The North American Association of State and Provincial Lotteries (NASPL) has called for “urgent regulatory clarification” around predictions as the products continue to grow in popularity.
The North American lottery trade body has joined its international counterpart, the World Lottery Association (WLA), in calling for clarity in “all jurisdictions” where prediction markets are either currently active or plan to be active.
As the NASPL’s focus is on North America, its main focus will likely be the US – which has emerged as the main and most valuable market for prediction platforms like Kalshi and Polymarket, which have secured valuations of $22bn and $15bn respectively.
Kalshi is even considering going public, though its Chief Executive Officer, Tarek Mansour, has told US media that this is still in the early stages and that an initial public offering (IPO) would likely not occur until at least late 2027 or 2028.
NASPL has reiterated the WLA’s argument that an “applicable test” for regulated predictions products must be “functional and economic”.
“If a product offers a financial return contingent on the outcome of an event—sporting, political, or otherwise—then it constitutes a wager or bet,” the statement reads.
“It must be licensed and regulated as such, irrespective of the operator’s preferred label.”
NASPL takes tough stance against predictions
Predictions have grown in popularity in the 2020s, with the biggest growth in the US seen in California and Texas – the two US states which do not have a regulated sports betting market.
The platforms are still enjoying growth outside these states, however, and the regulated sports betting and gaming industry has responded with a mix of opposition and acceptance.
In cases of acceptance, Fanatics, DraftKings and FanDuel (Flutter Entertainment) have all launched prediction products. In the case of opposition, the American Gaming Association (AGA) has lobbied heavily against predictions.
NASPL seems firmly in the anti-predictions camp. The trade body asserts that failure to set up proper regulatory parameters for predictions will “have a negative impact on the integrity of the very games that prediction markets target”, including sports and lotteries.
“The same gaps in the legal and regulatory infrastructure that allow this type of activity also make it difficult to identify, correct and prevent harmful ulterior motives from being enacted by bad actors,” the trade body added.
Predictions in the US, and elsewhere, have become the topic of intense regulatory debate.
In the US, the federal Commodity Futures Trading Commission (CFTC) has taken the side of predictions, viewing the products as legislative financial products akin to derivatives trading.
State regulators disagree, however, and have found themselves embroiled in litigation with prediction platforms like Kalshi and the CFTC. Nevada, Arizona and Connecticut, are examples, among others.
NASPL is firmly planting itself in the camp that views predictions as an unregulated form of gambling. The trade body states that “the overwhelming elements of chance involved in the outcome of that “prediction” in fact make it a “wager” and therefore a “probable illegal gamble”.
This regulatory debate is not just occurring in the US. In South America, Brazil and Argentina have been heaping criticism on predictions, a prospect welcomed by the lotteries association of the former nation.
The fierce discussions around predictions’ regulatory future are pulling in all kinds of stakeholders – the platforms themselves, state regulators, national regulators, trade bodies and betting firms, and increasingly, lottery companies and trade bodies.