New York Attorney General Issues Warning on Risks of Prediction Market Betting
New York Attorney General Alerts Public About Prediction Market Risks
New York Attorney General Letitia James has issued a warning to the public regarding the increasing popularity of online prediction markets, especially with the approach of the Super Bowl weekend. She advises caution as these platforms attract more users during major events.
Concerns Over Lack of Consumer Protections in Prediction Markets
On Monday, Attorney General James released a consumer alert emphasizing that many prediction market operators are not abiding by New York’s established gambling regulations. These platforms allow users to trade contracts based on outcomes of various events, such as sports matches, political elections, or even commercials aired during the Super Bowl. However, unlike licensed sportsbooks, these services do not implement the necessary safety protocols to protect players.
The alert highlights that the New York State Gaming Commission does not regulate prediction markets, meaning they operate without consumer safeguards. Essential protections like measures to prevent underage gambling, assistance for those with gambling problems, restrictions on misleading advertising, and options for self-exclusion are notably absent from these platforms.
Attorney General James also cautioned that operating or promoting unlicensed sports betting within New York could violate state laws, potentially resulting in civil or criminal repercussions. Her office pointed out that while some prediction markets present themselves as financial tools for forecasting outcomes, many function similarly to unregulated gambling websites.
States Respond to Growth of Prediction Markets Ahead of the Super Bowl
This alert comes at a time when billions of dollars are expected to circulate in Super Bowl LX betting markets. Platforms such as Kalshi and Polymarket have attracted attention by providing betting options that extend beyond game results to include details like halftime performances and advertising companies.
Advocates for these platforms maintain that they fall under the oversight of the Commodity Futures Trading Commission, which regulates them more like financial markets rather than traditional gambling establishments. Kalshi has publicly supported strong consumer protections and noted federal regulations that prohibit insider trading and encourage responsible betting behaviors.
Nonetheless, James’s office has highlighted increasing financial risks associated with the sector. Recent financial studies link these prediction markets to higher borrowing and default rates, suggesting some users might be wagering beyond their financial capacity.
The attorney general urges New Yorkers to verify whether any prediction market they consider using holds a valid state license and advises against betting money they cannot afford to lose. She further cautions that online betting can blur the lines between entertainment and financial risk.
Legal Actions and Support for Problem Gamblers
Apart from New York, several other states have pursued legal actions against prediction market operators. Massachusetts secured a temporary court order requiring Kalshi to limit its offerings within the state. Similarly, regulatory authorities in Nevada, Ohio, and New Jersey have challenged Kalshi’s business practices.
For individuals facing gambling difficulties, the attorney general’s office recommends resources such as the New York Council on Problem Gambling and its 24-hour helpline. As excitement for the Super Bowl builds, state officials emphasize that not all betting platforms provide safe environments, urging bettors to exercise caution when placing wagers.
