The Massachusetts Gaming Commission (MGC) is the latest regulator to warn licensed operators about offering sports event contracts and partnering with prediction markets.
On Thursday, the MGC sent a notice to all sports wagering licensees to emphasize that they are “prohibited from offering sports-related event contracts in Massachusetts, directly or via an affiliate, related business entity, or other association.”
The regulator sent the letter to licensees as FanDuel and DraftKings prepare to offer event contracts in select markets.
MGC watching what licensees do elsewhere
DraftKings and FanDuel plan to offer sports contracts in states that do not offer legal online sports betting, which does not include Massachusetts. The two operators have run sportsbooks in the Bay State since it opened as a regulated online sports betting market in March 2023.
The MGC intends to sanction not only operators that plan to offer sports event contracts in Massachusetts themselves but also those that direct residents to prediction market platforms that offer sports event contracts in the state. The regulator will explore potential license revocation for operators that fail to adhere to its rules.
“Please accept this letter as notice that you are prohibited from offering sports-related event contracts in Massachusetts, directly or via an affiliate, related business entity, or other association, or directing patrons to such event contracts being offered in Massachusetts,” said the commission.”
The MGC also cautioned that it will be taking note of whether gaming regulators in other states take action against sportsbooks’ licenses due to participation in the prediction market space. “Such action may inform decisions related to your suitability in Massachusetts,” added Executive Director Dean Serpa.
The regulator asked all licensees to please provide a written response within 10 business days identifying “the steps you will take to ensure compliance with this notice.”
Court proceedings in MA sparked by prediction markets
In September, Massachusetts Attorney General Andrea Joy Campbell challenged the legality of Kalshi and other prediction markets by filing a suit in Suffolk Superior Court.
Campbell alleges that Kalshi offers illegal sports betting in Massachusetts by not obtaining a license and following gaming rules in the state. Kalshi attempted to move the suit to the federal level, but a judge denied the company’s request. Kalshi attempted to move the case to federal court as it is suing a group of regulators in other U.S. markets for sending cease and desist orders. The orders were sent to Kalshi for offering sports event contracts.
A hearing on Massachusetts’ emergency motion for a preliminary injunction against Kalshi is scheduled for Tuesday, Nov. 18.
Robinhood is also facing pushback in Massachusetts. The fintech company was subpoenaed by Massachusetts Secretary of State Bill Galvin in March. His office sought details on the popularity of trading for college sports contracts.
In September, Robinhood sued the MGC in federal court, seeking an injunction to prevent the shuttering of its sports event contracts in Massachusetts as prediction markets and event contracts are regulated by the Commodity Futures Trading Commission. The suit references Campbell’s lawsuit against Kalshi as Robinhood partners with the platform.
