Prediction Markets in the US to Reach $1 Trillion Industry, Report Forecasts
Industry Growth Outlook by Eilers & Krejcik Gaming
A recent analysis by the California-based research and consulting firm Eilers & Krejcik Gaming anticipates that prediction markets could expand to become a $1 trillion industry in the United States. This optimistic forecast comes despite increasing regulatory scrutiny by various states targeting companies offering these services.
A Closer Look at Market Segments and Potential
The detailed report titled “U.S. Prediction Markets: How Big, How Fast, What’s Next?” suggests that prediction markets are poised to significantly influence both the betting and trading sectors. It envisions a future where the boundaries between these industries may blur, although the path forward involves considerable uncertainties and challenges.
According to the projections, sports-related prediction events are expected to generate around $435 billion. Financial and cryptocurrency prediction markets together could contribute approximately $310 billion, while news-centric markets might reach $160 billion. Other areas such as cultural topics are predicted to account for $40 billion, with various additional categories making up the remaining $55 billion.
This growth is partly driven by the introduction of contract types similar to parlay bets in traditional sportsbooks, which combine multiple individual wagers into one for higher potential payouts but also increased risk.
Regulatory Challenges and Industry Questions
Despite the positive financial outlook, several regulatory and strategic questions persist. One significant issue is whether online sportsbooks might transition into offering prediction markets, potentially lowering operating costs and diversifying their product offerings.
Factors influencing these decisions include current high state gaming tax rates, ambiguous gambling regulations, and potentially more relaxed oversight from federal agencies in place under recent administrations.
The report also highlights uncertainty about the revenue potential from non-sporting prediction markets. It emphasizes that a substantial contribution from these sectors is crucial for the overall growth and viability of prediction markets, indicating that further research is necessary to explore this area comprehensively.
Legal Environment and Ongoing Disputes
The evolution of prediction markets is also shaped by ongoing legal conflicts between companies and regulators. For instance, some states have intensified efforts to clamp down on sports-related prediction platforms, citing concerns over unlicensed wagering activities.
These regulatory battles underscore the complex landscape prediction markets must navigate as they strive for mainstream acceptance and expansion in the US market.
