Yet another US State is taking a closer look at event prediction operators and whether or not they are operating as unlicensed sportsbooks. Earlier this week the Michigan Gaming Control Board (MGCB) announced that it is investigating event prediction operators such as Kalshi and Robinhood to make a final determination on their place in the state’s gaming ecosystem.
The MGCB pulled no punches in a recent press release on the matter saying, The unlicensed platforms offer what they describe as innovative financial products that allow users to trade their predictions on the outcomes of sports events. By sidestepping the regulatory protections of Michigan’s legal sports betting market, these platforms pose a serious risk to consumers. They create potential confusion among bettors and blur the line between sports betting as entertainment and sports betting as a financial trading vehicle.”
Besides basically operating as unlicensed sportsbooks, Regulators are concerned that events prediction markets also sidestep efforts to prevent problem gambling. “By framing sports contracts as investment vehicles, these platforms risk confusing consumers and undermining the state’s commitment to responsible gaming. Moreover, many of these unlicensed platforms are often accessible to individuals as young as 18, in stark contrast to Michigan’s 21+ age requirement for legal sports betting,” the release noted.
Michigan is one of a growing number of states that are cracking down on the perceived effort by predictions market operators to do an end run around the tedious, but necessary, gaming license process. In New Jersey and Nevada courts have so far sided with Kalshi and let the operator continue offering sports-related contracts. It seems as though the issue will be contested multiple times and the final outcome is anyone’s guess.