Enough Room For Everyone
Is there enough space and differentiation for prediction markets and sportsbooks to coexist, or will operators gravitate toward one or the other.
The Bulletin Board
THE LEDE: Can sportsbooks and prediction markets coexist.
BEYOND the HEADLINE: AGA and PM Trade Group continue to spar.
NEWS: Can Illinois’ budget deficit lead to online casinos?
NEWS: SBA publishes a ‘benefits of legalization’ op-ed in the Boston Globe.
AROUND the WATERCOOLER: Kalshi eliminates badges on X.
STRAY THOUGHTS: Know your why.
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The Lede: Can Sportsbooks And Prediction Markets Coexist?
Move aside online casino vs. land-based casinos, we have a new cannibalization question to answer: Do prediction markets cannibalize traditional sportsbooks?
Prediction markets (and traditional sportsbooks involved in prediction markets) say no.
In his Las Vegas Review-Journal op-ed, Coalition for Prediction Markets Chairman Sean Patrick Maloney threw cold water on the cannibalization argument not once, but twice:
“Prediction markets won’t hurt casinos or traditional gambling.”
“There is no evidence that prediction markets pose an existential threat to state budgets or casinos. Their model is different. This is more about regulatory capture than protecting consumers. If the recent year has shown us anything, it’s that the emergence of prediction markets is not a zero-sum game. They can exist alongside casinos. Gaming profits will continue. Consumers and state economies won’t be casualties. People want — and should — have safe, fair and open access to these markets.”
And during the company’s earnings call, DraftKings CEO Jason Robins said, “To date, we are not seeing a discernible impact from predictions on our revenue.” Of course, Robins went on to call prediction markets “the most exciting new growth opportunity we have seen since PASPA struck down in 2018.”
The gambling industry hasn’t officially said it does (the AGA has been tracking lost revenue to states), but its opposition to prediction markets unofficially makes the case for cannibalization, even if their comments claim otherwise, like Caesars CEO Tom Reeg, who said, “Notwithstanding, our handle grew in the fourth quarter, and continues to grow. We’re not seeing any impact that we can see in our regulated markets as we operate today.”
I would stress Reeg’s final word: Today.
As I noted when I discussed online cannibalization:
“I was always in the, ‘yes there is cannibalization, but it’s trivial and the door swings both ways’ camp, but it’s clear that perspective is not as airtight as it was made out to be. New data means readjusting those beliefs.
“A lot of analysts, myself included, spent years arguing (to varying degrees) that online gambling isn’t/doesn’t cannibalize land-based casino revenue: The customers are different! Look at the revenue reports!
“… As such, I’m not even close to looking at sports betting and prediction markets growing in unison and opining that prediction markets (as currently deployed) and traditional sportsbooks can coexist without one harming the other.”
As I said in the column, cannibalization takes time:
“If we use the term demand shift (which is what cannibalization is in the gambling world), slow-burn cannibalization makes far more sense, as shifting consumer behaviors doesn’t happen overnight. Adoption of new products or delivery channels takes time… Amazon didn’t kill bookstores in a year, but over a decade, consumer preferences tilted toward online convenience, leading to widespread closures.”
“Is there seepage from land-based gambling to online? I think it would be difficult to argue there isn’t… Instead of asking how long we can preserve the current ecosystem and delay the inevitable, they should ask where they fit in. How can my organization mitigate or embrace online gambling to future-proof our business and bring in younger customers?
Coexistence
Still, cannibalization or no cannibalization, the question is: Can the two coexist?
Streaming services like Netflix and Cable TV peacefully coexisted for years, but it’s clear now that people are shifting largely in one direction. As I previously noted: “Cable subscriptions plummeting from over 100 million U.S. households in 2010 to under 50 million by 2025. In gambling, we’ve seen similar patterns, even if total industry revenues mask the transition for a while.”
Still, land-based casinos are not Blockbuster, and the traditional gambling industry would be fine with one of two outcomes when it comes to prediction markets:
A ban on sports contracts at prediction markets, not, as prediction markets claim, a blanket prohibition on prediction markets.
