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Prediction markets vs sportsbooks: what regulators say
Some apps now offer contracts on sports outcomes that are not state-licensed sportsbooks. Federal and state officials disagree about them. Here is what the public record says, without taking sides.
Two different kinds of product
Sportsbooks are licensed and regulated by state (or tribal) gaming regulators. Prediction markets that list "event contracts" on sports are described by the federal Commodity Futures Trading Commission (CFTC) as commodity derivatives, not state-licensed gambling.
What the CFTC did on October 9, 2026
The CFTC issued an interim final rule stating that casino-style gambling products, including wagers placed on sportsbooks and casino games, are excluded from the definition of a "swap." The same day it published a proposed rule to expressly include event contracts, including those based on sports, politics, cultural and weather-related events, in the definition of "swap," saying these are within its jurisdiction. Comments on both are due within 30 days of Federal Register publication.
Why it is not settled
News reports say courts have not agreed on whether federal law overrides state gambling laws for these contracts: a federal appeals court in September 2026 declined to block Ohio and Tennessee from enforcing their gambling laws against one company, a separate appeals court decision was more favorable to the company in a New Jersey dispute, and New York has accused one prediction market of operating an illegal gambling business (PlayNY, Oct. 13, 2026, citing other reporting).
What this means for you, in general terms
- A prediction market is not a state-licensed sportsbook, so the licensed-operator protections described in our offshore-site guide (state complaint handling, state self-exclusion programs) may not apply the same way. Ask the company what protections and limits exist.
- Tax reporting can differ by product. See the taxes guide and ask a tax professional.
- Check your state regulator's public statements about these products.