’s at stake.