An equal playing field where prediction markets adhere to the same licensing, taxation, and regulatory burdens as sportsbooks.
Like legalization bringing in new cohorts of bettors, I can see prediction markets having the same effect. That said, nobody is arguing that the legal industry is entirely new bettors, there is plenty of movement from gray and black markets to the legal, regulated market.
The issue is, if prediction markets cannibalize traditional sportsbooks, the argument that online casino doesn’t cannibalize land-based gaming starts to sound more far-fetched.
Beyond the Headline: AGA Fires Back at Prediction Market Claims
A week after former State Rep. Sean Patrick Maloney penned an op-ed in the Las Vegas Review-Journal, Bill Miller, the President and CEO of the American Gaming Association issued a response in the same paper.
Miller calls prediction markets nothing more than unregulated sports betting under the label of “event contracts” or “trading,” and blasted them for deliberately attempting to bypass state and tribal regulations.
“Rebranding sports betting as ‘trading’ does not change the product. It ignores the voice of voters and elected leaders who deliberately created a state- and tribal-regulated system to oversee gambling.”
The AGA’s position is that the playing field needs to be level and if these platforms want to offer sports contracts, they must comply with the same licensing, taxes, and rules as licensed sportsbooks.
“When a platform allows consumers to bet on the outcome of sporting events, it is sports betting and must follow the same rules, standards and consumer protections that apply in Nevada and other jurisdictions across America that have authorized regulated gaming.”
Miller was also a guest on the Straight to the Point podcast last week, where we discussed prediction markets at length:
Bonus Episode: Prediction Markets and the Gaming Industry's Resiliency with Bill Miller
“A bunch of hoodie-wearing crypto bros who believe that somehow or another they’re going to use a loophole in this Commodity Exchange Act, which was designed to hedge crop futures and price of cereal in order to establish the CFTC as the chief federal regulator of gambling.”
News: Illinois Is Facing a Massive Budget Deficit
Illinois Gov. J.B. Pritzker revealed his $56 billion budget, which includes one gambling-related item: a tax increase on land-based casino table games (currently 15%-20% based on revenue) to match the state’s graduated tax on slot machines (15%-50%).
As reported by local press, Illinois is staring down a budget deficit of somewhere between $2 billion and $4 billion:
“The governor’s office had projected a $2.2 billion budget shortfall in October. It now estimates $399 million in lost revenue next year due to congressional Republicans’ funding cuts for many social services and other federal programs, and the state assumes about $100 million in new administrative costs for food assistance and Medicaid programs.
“Meanwhile, the state is fighting in court to retain about $1 billion in various federal grants, all of which is included in the proposed budget as credit analysts predict a rocky year for the Illinois economy.”
The tax increase on table games is projected to bring in $120 million, but the state has already pumped the gambling well several times in the last two years. Recall that Illinois hammered online sportsbooks in 2024 with a huge tax increase (shifting from a flat 15% rate to graduated rate that caps off at 40%), and again in 2025, when it added a per-wager fee to mobile bets. Chicago also added a 10.25% tax on sports bets within the city in 2025 — a bill has been introduced in Springfield to prevent the city tax.
Another possibility is online casino legalization. State Rep. Edgar González, Jr. (SB 3723) and State Sen. Ram Villivalam (HB 4797) have introduced legislation in 2026 that would tether online licenses to land-based casinos and racinos, with each licensee capable of launching up to three online skins.
Still, as STTP has noted on numerous occasions, the VGT industry needs to have a change of heart before online casinos are even a possibility. As STTP reported in January, the team at Citizens met with Accel Entertainment where it was told by Accel management that “there is no shot” of iGaming legalization in the state.”
There will also be fights among stakeholders, as the entry of DraftKings and FanDuel into prediction markets has splintered the industry into two camps: the American Gaming Association and the Sports Betting Alliance — there are already glimpses of the return of bad actor debates.
