Prediction markets
A prediction market lists contracts that pay a fixed amount if an event happens and nothing if it does not. Traders buy and sell them, so the price of a contract can be read as the market's probability of the event. Prediction markets have moved from elections and economics into sport, where they compete directly with sportsbooks.
How they differ from a sportsbook
- The platform matches buyers and sellers and earns fees; it does not set odds or take the other side of trades.
- Prices move with supply and demand, like a betting exchange.
- In the United States, the largest platforms operate as exchanges regulated by the federal Commodity Futures Trading Commission (CFTC) rather than under state gambling licences.
The regulatory fight
Sports event contracts offered under federal commodities rules reach players in states where sports betting is illegal and bypass state licensing, age limits and taxes. State regulators and tribal gaming operators argue that these contracts are sports betting and must be licensed by the states; the platforms argue that federal law pre-empts state gambling law. The dispute is being fought in courts and at the CFTC, and its outcome will decide whether sports betting in the US is regulated by the states or partly at federal level.
Outside the United States
Most other countries treat real-money predictions on sport as betting that needs a gambling licence, and some treat predictions on other events the same way.
Related: sports betting, fantasy sports and the United States page.
Updated: