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Prediction markets can offer sports-betting-like markets in Florida without state-by-state approval because they operate under federal CFTC regulation, according to an analysis in Joe Pompliano’s Huddle Up newsletter.
Pompliano writes that prediction markets are available in California, Texas and Florida, where sports betting is not broadly available. He says about 100 million people live in those three states combined.
Federal oversight instead of state approval
The newsletter says prediction markets have chosen to operate under Commodity Futures Trading Commission (CFTC) regulation rather than seek approval from individual states. Sports betting is currently available to only about 50% of US residents, Pompliano writes.
He describes the arrangement as a regulatory loophole that gives prediction markets a large addressable-market advantage over traditional sportsbooks.
The sportsbook incumbents’ lead
FanDuel and DraftKings gained an early lead after the federal sports betting ban, PASPA, was repealed in 2018, according to Huddle Up. The newsletter says the two companies spend billions of dollars on advertising each year and dominate the market.
No other sports betting company has reached 10% market share, it says, despite dozens of well-funded competitors. Underdog, PrizePicks and Sleeper have built large businesses by offering innovative fantasy products.
What Pompliano says prediction markets could do
Pompliano writes that prediction markets could raise billions of dollars from venture capitalists, spend heavily on customer acquisition and hire hundreds of employees. He adds that they could donate to political parties and align their marketing with sports leagues, teams and media outlets such as CNBC and CNN.
The newsletter frames the regulatory advantage as dependent on a loophole and vulnerable to changes by a new administration.
If you or someone you know has a gambling problem, call Florida’s problem gambling helpline at 1-833-PLAYWISE (1-833-752-9947).
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Source: As reported by huddleup.substack.com.
