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A new study from the American Gaming Association (AGA) raises concerns regarding how well sports bettors understand the nature of sports event contracts.
According to a recent survey of 1,026 bettors, 78% of those who wager on sports contracts incorrectly believe state gaming regulators can intervene in disputes with prediction market platforms.
“This research reinforces why state- and tribal-regulated sportsbooks are critical, offering strong oversight and consumer protections that prediction markets simply do not match,” AGA CEO Bill Miller said in a statement.
Rise of sports event contracts raises questions
The study comes as sports event contracts grow at a rapid pace. These platforms allow users to wager on outcomes using contracts similar to those investors use for commodities.
Because these contracts are often available in states where traditional sports betting remains illegal, they offer individuals a wagering experience that is otherwise unavailable. Unlike traditional sportsbooks that utilize over-unders, moneylines, and parlays, prediction markets offer binary “yes” or “no” contracts. If the event occurs, “yes” contracts pay out; if not, “no” contracts are paid.
While they may feel like sportsbooks, event contracts are not covered by state regulations. Instead, they fall under the jurisdiction of the federal Commodity Futures Trading Commission (CFTC). Consequently, a bettor seeking assistance with a dispute must pursue a federal claim rather than contacting a state-level office.
Why 58% of contract users still call it gambling
Prediction market sites generally do not market themselves as gambling platforms. They argue that their model differs from traditional sportsbooks because customers bet against one another rather than against “the house.” Many also position themselves as investment platforms.
However, that branding has not changed public perception: 58% of event contract bettors believe what they are doing is gambling. While the platforms maintain that “wagers” are intrinsically different from sports betting, the majority of users view them through the lens of traditional gaming.
The responsible gaming gap
States that have legalized sports betting require specific, easily recognizable responsible gaming resources within apps and websites. Because sports event contracts do not operate under state laws, they are not held to these same standards.
The AGA study highlighted the following disparity in consumer experience:
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58% of sportsbook bettors say RG tools are easy to find.
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28% of prediction market bettors say the same.
“This research highlights a growing consumer protection gap,” the Jan. 30 AGA study concluded. “When sports betting is framed as investing, bettors are more likely to misunderstand risk, misuse funds intended for long-term financial goals, and assume protections that do not exist.”
