Prediction markets are rapidly attracting capital, users, and attention throughout the gaming industry. At the same time, they sit in an unusual place between financial markets, sports betting, and state and federal regulation.
Whether that position represents a breakthrough innovation or a regulatory collision course is still an open question.
That debate was the focus of a panel at last week’s NEXT Summit: New York titled “Prediction Markets & Investable Controversy: Opportunity or Overreach?” Moderated by Stephen Grambling, head of U.S. gaming, lodging and leisure research at Morgan Stanley, the session featured Dr. Laila Mintas, founder and CEO of 365Predictions, Alexander Kane, CEO of Sporttrade, and Joseph Brennan, co-founder of Prime Sports.
Listening to the discussion, it became clear that prediction markets are forcing the industry to rethink some long-held assumptions about how wagering products are regulated and delivered.
A different model
Dr. Laila Mintas framed the conversation by emphasizing that prediction markets should not be viewed as traditional sports betting.
“Sports event contracts are not betting,” Mintas said. “You trade them like a stock exchange.”
That distinction may sound subtle, but it changes the entire structure of how the market operates.
In a sportsbook model, the operator acts as the house and sets the odds. In a prediction market, participants trade contracts with one another based on probabilities. The platform facilitates the exchange, rather than taking the other side of the wager. Mintas argued that the structure aligns more closely with financial trading than gaming.
“You don’t bet against a house that always wins,” she said. “You trade on an exchange.”
That framework is one reason prediction markets have drawn interest from investors and trading platforms that traditionally sit outside the gaming industry.
The state vs. federal question
At the same time, the regulatory structure behind prediction markets creates tension within the existing sports betting ecosystem.
Legal sports betting in the United States operates almost entirely under state-by-state regulation. Each jurisdiction licenses operators, sets tax rates, and determines how sportsbooks can operate inside its borders. Prediction markets, on the other hand, operate under federal oversight through commodities regulators.
Mintas pointed out that this framework allows platforms to offer markets nationally rather than navigating dozens of state-licensing regimes.
For operators and investors looking at large markets that remain closed to sportsbooks, such as Texas and California, that difference is significant.
Liquidity and market structure
Alexander Kane, CEO of Sporttrade, focused on how prediction markets function from a market-mechanics perspective. His company operates an exchange-style sports betting model, which shares some similarities with prediction market structures.
Kane explained that the biggest difference between these platforms and traditional sportsbooks is liquidity. Prediction markets allow a wider group of participants to enter the system, including institutional traders and market makers that are common in financial markets.
“Prediction markets offer liquidity, institutional participation, and market making,” Kane said.
Those participants create a trading environment where prices move based on supply and demand rather than bookmaker odds.
Kane noted that many of these features do not exist within state-regulated sportsbook systems.
“Market making, APIs, and broker intermediation were never contemplated in state sports betting regulations,” he said.
That difference, he suggested, explains some of the friction between prediction platforms and the existing gaming framework.
A market still taking shape
The discussion also highlighted how quickly the category has grown. Prediction market platforms have expanded from niche products focused on political events or economic indicators into systems where sports contracts now represent a large share of trading volume. That shift has accelerated the conversation about how these platforms should be regulated and whether their growth could affect traditional sportsbooks.
Mintas believes the category could open new consumer segments. “This generation trades,” she said. “They already trade stocks, crypto, and other assets. Prediction markets fit naturally into that behavior.”
Kane agreed that consumer behavior is evolving quickly, particularly among younger audiences who are comfortable using trading platforms for entertainment and speculation.
A market under the microscope
For now, prediction markets remain a rapidly evolving experiment in the gaming and financial worlds.
They are attracting investment, new platforms, and growing user bases. At the same time, regulators and traditional operators are still determining how the category fits within the broader ecosystem.
As the panel discussion made clear, prediction markets have the potential to reshape parts of the industry. Whether they ultimately do will depend largely on how regulators decide to interpret the boundaries between financial trading and gaming.
For now, that line remains very much under debate.
