Massachusetts regulator warns sports betting operators against offering prediction markets in the state

The Massachusetts Gaming Commission has issued a warning to its licensed sports betting companies against offering prediction markets in the state.

DraftKings, FanDuel, and other Massachusetts sportsbook operators might have to reevaluate their prediction-market plans after state regulators warned them that offering sports-related event contracts in the state—or directing patrons to them—could jeopardize their licenses.

The notice, issued November 13 by Massachusetts Gaming Commission (MGC) executive director Dean Serpa, states that operators “are prohibited from offering sports-related event contracts in Massachusetts, directly or via an affiliate, related business entity, or other association, or directing patrons to such event contracts being offered in Massachusetts.” Licensees must submit a written response within 10 business days outlining how they intend to comply.

The letter reiterates that Massachusetts sports wagering is governed by M.G.L. c. 23N and may only occur through platforms licensed by the MGC. Under the statute, a “sporting event” includes professional and collegiate competitions, tournaments, motor races, esports, and other events authorized by the commission. Any introduction of sports-related contracts outside this framework could lead to penalties that extend to license revocation.

The MGC also noted that any action taken by regulators in other states “may inform decisions related to your suitability in Massachusetts.”

Prediction markets enter the regulatory spotlight

The regulatory action comes as several operators explore event-contract products nationally. DraftKings recently acquired prediction-market platform Railbird, which is licensed by the Commodity Futures Trading Commission, and indicated plans to offer contracts “in the coming months.”

FanDuel announced a partnership with CME to introduce similar markets next month. Both companies have said they will not introduce sports-related prediction markets in jurisdictions where sports betting is already legal.

Prediction markets differ from sportsbook wagering in how prices are set: users buy and sell contracts based on supply and demand, while sportsbooks rely on internal analysts and risk models.

Consumer protection and tax considerations

Public Health Advocacy Institute executive director Mark Gottlieb told 10Boston the absence of state oversight in prediction markets removes consumer-protection mechanisms tied to advertising, promotions, and problem-gambling programs.

“One of the main goals has always been for revenue to flow into Massachusetts as a result of sports gambling,” Gottlieb said. “The prediction markets would prevent that from happening.”

Massachusetts is also pursuing legal action related to prediction markets. In September, Attorney General Andrea Joy Campbell filed a lawsuit in Suffolk County Superior Court seeking to block prediction market operator Kalshi from operating in the state. The case was briefly transferred to federal court before being returned to state court on October 28, a decision that cannot be appealed. A hearing on the state’s request for an injunction is scheduled for next week.

Alongside DraftKings and FanDuel, pmñome licensees in the state include BallyBet, BetMGM, Caesars Sportsbook, Fanatics Sportsbook, and Penn Entertainment. Encore Boston Harbor operates a retail sportsbook but does not have a digital platform in Massachusetts.

State regulators said they are not addressing sports-related event contracts offered outside Massachusetts at this time, but hinted they may revisit the issue. The commission is requiring all licensees to detail the actions they will take to ensure compliance with the notice.

Earlier this week, both FanDuel and DraftKings agreed to abandon licensing efforts in Nevada as they shift focus toward launching prediction markets across the United States. State regulators had deemed prediction markets “incompatible” with Nevada’s gaming structure.