Licensed sportsbooks and fantasy operators were warned by the Arizona Department of Gaming that providing prediction markets could jeopardize their licenses. According to a recent letter, regulatory approval may be impacted by relationships with companies that sell event contracts, even those located outside of Arizona.
Offering prediction markets outside of Arizona might put sports betting and fantasy sports operators’ licenses at risk, the Arizona Department of Gaming (ADG) warned this week.
On Monday, licensed and registered operators received a letter with that warning, which InGame was able to secure. “If the Department believes that an entity related to a licensee is partnered with a company that is selling event contracts in a jurisdiction outside Arizona in violation of that jurisdiction’s laws, that might (depending on circumstances) impact a licensing decision,” stated Jackie Johnson, the ADG’s director, in the letter.
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Offering event contracts anywhere in the US might constitute a poison pill in Arizona, one of the biggest state-regulated sports betting markets in the US, according to the ADG’s statement.
In May, Kalshi, Robinhood, and Crypto.com received cease-and-desist letters from the ADG for providing sports betting without a license. Six additional states followed suit. To the best of InGame’s knowledge, no state or federal court cases pertaining to sports event trading have been filed in Arizona.
As a “tech provider” for Crypto.com, Underdog, a fantasy sports operator based in Arizona, has began offering sports event contracts in 16 states. Among them is Arizona.
There are currently no other regulated sports betting or fantasy sports operators operating with any sort of prediction market offering. FanDuel has revealed plans to run a financial markets-only prediction market in partnership with CME Group.
The Ohio Casino Control Commission’s August letter to sports betting businesses is comparable to the latest correspondence from the Arizona regulator.
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