USA
After a period that served the prediction markets industry with optimism, Maryland marks a setback, showing us that the state of affairs is far from certain. Despite this, more companies are making pushes into this space, including DraftKings, FanDuel, and Coinbase.
TL;DR: A Bite-sized Overview:
- FanDuel and CME launch financial markets: Joint venture targets CFTC approval for $1 bets on economic indicators, avoiding sports.
- DraftKings reapplies for NFA membership: Seeks Swap Firm and Introducing Broker status to enter prediction markets.
- Coinbase Expands with Tokenized Assets: Plans US Launch of Stocks and Prediction Markets, Leveraging a Crypto-Friendly Shift.
- Robinhood sues NJ and NV regulators: Fights to protect sports contracts and around 60,000 affected customers, citing earlier CFTC rulings in other cases.
- Kalshi faces Maryland setback: Court upholds state gambling laws, prompting appeal to the Fourth Circuit.
FanDuel and CME Group Partner to Launch Financial Prediction Markets
FanDuel and CME Group announced a joint venture to launch financial event contracts, marking FanDuel’s entry into the rapidly growing US prediction markets. Pending approval from the US Commodity Futures Trading Commission (CFTC), the platform will enable customers to place $1 “Yes” or “No” bets on financial and economic indicators like the S&P 500, Nasdaq-100, oil, gas, gold, cryptocurrencies, GDP, and CPI. Operating as a non-clearing futures commission merchant (FCM), the venture will list contracts on CME exchanges.
FanDuel CEO Amy Howe highlighted the partnership’s potential to expand its customer base through innovative products, while CME’s Terry Duffy emphasized the appeal to sophisticated retail investors. Unlike rival Kalshi, which faces legal challenges over sports contracts, FanDuel avoids sports markets to maintain regulatory harmony, as noted by Flutter CEO Peter Jackson. The move leverages FanDuel’s parent company, Flutter, which has experience with Betfair, positioning it to capitalize on the growing interest in regulated financial prediction markets.
DraftKings Reapplies for NFA Membership to Enter Prediction Markets
In July, JustGamblers reported on rumors about an acquisition of CFTC-approved Railbird after withdrawing their 2024 registration of a proprietary brand designated for prediction markets. In August, DraftKings took more concrete steps into the US prediction markets by reapplying for National Futures Association (NFA) membership under Gus III Holdings LLC. The application seeks approval to operate as a Swap Firm and as an Introducing Broker, both in a Designated Contract Market (DCM) capacity. The initiative is led by DraftKings’ CEO Jason Robins, CFO Alan Ellingson, and co-founder Paul Liberman.
Rivals Underdog, PrizePicks, and Fanatics have also filed for NFA membership, targeting Swap Firm, Futures Commission Merchant (FCM), or Introducing Broker status. While NFA membership isn’t required for prediction markets, for example, Kalshi operates without a membership, it is essential for FCMs. This suggests that these platforms aim to follow FanDuel's route by offering Yes/No options on economic and financial indicators, while avoiding sports markets.
Coinbase to Launch Tokenized Stocks and Prediction Markets in US Expansion
Coinbase announced plans to expand its platform with tokenized stocks, derivatives, early-stage token sales, and prediction markets, starting in the US within months, followed by a gradual international rollout pending regulatory approval.
Similar to Robin Hood, Coinbase is attempting to build a comprehensive trading platform, an “everything exchange,” as described by Max Branzburg, VP of Product at Coinbase. This will enable Coinbase to better compete with Kalshi, Robinhood, Gemini, and Kraken in the tokenized equities and prediction markets space. This development opens up the possibility of crypto exchanges engaging in prediction markets, paving the way for a fusion between betting and crypto in the now crypto-friendly regulatory environment.
Robinhood Launches NFL and College Football Prediction Markets with Kalshi
Robinhood introduced NFL and college football event contracts through its Prediction Markets Hub in partnership with CFTC-licensed Kalshi. This is the same setup as they used back in March for basketball. Initially, they’ll cover all NFL regular-season games and Power Four college football matchups.
As expected, these contracts are structured as commodities, not wagers; these contracts leverage financial market dynamics, distinguishing them from traditional sportsbooks like DraftKings and FanDuel.
Robinhood’s VP of Futures, JB Mackenzie, emphasized that the move aligns with the company's goal of making Robinhood a comprehensive trading platform. Since launching its Prediction Markets Hub in March, Robinhood has seen over two billion contracts traded across crypto, economics, and cultural events. CFO Jason Warnick noted strong engagement in sports contracts, with CEO Vlad Tenev calling prediction markets a significant growth opportunity.
Robinhood Sues NJ and NV Regulators to Protect Sports Event Contracts
Instead of prediction market platforms being sued, Robinhood filed lawsuits against the New Jersey Division of Gaming Enforcement (NJDGE) and the Nevada Gaming Control Board (NGCB), seeking to block enforcement actions against its sports event contracts. This comes as part of a broader pushback against regulators, alongside Kalshi.
The suits, filed in US District Courts, argue that the CFTC has exclusive jurisdiction, citing federal rulings that favor Kalshi, which continued to offer similar contracts despite state cease-and-desist orders. Robinhood claims regulators’ threats risk “irreparable harm” to its 48,000 New Jersey and 12,000 Nevada customers, harming its business and reputation.
Kalshi has already seen success in disputing the NJDGE and NGCB. In other words, we can expect that Robinhood’s filings are successful. One thing to note is that Robinhood refrained from filing lawsuits in Maryland, where Kalshi was unsuccessful.
Kalshi Faces Setback as Maryland Court Upholds State Gambling Regulations
A Maryland federal court ruled against Kalshi’s motion for a preliminary injunction to block the Maryland Lottery and Gaming Control Agency (MLGCA) from enforcing state gambling laws. Kalshi’s claim that the federal Commodity Exchange Act (CEA) preempts Maryland’s gaming regulations was rejected, affirming the state’s authority to regulate gambling. The decision, contrasting with favorable rulings for Kalshi in Nevada and New Jersey, followed Maryland’s April cease-and-desist letter labeling Kalshi’s sports event contracts, such as NCAA basketball and US Open Golf outcomes, as unlicensed sports wagering.
Kalshi has appealed to the Fourth Circuit, seeking an injunction to maintain operations during the appeal process. This highlights that the legal struggles are far from over for prediction market operators, keeping the industry in a state of limbo.