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News: SBA President Pens Op-Ed in Boston Globe
The Sports Betting Alliance’s Joe Maloney took to the pages of the Boston Globe this weekend to make the case for online sports betting regulation:
“Legal online sports wagering is now available in more than 30 states because policy makers overwhelmingly recognized the simple truth that prohibition at the federal level didn’t stop betting. It pushed the activity offshore, where there are no age checks, no spending limits, no consumer protections, and no ability for regulators or law enforcement to see what was happening. Legalization and regulation have, so far, been the most powerful disinfectant to wipe away the black market in the United States.”
The arguments the SBA makes are well-known to newsletter subscribers, but the reason this is newsletter-worthy is two-fold.
First, the Boston Globe, the paper of record in Massachusetts, a state with legal sports betting, makes it an interesting choice — these op-eds are usually sent to battleground states, where they can perhaps change the mind of a lawmaker or two. Yes, Massachusetts has online casino bills, as well as a bill looking to raise the sports betting tax rate and impose additional restrictions, but it’s hardly a battleground.
Of course, Massachusetts is the home base of DraftKings, one of the major funders of the Sports Betting Alliance, and recently published an anti-legalization commentary: The addictive danger of sports betting.
Second, as I always say, go to the comment section. The responses to these op-eds are a good indication of where the voters are on these issues. For anyone unable to get behind the paywall, of the 74 comments on Sunday, I saw zero supporting the SBA opinion.
Around the Watercooler
Social media conversations, rumors, and gossip.
The era of the modestly paid influencer (as little as $15 per tweet by some accounts) appears to be over — Prediction .
A Kalshi spokesperson confirmed the removal of badges to Front Office Sports, “We’ve decided to remove Kalshi badges. People loved the badges and it was a fun way to engage the community, but it became too difficult to police, and people often confused badged accounts with Kalshi-endorsed messages. We’ll figure out other ways to make things fun for our traders.”
The story began when X’s Head of Product, Nikita Bier began threatening suspensions last week for undisclosed Kalshi ads, which coincided with an updated X policy (STTP touched on that change in yesterday’s newsletter) restricting gambling from influencer and paid partnerships:
As Bier said on Sunday:
Polymarket badges are still on X, but maybe not for long, given this tweet from Bier:
Stray Thoughts
I try to put every drill into context at my martial arts school. This drill is for self-protection; this drill is for sparring another martial artist; this drill is for fun. I still do all of them, but context matters — what Iain Abernethy calls the Martial Map.
For instance, you’re not going to go for an anaconda choke off a snap down in a self-defense situation (if it is crossing your mind, DON’T DO IT), but you can in the dojo with a training partner, where the floor is soft and there’s no risk of a second person coming in and stomping on you.
Here’s an example of this from Abernethy (posted on social media) on the different types of skiing competitions that exist:
“Watched a little bit of the Aerials in the Winter Olympics. If you consider that the original point of skiing was to get from A to B across snow, then there are some parallels with martial arts.
“Originally, martial arts were about self-defense or battlefield victory (depending on the system), but we now have numerous sporting, athletic, and aesthetic offshoots. While some - including my younger self - would dismiss these offshoots as pointless aberrations, they gain value simply because people give them value.
“Acrobatically spinning through the air on skis, is far removed from the original purpose of skiing, but there’s no doubting the skill and dedication of those who do it. Furthermore, when we collectively give something value, then it has value.
“Perhaps, where things differ is Aerial competitors don’t try to tenuously link what they do to travel through snow covered lands. Similarly, I can’t imagine those skiing cross country decrying Aerial competitors as being “deluded” or “impractical”.
“Knowing what you do, why you do it, how you should specifically train for it, and accepting the value given by those who practice what they do, even when it’s not your thing or not inline with your personal goals, seems healthy and should be encouraged. It avoids so many issues, keeps training and teaching focused, and makes things more fun.”
And for anyone interested in understanding the concept more fully in martial arts terms: