Drawing the Line: MGCB Warns Sportsbooks Against Prediction Markets

By Matt Speakman,
Betting Expert at online-gambling.com

Matt Speakman Betting Expert at online-gambling.com

A die-hard fan of the Patriots, Matt Speakman is an expert on everything related to sports betting and DFS sites. Over the years, he has proven a valuable asset for our team at online-gambling.com. You can find Speakman's professional tips and tricks in any of his many articles on the website.

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Last updated: October 6, 2025

The MGCB is planning regulations for prediction markets

While prediction markets are becoming increasingly popular, the Michigan Gaming Control Board (MGCB) has warned sportsbook operators not to offer them. If states don’t comply, they risk losing their licenses. Check out our article to learn more about Michigan’s statement and the future of prediction markets.

Michigan’s Warning

On the 3rd of October, the MGCB sent a memo to all state sportsbooks, saying that their licenses are in danger if they engage with prediction markets. It claims that when evaluating a licensee’s eligibility, they will look into whether the operator offers prediction markets, including other jurisdictions where that’s illegal. Operators also cannot partner or associate with any prediction market entities.

The MGCB writes to make you aware that any involvement in the offering of sporting event contracts, directly or via an affiliate, key person, related business entity, or other association, will have implications relative to your licensure in Michigan.

Henry Williams, MGCB Executive Director

This memo is part of Michigan’s ongoing campaign to curb prediction markets in the country. In April, it launched investigations into prediction market platforms and found that many unlicensed ones were offering this product. The MGCB’s primary concern is that such platforms sidestep responsible gambling laws by framing sports betting as an investment vehicle and offering their services to people below 21.

Investigations in Other States

Michigan is the latest state to push back on prediction markets. Massachusetts is suing Kalshi for offering sportsbook prediction markets, with the state’s attorney general stating 75% of Kalshi’s profits come from sports markets. Meanwhile, states like Ohio and New Jersey have sent cease-and-desist letters to such operators.

This lawsuit will ensure that if Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a licence and follow our laws.

Andrea Campbell, Massachusetts Attorney General

Many states claim that prediction markets offering sports events offer sports betting while circumventing the relevant laws. Like Michigan, Ohio also sent a letter to sportsbooks in the state stating their licenses are threatened if they offer prediction markets. Meanwhile, states like Maryland and California are also suing platforms like Robinhood and Kalshi.

Prediction Markets Respond

The platforms have also retaliated with their own lawsuits. According to sites like Kalshi, they are regulated by the Commodity Futures Trading Commission at a federal level, so sports betting laws should not apply. That’s why many sites like Robinhood have launched lawsuits against state regulators, claiming their actions breach the Commodity Exchange Act.

Kalshi is regulated at the federal level by the Commodity Futures Trading Commission, and we will continue to operate under their jurisdiction.

Kalshi Spokesperson

Kalshi is currently engaged in various lawsuits across several states with varying success. In New Jersey, it received a preliminary injunction following its lawsuit that allows it to continue offering its services. At the same time, Maryland has withheld enforcing rules despite the court siding with the state. Kalshi continues to expand even as it faces more opposition.

Future of Prediction Markets

States have started cracking down on these sites because of their rapid expansion. Operators like FanDuel have partnered with CME Group to offer a standalone app for event contracts. Meanwhile, DraftKings has discussed a potential acquisition with Railbird Exchange, but will continue to monitor the situation with prediction markets before committing.

If we fail to rightly prioritize consumer protection or market stability on the road to capturing the benefits of innovation or growth, the results can be devastating.

Kristin Johnson ,former CFTC commissioner

As part of her farewell address, former CFTC commissioner Kristin Johnson warned that the CFTC needs to step up in its regulation of prediction markets. The commission has been chiefly hands-off regarding the expansion of prediction markets. Still, it must provide better consumer protection and market stability to avoid situations like the 2008 financial crisis, according to Johnson.

Conclusion

Prediction markets are becoming increasingly popular, and that necessitates stricter regulation. States like Michigan have started cracking down on these platforms, but the CFTC must address the issues.