Massachusetts has become the latest to state to warn sports betting licensees about getting too deep into the prediction markets business.
In a letter to operators, Massachusetts Gaming Commission executive director Dean Serpa writes, “Please accept this letter as notice that you are prohibited from offering sports-related event contracts in Massachusetts, directly or via an affiliate, related business entity, or other association, or directing patrons to such event contracts being offered in Massachusetts. …
“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.”
Sportsbooks have been served similar notices in Ohio, Arizona, Michigan, Illinois and Nevada.
The relevance of the warnings has heightened over the last week, as DraftKings and FanDuel – by far the top two revenue-producing sportsbooks in the US – have unveiled plans to offer sports event contracts on new prediction markets platforms. These plans, though, are only for states where sports betting is not legal.
PrizePicks, which is licensed in Massachusetts as a DFS operator, also recently announced its prediction markets intentions via a new partnership with Polymarket.
Is Nevada First Domino?
While FanDuel and DraftKings maintain their sports event contracts will not be available in legal sports betting states, Massachusetts’ letter suggests regulatory sanctions in other states may carry over to the Commonwealth.
“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,” Serpa writes.
This portion of the warning is consistent with gaming attorney and lobbyist Bill Pascrell III telling DeFi Rate recently, “Once you get a license stripped in one state, it has a deleterious effect in other states.”
Nevada, in fact, has taken action against FanDuel and DraftKings, although neither operator is licensed as a mobile sportsbook in the Silver State. And it appears they won’t be any time soon.
In a notice to licensees dated yesterday, Wednesday, Nov. 12, the Nevada Gaming Control Board indicated FanDuel has surrendered its license as an information service provider and that DraftKings has withdrawn its application for a sports betting license.
FanDuel operates the retail sportsbook at the Fremont Hotel & Casino in Las Vegas. DraftKings opened a 90,000-square foot office in Vegas in March 2023.
Mass Fighting Prediction Markets on Multiple Fronts
Prediction markets are in Massachusetts’ crosshairs.
Multiple states, including New York, Nevada, New Jersey, Maryland, Ohio, Illinois, Montana and Arizona, have sent cease-and-desist letters to Kalshi, which in turn has sought preliminary injunctions to halt enforcement of the C&Ds. Massachusetts chose a different path by initiating a lawsuit against the company.
These states all make the same case, however: Kalshi is acting as an illegal sportsbook in their jurisdictions.
As DraftKings and FanDuel push further into prediction markets, they’re risking putting themselves in the same bucket.
