News: FanDuel, DraftKings Leaving American Gaming Association
FanDuel and DraftKings are leaving the American Gaming Association as they expand into prediction markets, The Closing Line confirmed on Monday night.
The two biggest US sports betting operators have said they are launching sports prediction markets in their Q3 earnings reports, putting them at odds with the AGA.
The AGA and some of its members have been publicly against the rise of prediction markets, saying they should be regulated as a form of gambling. Right now, prediction markets operate in 50 states under the Commodity Futures Trading Commission and are not treated as a gambling product.
A FanDuel spokesperson offered this statement to The Closing Line:
“FanDuel has built our business by maintaining strong industry partnerships. We value the spirit of collaboration that comes with these relationships.
But as we expand into prediction markets, we recognize this direction is not aligned with the American Gaming Association’s current priorities for its member operators. After thoughtful consideration, we have decided to step back from our AGA membership at this time.
FanDuel has always been the company that moves quickly, from daily fantasy to mobile sports betting to prediction markets. We build what consumers want and we operate with an unwavering commitment to integrity.”
And from a DraftKings spokesperson:
“As the company’s business strategy evolves — including with prediction markets — DraftKings determined that its plans no longer fully align with the AGA’s direction in certain areas and have decided to relinquish its membership.“
The AGA acknowledged the departures in a statement from a spokesperson sent to TCL:
“In discussion with DraftKings and FanDuel, the AGA has 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.”
The prediction markets industry — led by Kalshi — has become huge in the space of a year, seeing more than a billion dollars traded on the outcomes of sports events each week. Kalshi largely functions as a sports betting exchange, with more than 90% of its trading volume coming on sports since the start of football season.
A number of state regulators have sent cease-and-desist letters to prediction markets for offering sports betting without a license in recent months. The legality of prediction markets is being tested in various federal and state courts and may take years to resolve. For now, there’s no guarantee that sports betting via prediction markets will ever go away.
In the interim, FanDuel and DraftKings, at least, have faced a decision: Wait for legal clarity and cede the market to Kalshi and others, or get into prediction markets in the short term. They have decided on the latter, and they are hardly alone in trying to capitalize on the potential in prediction markets. Fantasy pick’em apps like PrizePicks and Underdog have already launched prediction markets products, while crypto platforms, sweepstakes casinos and even Truth Social have announced they will launch prediction markets. Polymarket’s US-facing launch also looms.
The relationship between the AGA and the sports betting giants has perhaps always been uneasy, to some extent. FanDuel and DraftKings played the role of disruptors more than a decade ago when they were only daily fantasy sports operators. They were not a part of the AGA then and faced pushback from legacy gaming interests.
All of the lobbying for online sports betting by FanDuel and DraftKings takes place via the Sports Betting Alliance, so a split with the AGA likely won’t hinder efforts in the states that have not yet legalized.