Sports Betting Revenue Under Threat

States with legalized sports gambling, like New Hampshire, are facing a challenge from emerging prediction market platforms such as Kalshi and Polymarket. These platforms are attracting bettors and potentially diverting revenue away from state-regulated sportsbooks.

New Hampshire's Concerns

New Hampshire currently receives revenue from sports wagers placed through its partnership with DraftKings. Since legalizing sports wagering in 2019, following the Supreme Court’s decision, the state has collected over $170 million. State officials, however, are worried that bettors will shift to prediction markets, impacting these revenues.

Legislative Action Planned

Republican state representative, Lang, expressed concern about his own bracket predictions, stating, “I do have a bracket. It broke pretty hard.” He also plans to introduce legislation to allow New Hampshire to join other states in suing the prediction market companies. Lang argues these platforms are circumventing state gaming laws.

How Prediction Markets Differ

Prediction companies allow users to buy “yes” or “no” contracts on future events, including sports outcomes. They argue they operate as financial markets, not sportsbooks, and therefore aren’t subject to state taxes and regulations on sports betting. This allows them to avoid sharing proceeds with the states.

Legal Battles and Regulation

Kalshi is currently involved in 19 federal lawsuits. The company maintains it is already regulated by the federal Commodity Futures Trading Commission and that complying with 50 different state regulations is impractical. Courts have issued mixed rulings, creating uncertainty about the definition of sports gambling.

Differing Opinions

Michael McCann, director of the University of New Hampshire’s Sports and Entertainment Law Institute, notes the legal ambiguity: “Is sports betting and prediction market synonymous, or are they sufficiently distinct that there should be different treatment under the law? I mean, that’s an open-ended question.”

Support for Competition

Not all New Hampshire officials oppose prediction markets. John Stephen, a Republican member of the state contracts council, values the competition and entrepreneurial spirit these platforms represent: “Companies that are trying to make money, and this entrepreneurial spirit that we have in this country, I value that.”

No Comment from Platforms

Neither Kalshi nor Polymarket responded to requests for comment on this matter.