New York to review licences of prediction market operators
New York’s sports betting market is facing scrutiny over prediction markets. On 18 November, New York State Gaming Commission (NYSGC) Chair Brian O’Dwyer said licenced operators may need to choose between staying in New York or offering prediction markets elsewhere. Prediction markets let users buy and sell contracts based on future events, such as sports results, political votes, or economic indicators. They function more like financial trading than traditional betting. Because prediction markets resemble financial products, regulators are questioning whether they should be treated as gambling or trading. O’Dwyer stated that these markets challenge the NYSGC’s authority and could affect New York’s regulated betting system.
NYSGC Chair’s warning
At the meeting, O’Dwyer described prediction markets as a risk to New York and its residents. He said the commission must review whether licensees offering them are suitable to operate in the state. O’Dwyer argued that prediction markets blur regulatory boundaries. If sportsbooks offer products like financial derivatives, regulators could lose control over consumer protections and market stability. New York requires operators to maintain a clear record. If prediction markets are judged risky or unregulated, working with them could put sportsbooks in breach of state standards.
National regulatory pressure
In October, the NYSGC issued a cease-and-desist letter to prediction market company Kalshi, a case that is now before the court. O’Dwyer has indicated that further warnings or direct action may follow, emphasising that New York requires operators to maintain high standards and that partnerships which compromise those standards could create regulatory risks. A New York Assembly Member introduced a bill to block prediction platforms from offering markets on athletic events. If passed, sportsbooks using prediction apps could face legal challenges or be forced to stop.
Underdog, which operates under a temporary DFS licence, provided comparable contracts through Crypto.com, while FanDuel and DraftKings unveiled new apps that enable geolocated sports contracts. Concerns about regulations were raised when PrizePicks teamed with Kalshi soon after obtaining a New York DFS licence. Although interest in prediction markets is increasing among operators, regulators continue to highlight potential compliance risks.
Impact on New York’s gaming market
Operators in New York’s gaming market could face warnings, fines, or even licence revocation as regulators assess prediction market activity. While some companies are delaying their plans in response to the uncertainty, others are continuing to move forward. If major sportsbooks lose licences or scale back their offerings, the state’s betting market could experience significant disruption.
Recent scandals in MLB and the NBA have raised concerns about player influence on betting outcomes, prompting closer scrutiny of prop bets. A review of 104 NFL player props identified one as problematic, indicating that stricter rules may be introduced. While MLB has already agreed with sportsbooks to limit micro-bets, in New York such decisions remain under the authority of the commission.
NYSGC calls on sports leagues
The commission contacted more than 70 sports leagues for input on which props or wagers should be restricted. Regulators want league cooperation to protect betting integrity. O’Dwyer stated that any wager deemed open to manipulation will be removed. The NYSGC legal team will soon submit recommendations, after which enforcement actions will be decided. Outcomes could range from policy changes to penalties. If regulators act strongly, prediction markets may be excluded from New York’s betting industry.
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