Towards the end of 2024, Kindbridge reported on the rise of online prediction markets. Prediction markets are exchange-traded platforms where individuals can “invest” on the outcome of a variety of events with an unknown future. Members can make “Yes / No” predictions on items such as weather events, economic recessions, cryptocurrency values, Rotten Tomatoes scores of newly released Hollywood films, and despite an attempt by the Commodity Futures Trading Commission (CFTC) to prohibit it – members can earn money by predicting political outcomes too. TradingView reported that U.S. presidential race bets (their word, not ours) neared $4 billion on election day.
Prediction market trading platforms thus far been able to sidestep federal and state level gambling regulations. Semantics such as “trading”, “investing”, and “monetary incentives” seem to be enough to keep regulators from stepping in. The fact that they haven’t featured casino slots and table games in addition to sports betting have also helped draw the line between prediction markets and gambling platforms.
Until now.
In the first fiscal quarter of 2025, two of the most popular prediction market sites in the U.S. added sports to their platforms. Of course, they are quick to state that their sports trading product is not the same as sports betting. But let’s have a look at how one of them positioned this new market release and let the reader decide what it looks like:
Let’s also have a look at direct quotes used from the above platform’s press release regarding the launch of a sports trading product:
“At first, our CEO, (name hidden), poo-pooed the idea, saying it was far too niche for casual users, and would spook our investors […] But I held my ground, and now (name hidden) is offering markets on college and professional sports. And they are 100% legal in all 50 states! You’re welcome, America! […] Of course, many states have already legalized sportsbooks. And that’s great, if you happen to live in a state that has them. But millions of Americans don’t. And for those Americans who do have access to legal sportsbooks, we offer a different product.”
Further, those who arrive at the sports trading portal are delivered the interface below. Some may say that this looks a lot like the betting lines of an online sportsbook, with “Yes/No” outcomes not functioning much differently than traditional sportsbook moneyline and OVER/UNDER wagers in addition to proposition bets on Y/N outcomes being offered by unregulated offshore sportsbooks:
Again, we’ll let the reader be the judge and what this all looks and feels like to them. It certainly didn’t take long for the regulated sports betting market to draw its own conclusions. TechCrunch reports that regulated states of Nevada, New Jersey, Illinois, Maryland, Ohio, and Montana have sent the above-detailed sports trading platform cease-and-desist letters claiming that sports prediction markets are de facto sports betting operations. Meanwhile, a Massachusetts regulator has subpoenaed another platform for the same reason. Readers may also be interested in Reddit group discussions about the Day in the life as a Sports Trader where the words bet and betting are a ubiquitous part of the lingo.
Google algorithms are also not able to draw a distinction between sports trading and sports betting, as a Google search for “sports trading websites” unveils the following collection of unregulated and regulated online sports betting operators:
Whether or not the addition of college and professional sports makes a prediction market a de facto sports betting operation is up for the courts to decide. The concern of many of America’s mental and behavioral health support providers, are implications regarding sports trading addiction. Below is a succinct overview of these concerns that those who are vulnerable to problematic gambling behavior need to be made aware of.
Overview of How Americans Who Are Vulnerable to Problem Gambling Behavior Must be Mindful of Sports Trading Addiction Too
No Responsible Gaming Protocols on Sports Trading Platforms
Since sports trading does not land in the jurisdiction of the American Gaming Association (AGA), operators are not beholden to anything laid out in the AGA’s Responsible Gaming Statutes and Regulations Guide. This means there are fundamentally no mental and behavioral health protections in place for those who exhibit problematic behavior. Verbiage relating to personal risk is tucked into the footer of their respective websites. Here is a direct example:
“Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.” (Robinhood)
While the above type of messaging is found across all CFTC regulated prediction market websites, the boilerplate nature fails to account for the difference between a standard trading customer and the new sports trading customer. As the sports trader operator press release in the introduction of this article indicates, these platforms are positioning themselves as an alternative to sports betting for those who live in states where the activity remains illegal. Logically, this will attract sports bettors who have been handcuffed by the laws of the states they are residents of. This population segment shares the same sports betting addiction statistics as the rest of the country, with a concerning proportion bringing their vulnerabilities into these sports trading platforms.
Unlike with the regulated sports betting market, sports traders do not offer customers access to self-exclusion tools. In addition, none have entered into partnerships with mental health support providers in the same manner as regulated sports betting operators like FanDuel (view more), DraftKings (view more), and BetMGM (view more).
Further, sports trading sites may not be incentivized to offer customers access to self-exclusion tools and mental health support providers. Because if they do, it may be perceived as if they are conceding that what they do is de facto sports betting.
All of this is extremely problematic for vulnerable Americans. It’s certainly not a stretch to suggest that someone who exhibits vulnerabilities of disordered gambling is also at risk of developing a sports trading addiction when using such platforms. This is particularly concerning given that they are not being presented with tools to monitor for and address issues.
Invasion of Unregulated Sports Trading on U.S. Soil
CFTC regulated sports trading is problematic enough when it comes to the mental/behavioral health vulnerabilities of their new sports trading customers. But as with traditional online sports betting, unregulated (by CFTC) operators have flooded the market to accept money from U.S. players who use a VPN to access their platforms. Some are licensed in the United States, while many others are licensed in Costa Rica, Curacao, and Malta to keep at an arm’s length from federal law. The same dangers that exist with unregulated sports betting operators (view here) exist with unregulated sports trading operators.
If you have struggled with sports betting in the past, have a family history of problem gambling, or exhibit any other risk factors (view here) you are encouraged to stay away from sports trading. If it has already had a negative impact on your life you can get help right away through Kindbridge Behavioral Health. Connect to a Kindbridge care coordinator for a FREE assessment and to schedule your first counseling session.
Concerned About Your Relationship with Sports Trading?
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