Prediction markets may push more states toward legalizing iGaming, Caesars' Eric Hession says

Eric Hession, President of Caesars Digital, warned that prediction markets and rising sports betting tax rates are among the biggest risks facing gaming operators, adding that the spread of untaxed prediction products could eventually push more U.S. states to legalize online casino gaming in an effort to recover lost revenue.

Speaking during a discussion hosted by the Nevada Society of Certified Public Accountants and moderated by Brock Elliott, Senior Vice President and Controller for Caesars Digital, Hession said the sports betting industry had enjoyed years of rapid growth before encountering mounting competitive and regulatory pressures.

“When the government sees the tax-revenue opportunity, I fear they will keep raising the taxes and I’m not sure how to stop that,” Hession said, as reported by CDC Gaming.

He said competition in the sector was intensifying as new products emerged, including sweepstakes casinos and sports-event prediction markets.

“The business is incredibly competitive. Our normal competitors are constantly innovating and investing,” Hession said. “New competitors are coming in that make up products overnight, like sweepstakes casinos. Now you have prediction markets.”

Hession questioned whether sports prediction markets were serving a genuine economic purpose, criticizing products tied to player performance wagers.

“The argument that an 18-leg parlay on rebounds in the NBA is somehow economically significant and needs price discovery seems a bit stretched,” he said.

Prediction markets tied to sports outcomes have expanded across the United States over the past year, including in states such as California and Texas, where traditional sports betting remains illegal.

Hession said Caesars has been unable to participate in prediction markets because of unresolved regulatory questions, leaving the company trailing rivals including FanDuel and DraftKings.

“We started so far behind FanDuel and DraftKings, and we’re not allowed to participate (in prediction markets). They’re getting a head start,” Hession said.

He added that Caesars is waiting for legal clarity before deciding whether to enter the market.

“There will be clarity at some point, and when there’s clarity, we’re able to compete very well,” he said. “I hope the Supreme Court or whoever it is that needs to rule on this decides quickly.”

Hession said the growth of prediction markets could ultimately encourage states to legalize iGaming as lawmakers seek to capture tax revenue migrating to unregulated products.

“As states start to see their revenue move to untaxed prediction markets, there will be pressure to legalize and tax it or allow casinos if they already have legalized sports betting,” he said.

He also highlighted expansion opportunities in online gaming, including Alberta’s planned launch of sports betting and online casino gaming in July, Maine's upcoming iGaming rollout with Caesars and DraftKings as license holders, and the inclusion of iGaming in Washington, D.C.’s 2027 budget plans.

Caesars remains focused on growth opportunities in the US and Canada rather than international expansion into markets such as Brazil.

“Our view is that where we can allocate our resources most effectively is here in the United States and Canada,” he said. “It would be a big distraction to go into another country.”

Commenting on criticism that Las Vegas has become too expensive for visitors, Hession said the city continues to reinvent itself through investments in sports and entertainment.

“I don’t think sports are fully played out, but the city will reinvent itself so it keeps entertaining and attracting people when it needs to,” he said.