The Takeaway: Welcome To The Era Of (Sports) Prediction Markets

Kalshi launches futures markets for the Super Bowl and more

Jan 23, 2025

It feels like a pretty disruptive moment in sports betting, doesn’t it?

Kalshi launched sports events contracts for the champions of some major North American sports — basically futures bets — on Thursday in all 50 states. They followed in the footsteps of Crypto.com, which launched similar markets in December.

Right now you can ~~bet~~ trade on the outcomes of the Super Bowl, the winners of this weekend’s AFC and NFC title games, the NBA Finals (along with the Eastern and Western conference winners), the Stanley Cup finals in hockey and the men’s college basketball season. (On the final one, I would probably want to tighten up the language if I were Kalshi, as it doesn’t designate “men’s” or “women’s.” It’s also interesting to note Kalshi avoids using league names and marks, but it is using team logos in the UI.)

So far, it’s pretty small potatoes, with less than half a million dollars traded on all these markets in sum as of this afternoon. Markets for the next coach of several NFL teams had been active before today’s launch.

If you’re reading tea leaves, you would be hard-pressed to find reasons for Kalshi not to take the plunge into sports:

Crypto.com tested the waters. While the Commodity Futures Trading Commission asked them to stop taking sports contracts, they didn’t comply with that order. And nothing happened.
Kalshi added Donald Trump Jr. as an advisor days before his father took over the White House.
While the CFTC has been fighting prediction markets in court, the new acting chair, Caroline Pham, has supported regulating prediction markets rather than stopping them. A new CTFC head will be nominated by Donald Trump.
The CFTC’s general counsel in the ongoing appeals case with Kalshi, Rob Schwartz, is out.

Does that mean sports event trading is all systems go? Not necessarily. There are certainly ways this could be reined in, even via a CFTC that one would assume will be much friendlier to Kalshi in general.

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But are you willing to bet on sports contracts going away? As we sit here, I’d make sports contracts, at least like the ones we’ve seen offered so far, a favorite to survive in the short term. (Maybe Kalshi should open up a market on this topic!)

Regulus Partners, an advisory firm, offered this insight in between the Crypto.com and Kalshi launches:

We struggle with the idea that a Trump White House and a Republican Congress will let investing to become sports betting by another name just because the first operator has ‘crypto’ in the title – and Trump likes crypto. If CFDs can offer sports, then the states have just lost their right to regulate and tax sports betting. This outcome does not suit any major vested stakeholder; nor does it provide a working legal-regulatory environment, in our view. We believe the Federal government will have to step in to define betting more precisely potentially by amending the Wire Act (which leaves wagering undefined).

I agree that states are on their way to losing control of the ability to regulate sports betting, if this trend line continues. But I do question 1. the will to stop it at the highest level and 2. from where the pushback might manifest.

The next step for a prediction markets platform, of course, is offering markets beyond simple futures contracts. Think of anything you might see at a sportsbook: winners of tournaments in other sports, outcomes of single games, player propositions, etc. If and when Crypto.com or Kalshi tries that, will there be more pushback? Or will this just be the natural evolution from the initial rollout?

If you’re in the US sports betting space, or even if you’re not, you’d be foolish not to look into the paths to serving the whole country that prediction markets currently provide. Even if sports trading eventually gets reined in, there’s still a viable business there, on top of it being a marketing and acquisition vehicle.

Maybe sports prediction markets go away. Or maybe we’re on the precipice of a truly disruptive moment in gambling. What are you betting on happening next?

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Gambling news roundup

First legislation, then other news:

Gambling legislation update for Jan. 23

Massachusetts | online casino: Massachusetts joined the growing list of states where online casino legislation has cropped up. Even if nothing gets passed this year, the sheer number of bills being considered at this point would be a moral victory for the industry. Story from Legal Sports Report: “The pair of bills would allow the Massachusetts Gaming Commission to regulate and license online casinos in the state. Each of the state’s three casinos could partner with up to two operators. Up to four companies could also qualify for untethered licenses to operate online casino platforms. They could operate poker, blackjack, craps, roulette, cards, slots and other casino games. The bills would set a tax rate of 20%.” MA online casino bill
Hawaii | sports betting, fantasy and online casino: Passing gambling legislation in Hawaii always seems like a longshot, but that doesn’t stop people from trying. Story from SBC Americas: “Lawmakers in Hawaii have introduced a cluster of long-shot bills that would open up the state to online casino gaming and/or sports betting. All forms of gambling remain illegal in the Aloha State, despite multiple efforts in past years to change that landscape. Now, several pieces of legislation have been introduced from 2025 that cover everything from online sports betting to online casino gaming, lottery and fantasy sports.” Sports betting bill | Online casino/lottery bill | Fantasy sports bill
Sweepstakes followup in New York: I covered this in yesterday’s news roundup; a key state senator in New York had some choice words for the sweepstakes industry. The Social and Promotional Games Association offered TCL a statement: “The characterization of social sweepstakes operators in Senator Addabbo’s comments stands in contrast to the safe, legal, and responsible operators, with best-in-class consumer protections, that we represent. … SPGA members adhere to a Code of Conduct that includes the application of regulation-grade suppliers, technology for age verification, KYC, location verification, and AML. Our members use products such as 3DS from American banking institutions and work with renowned payment processing companies such as Paysafe and Worldpay.” It’s worth noting that the SPGA, at last count, represents about 10% of the operators in the sweepstakes casino and sportsbook industries.

Here’s a handy tracker for online gambling legislation from Bonus.com, along with momentum ratings.

Other gambling news for Jan. 23

If you missed my podcast on the timeline for California online sports betting getting pushed out to 2028 or later, here you go.
That DraftKings-Delta partnership (which we still know almost nothing about) set off a flurry of coverage of the potential of in-flight betting. We’re pretty far from that actually happening from a legal, compliance and/or logistical standpoint, but I guess it makes for good headlines. And even if it does happen someday, which seems unlikely, I can’t believe it would be worth the squeeze… unless you can do it on flights originating in states that don’t have legal sports betting. Maybe Kalshi should do a deal with United. Hopefully, the coverage of airplane betting will go away soon.
How Sports Betting Apps Use Psychology to Keep Users Gambling (Scientific American): “These mobile apps have made sports betting quicker and more accessible than ever. They have also granted companies access to troves of data on their customers’ behaviors, which they can use to keep people betting—making it easier than ever to fall into problematic behaviors, experts say, and harder than ever to quit. '“The features that make these products exciting and engaging are also the features that make them addictive,’ says Heather Wardle, a policy researcher studying gambling at the University of Glasgow.”
This story is ridiculous, but you should know it exists, I guess, especially its silly headline: Hannibal is at the Gates: Gambling in America.
VC firm launches BettorWatch to provide tech solutions for RG (SBC Americas): “Discerning Capital is leveraging its expertise in gambling and technology to launch a venture designed to support responsible gaming. The Las Vegas-based venture capital firm has announced the launch of BettorWatch, Inc. a technology solutions provider for RG efforts for some of the largest gambling brands in America. BettorWatch will collaborate with operators to identify and develop solutions that will help brands and their players combat problem gambling. BettorWatch will bolster its RG efforts with the looming acquisition of iProtekt, Inc., which offers unique tools.”

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