Higher Roller Technologies is preparing to enter the crowed prediction market space next month, as CEO Seth Young sees a massive opportunity in a rapidly growing industry, but just don’t call it gambling.
“I think we are witnessing a generational shift in how wagering or trading activity is consumed,” said Young, who spent 20 years in the regulated gaming industry and is the former chief innovation officer with PointsBet.
“The market is massive,” he added. “The breadth of the markets that can be offered, which everyone knows here, is much greater than a regulated sports betting environment in the United States and in many cases outside the United States.”
That breadth has been demonstrated by the diversity of companies in the prediction market space, whether they’re crypto exchanges or social networks, or Wager Wire, High Roller or even vertically integrated iGaming companies.
“Everybody has a different audience but still prediction markets manage to fit. Whether it’s the primary initiative or an amenity, or tab on the page,” Young said Tuesday during a discussion on the future of gaming innovation at Predict 2026 in New York.
Young was joined on the panel by Travis Geiger, co-founder of Wager Wire, and Dan Wallach, a gaming and sports betting attorney. Dustin Gouker, founder of Event Horizon, moderated the 40-minute discussion.
Young said when he looks at this industry the sees the direct strategic implications for a company are such that they have an “incredible opportunity” to gain scale of audience, especially in the United States, “with a interesting regulatory environment.”
“You also have the really interesting indirect implications to the extent the controversial part of the market (sports event contracts) ends up going to the U.S. Supreme Court … was found to be averse to state interests,” Young said.
Even so, Young stressed, companies still have a tremendous opportunity to introduce other products to the consumer base that has been built.
He cited a Macquarie Group report that forecasted taker volume at $1.5 billion and industry revenue opportunity at $50 billion, meaning even a 2% share of that market could translate into a $1 billion top-line business.
“I think we’ve seen this movie before with daily fantasy sports (DFS) back in 2012,” he said. “The second iteration of DFS for groups like Prospects and Underdog … all in the prediction market space today.”
Geiger said what’s different from prediction markets was all the “buzz” around sportsbooks, noting the failure of ESPN, Sports Illustrated, SuperBook, WynnBet, and others since the Professional and Amateur Sports Protection Act (PASPA) was struck down by the Supreme Court in 2018.
“I could go on because they didn’t feel like they had to innovate,” Geiger said. “In fact, there was an innovation bottleneck. I think one of the really cool things, prediction markets … are doing (is) creating an open build environment, but also, we are not in the same adversarial bracket, a few versus the house that sportsbooks are in.”
Geiger warned that prediction markets have to be thoughtful of and avoid over advertising, trying to over induce consumers, and then create a you-versus-the-house mentality.
“It’s a popular product that meets a moment when people are kind of cynical and it’s entertainment more than it is gambling,” Geiger said. “It’s the confluence of culture and technology.”
Young was quick to respond, reminding Geiger that sports event contracts are “not gambling at all; it’s a financial product, regulated.”
“Well in Europe, it’s gambling,” Geiger said.
Wallach said you can’t even talk about the future of interactive gaming until there is legal clarity. He expected the issue of sports event contracts and the future of prediction markets to be determined by what happens with these court cases, which likely will land in the Supreme Court within the next year.
“There is a framing disconnect for many in this room,” Wallach told attendees. “Is this a swap or trading on designated contract markets (DCMs) and it’s a derivative. But a majority of courts, and many people in the regulated gaming industry are pushing back.”
And an increasing majority, Wallach said, are viewing this as sports betting.
“This is where the debate is sort of going to coalesce. Is it sports gambling, or is it a derivative?” Wallach said. “The Supreme Court will likely answer that question.”
Thirty-eight out of 44 judicial decisions, which have largely addressed that question, have sided with states and tribes on that answer – it’s sports betting that should be regulated under state or tribal gaming regulations.
Wallach said there is something to be said about the majority of federal courts around the country, viewing this through the wrapper of sports betting, but we need to see where this sits before we can sport of hypothesize what the future may look like.
“It’s an uncertain legal terrain but certainly has gone not as well for the prediction markets as some of the early cases would have suggested,” Wallach said. “The vast majority of recent decisions have gone the state’s way.
“So, I think we’re dealing with an unknown future until that question gets settled,” he said.
