Licensed gaming operators active in Michigan may have a big decision to make if they’re considering stepping into the world of prediction markets. Or, in the case of some, if they have begun that process already.
Michigan Gaming Control Board (MGCB) Executive Director Henry Williams sent a notice to all licensed casino operators and suppliers, iGaming operators and suppliers, sports betting operators and suppliers and fantasy operators on Thursday, Oct. 3, to warn them about any thoughts of exploring offering sporting event contracts.
Williams emphasized that partaking in the kind of sports contracts offered by the likes of Kalshi and Crypto.com would contravene state gambling law. The MGCB chief also seemed to suggest that companies could risk losing their license.
“The MGCB writes to make you aware that any involvement in the offering of sporting event contracts, directly or via an affiliate, key person, related business entity or other association, will have implications relative to your licensure in Michigan,” Williams wrote.
Outside Michigan won’t fly, either
Notably, Williams stressed that this applies to licensees’ activities both inside and outside Michigan.
“As the MGCB fulfills its statutory duty to monitor and evaluate each licensee’s continued suitability for licensure, it will consider whether the licensee and its affiliates, key persons, related business entities, and any other associates are involved in the offering of sporting event contracts in Michigan and other jurisdictions,” he wrote.
Conduct that would be taken into account includes directly or indirectly offering or facilitating access to sports event contracts or partnering with companies that do so. Williams added that it is incumbent upon gaming license holders and applicants to establish and maintain good conduct and suitable operations, integrity and reputation.
Some licensees have taken steps
Three gaming operators that do approved business in Michigan have already taken some kind of firm step towards potentially offering sports contracts.
Underdog is already doing so in some states through a deal with predictions platform Crypto.com, FanDuel is set to launch a FanDuel Markets platform with trading exchange CME Group and PrizePicks has secured approval from the National Futures Association (NFA) to operate as a Futures Commission Merchant, an entity like Robinhood which works with a Designated Contract Market like CME Group or Crypto to faciliate contract markets.
Underdog and PrizePicks offer fantasy contests in Michigan, while FanDuel runs both online sports betting and online casino in the state. In light of Michigan’s correspondence, SBC Americas reached out to all of Underdog, FanDuel and PrizePicks for comment.
Other Michigan licensees including DraftKings and Fanatics have filed for approval with the NFA.
States of the union
Michigan is, at minimum, the third state that has issued similar sentiments on prediction markets.
The Ohio Casino Control Commission (OCCC) sent a letter to licensees in late August intimating that sports contracts equate to unapproved sports betting and that participating sportsbooks could risk losing their OCCC license.
And the Arizona Department of Gaming (ADG) issued a similar warning to licensed operators in September. Like Michigan’s memo, ADG Director Jackie Johnson stressed that licensees would be scrutinized for involvement with prediction markets outside state borders.
Michigan is the first state that allows licensees to offer iGaming as well as sports betting to send such a notice. The MGCB previously announced in spring that it was beginning a formal investigation into prediction markets and their sports event contracts.
