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Read Full BioMassachusetts has become the sixth state to warn its licensed sportsbooks about launching prediction markets. The Massachusetts Gaming Commission (MGC) stated in the letter that sportsbooks “are prohibited from offering sports-related event contracts in Massachusetts.”
The state has been actively opposing the expansion of prediction markets, and the Attorney General filed lawsuits against Kalshi and Robinhood in September.
The letter warned sportsbooks that they could also be the subject of legal action, stating, “In the event you offer sports-related event contracts in Massachusetts or direct patrons to such event contracts being offered in Massachusetts, the Commission may take steps up to and including revocation of your license.”
The letter did not go as far as some other states, which have forbidden companies from offering prediction markets outside their own jurisdictions. Still, it did say that it would review any action taken by other state regulators.
It added, “In addition, to the extent any other regulator takes action against your license due to your operation in the prediction market space, such action may inform decisions related to your suitability in Massachusetts.”
The full letter can be read below:
Sportsbooks Launching Prediction Markets
FanDuel and DraftKings decided to withdraw their licenses from Nevada this week after the Gaming Control Board (NGCB) sent a similar letter. The two companies had limited to no presence in Nevada, and have attempted to preempt any sanctions ahead of launching their own prediction market platforms in the near future.
The country’s two leading sportsbooks have said they will focus their prediction market apps on states with no legal sports betting. The letter from Massachusetts serves as a reminder to adhere to this and refrain from launching the apps in the state.
Other states that have issued similar letters include Arizona, Ohio, Michigan, and Illinois, all of which have legalized sports betting. In those letters, the gaming regulators warned that even offering prediction markets in other states could risk disciplinary action.
DFS Platforms Expand Into Prediction Markets
DFS operators have seen prediction markets as an opportunity to expand. PrizePicks partnered with Polymarket this week, following Underdog teaming up with Crypto.com.
The companies are used to operating in legal gray areas and have been forced to adapt or withdraw their against-the-house versions of DFS to survive in many states. Neither is licensed as a sportsbook in Massachusetts.
Casino-tied operators have so far resisted the temptation to become involved. BetMGM and Caesar’s said they consider the markets to be illegal, and PENN has other concerns as it brings an end to its partnership with ESPN to operate ESPN Bet.
The other two sportsbooks licensed in Massachusetts are Bally’s and Fanatics, neither of which has declared any plans to enter prediction markets for the time being.
FanDuel & DraftKings Eye Future Legalization
The letter, therefore, appears to be targeted at FanDuel and DraftKings. Both companies have stated that they are prepared to adapt to individual states, and it is hoped that launching prediction markets will encourage states to legalize sports betting.
FanDuel said it will withdraw FanDuel Predicts from any state that legalizes, while DraftKings stated, “As growth in Predictions continues, this may also motivate more states to legalize online sports betting and iGaming with reasonable regulation and taxation.”
The companies have invested heavily in lobbying efforts to legalize sports betting in Texas, California, and Florida. Prediction markets are essentially a way to access those states.
Massachusetts, meanwhile, ranks as the 13th largest state for sports betting, with a total of nearly $17 billion wagered since legalization in 2022. That has generated around $1.6 billion in revenue for licensed operators.
The state has collected over $300 million in tax revenue from that, and the warning about prediction markets appears to be aimed at preserving that revenue stream.
