Last week, the U.S. Ninth Circuit Court of Appeals' procedural ruling involving the prediction market platform Kalshi and Nevada regulatory authorities became the focus of industry-wide attention. If the court rejects Kalshi's request for an emergency stay, Nevada may quickly initiate enforcement actions and seek a temporary restraining order to stop its operations in the state. This direction will directly determine whether the prediction market can continue to expand beyond the "gambling industry".
Almost simultaneously, crackdowns on "online lottery casinos" are also advancing in multiple states in the U.S. Legislation in Tennessee, Maine, Indiana, Florida, and other places has included platforms that use "virtual currency + simulated casino gameplay" within the scope of regulation or even prohibition. The enforcement targets not only include operators but also extend to suppliers and other partners. The regulatory attitude is very clear: 🔴 any model that bypasses the traditional licensing system and offers gambling-like products in the form of "lotteries" or "promotions" will face stricter scrutiny.
This policy pressure is directly reflected in the capital market. In the past few days, several U.S. sports betting concept stocks have experienced accelerated crashes, with investors worried about the expansion of regulatory uncertainty and the potential diversion effect of the prediction market on traditional sports betting. Leading operators such as DraftKings and FanDuel have seen significant stock price fluctuations. 🔴 The market worries that once the prediction market gains clearer legal support at the federal level, its "financial derivative" nature may bypass state-level gambling regulatory frameworks, constituting structural market competition.
⚠️ The relationship between the prediction market and online gambling may form a "core contest" from a regulatory system perspective. A deeper issue is whether the two industry models will compete or integrate in the future. On one hand, the prediction market may attract younger, transaction-oriented user groups, putting pressure on traditional sports betting operators; on the other hand, traditional operators may also proactively embrace this trend, embedding prediction contracts into existing betting platforms to upgrade their products. In fact, some large operators have been frequently asked about their attitude towards the prediction market during earnings calls, which itself indicates that the capital market has regarded it as an important new variable.
It can be foreseen that in the coming years, the U.S. online gambling industry may present a "three-track parallel" pattern: ➡️ one is the steady expansion of state-level sports betting and online casinos, such as the advancement of the Virginia online casino bill; the second is the continuous cleanup of "gambling-like" lottery models and borderline social casinos; the third is the judicial contest between the prediction market and gambling.
In the short term, regulatory uncertainty will suppress the valuation of the online gambling industry. However, in the long run, the relationship between the prediction market and online gambling is not a zero-sum game. Both share similar risk pricing mechanisms and psychological foundations, and they are likely to form some form of integration within a compliant framework—perhaps more financialized gambling products or more gamified prediction trading platforms.
This tug-of-war around regulatory certainty is reshaping the competitive landscape of the U.S. online gambling industry.
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