The Massachusetts Gaming Commission has formally informed its sports betting licensees that sports event prediction contracts are strictly prohibited within the state. The communication comes amid growing industry interest in prediction market models, particularly by leading operators such as FanDuel and DraftKings. Both companies have recently unveiled strategic moves into this space through partnerships with CME Group and the acquisition of Railbird.
According to the Commission’s letter, any attempt to offer sports prediction contracts to residents may trigger significant consequences, including potential licence revocation. The regulator also noted that enforcement actions taken by authorities in other jurisdictions could influence future suitability determinations in Massachusetts. This marks one of the strongest positions taken by a state regulator regarding prediction market operations and underscores rising scrutiny in the United States.
The warning follows recent developments in Nevada, where FanDuel exited the market and DraftKings withdrew a licensing application, reportedly after concerns were raised about prediction market involvement. Market reactions were swift, with Flutter’s stock declining by more than 16% and DraftKings falling nearly 6% as investors reassessed regulatory and operational risks.
Analysts, however, argue that the market response may be overstated. They contend that prediction market products are unlikely to compete directly with traditional sportsbook offerings due to limited parlay and in-play capabilities. Nonetheless, the regulatory environment remains fluid as operators consider expansion strategies in pre-regulation states where prediction markets may offer new opportunities.
Massachusetts has given all operators 10 working days to confirm how they intend to comply with the directive, setting the stage for further dialogue between regulators and the industry.
