DraftKings & FanDuel Exit AGA Due to Prediction Market Ambitions

The two mobile sports betting leaders in the U.S. have both renounced their membership in the American Gaming Association, as the trade group’s mission statement does not align with their ambitions to enter the sports event prediction markets.

Difference of Opinion

The American Gaming Association (AGA) wants prediction market platforms to fall under the same guidelines as mobile sports betting sites, but those firms that offer sports event contracts, like Kalshi and Polymarket, have waged legal warfare with state gaming regulators.

They have refused to operate under the auspices of the states, instead arguing they are regulated at the federal level by the Commodity Futures Trading Commission (CFTC).

The financial exchange and prediction market companies have successfully scored early legal victories after being beset by cease-and-desist orders from state regulatory agencies. As of this writing, Kalshi and firms like it are continuing to operate in all 50 states, including those that do not offer legalized sports betting.

However, the landscape is evolving with sports betting industry powerhouses DraftKings and FanDuel both announcing their intentions to offer sports event contracts, which flies in the face of the AGA’s dictate that they should be governed and regulated at the state level.

“In discussion with DraftKings and FanDuel, the AGA has accepted their request to relinquish their membership, effective immediately,” an AGA spokesperson said. “We wish them the best, and we expect to maintain close ties in our mission to promote and protect legal, regulated gaming.”

Although the dynamic duo of the mobile sports betting world will no longer fly their banners on the AGA’s site, both will continue to be members in good standing with the Sports Betting Alliance, a sports betting industry lobbying group that also includes AGA members, bet365, BetMGM, and Fanatics.

DraftKings & FanDuel Poised to Launch

Both DraftKings and FanDuel have made it clear that when they begin expanding into the sports event contract trading market, they will not do so in states that have legalized sports betting. In short, neither wants to bite the hand that feeds them.

However, the two biggest markets, California and Texas, will be fair game, as neither has legalized sports betting despite both being among the most populous states in the nation.

Those markets have been the holy grail for sports betting operators, and through the prediction markets, DraftKings and FanDuel will get the opportunity to explore both through contract trading and not a traditional sports betting platform.

DraftKings Predictions and FanDuel Predict will be the two new entities in the sports event contract trading market. Both are expected to launch within the next few months, but they have been careful not to sever relationships with their state regulatory partners.

Moreover, the looming launches could expedite sports betting in areas that are in the process of considering legalizing it, as Flutter CEO Peter Jackson pointed out. Should it be passed in the legislatures, DraftKings and FanDuel would not launch their prediction market platforms in those states.