The Massachusetts Gaming Commission has issued a notice to sports betting license holders, prohibiting them from offering or facilitating sports event-related transactions in the state, either directly or through affiliates. Previously, the state's Attorney General had sued the prediction market operator Kalshi, seeking to ban sports event prediction markets.
Scope of Regulatory Action
The Commission explicitly prohibits sports betting license holders from offering sports event contracts or guiding customers to purchase such transactions. The warning notes that violations could lead to actions up to and including revocation of licenses, and could affect operational qualifications in other states.
Industry Reaction and Background
FanDuel and DraftKings have announced plans to launch sports event prediction market products to explore markets like California and Texas, where traditional sports betting is illegal. Kalshi argues that it operates legally under the federal regulation of the Commodity Futures Trading Commission and has filed lawsuits in states like Maryland and Nevada.
Interstate Regulatory Trends
Massachusetts' action is the latest case of an increasing number of states adopting similar regulations. At least eight states have issued cease and desist letters to Kalshi, considering its prediction markets as unlicensed gambling activities. Other states like Arizona and Illinois have also taken regulatory actions against prediction markets.
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