Some time back when the prediction markets story began to break big this publication, with some prescience it now appears, ran the headline: “I Predict A Riot”, referencing the title of a hit song by a now-passé British pop group.
Well, that prediction–all puns intended–has come to life; so real indeed that a veritable iGaming civil war has now erupted between the hitherto representative American Gaming Association (AGA) and the two biggest heavy-hitters in the iGaming and sportsbook space – FanDuel and DraftKings.
Faced with what they believe to be an existential threat from coming prediction markets, notably Kalshi, Polymarket and Robinhood, the two online giants have not only joined the binary betting boom, they have effectively jacked the middle finger at the AGA by withdrawing from the association.
The AGA now sits aghast and emasculated in a Washington D.C. office that has seemingly lost all relevance in a hyper convoluting online gambling world.
Truth Predicts
With the American president’s own Truth Social media site entering the prediction markets space as the Truth Predicts platform, and with the regulatory Commodity Futures Trading Commission (CFTC)–the independent U.S. government agency that regulates derivatives markets, including futures, options, and swaps–still technically leaderless, just who is in control here?
FanDuel, owned by Irish-American Flutter Entertainment, and Massachusetts-origin DraftKings, who both came to prominence as Fantasy Sports channels in the wake of the 2018 PASPA repeal, have seen the future. And the future, returning to their disruptive roots, is prediction markets; as exemplified by canny Kalshi, who have dragged-in more than US$2 billion in investment during the last few months on “just the whiff of baked beans”.
Not shackled by current gambling legislation, with a sympathetic pro-prediction markets administration ensconced in the White House–Donald Trump Jr. is both a strategic adviser to Kalshi and sits on the board of crypto-powered Polymarket–, the binary betting phenomenon is the Gold Rush of our times.
Crushing Blow
Both FanDuel and DraftKings are now poised to launch prediction market sites of their own: FanDuel Predicts, through a tie-in with the CME Group, and DraftKings Predictions by the acquisition of Railbird.
Quitting the AGA–an organisation founded in 1994 with the express aim of promoting, educating and lobbying on behalf of the gambling industry, which has consistently argued that prediction markets should be regulated–and crucially taxed–like any other betting vertical–is a clear indication that both iGaming leaders intend to put the new gaming vehicle at the very heart of their offerings going forward.
Diplomatically, despite what can only be termed a crushing blow, the AGA has posted that “it expects to maintain working relationships with both companies” as it continues to work for regulated gambling in the USA.
And the association told iGamingFuture: “In discussion with DraftKings and FanDuel, [we have] accepted their request to relinquish their membership, effective immediately.
“We wish them the best, and we expect to maintain close ties in our mission to promote and protect legal, regulated gaming.”
Last week the Massachusetts Gaming Commission (MGC) also joined the looming iGaming civil war when it warned its sports betting licensees not to circumvent legislation by offering sports “contracts” through prediction market verticals.
Last Laugh
Given that DraftKings was founded in the Bay State, the principal butt of its broadside couldn’t have been clearer.
The MGC warned infractors that they would lose their gaming licences and ominously added: “In addition, to the extent any other regulator takes action against your licence due to your operation in the prediction market space, such action may inform decisions related to your suitability in Massachusetts.”
FanDuel and DraftKings may shrug-off regulatory threats but one thing they can’t fight is the truth of markets — and falling share prices.
At the time of this writing, FanDuel’s share price had fallen 16.67 percent in the last five-days; while DraftKings was down 5.35 percent over the same period.
Flutter Entertainment CEO Peter Jackson and DraftKings CEO Jason Robins may have calculated that they will defy regulation and triumph with their new prediction markets offerings.
But one thing’s for sure, as this dynamic phase of America’s iGaming civil war plays out, at the end of the day there’s only one guaranteed winner.
And that, Mr Trump notwithstanding, is Tarek Mansour and Luana Lopes Lara – the partners who founded Kalshi and launched an American iGaming revolution.
Additional reporting by Lauren Harrison
