As prediction market proponents seek out innovative ways that small businesses can use exchanges to hedge against economic catastrophe, the US Open men’s singles tournament has become the focus of online gaming attorney Peter Hammon.
Hammon, who shared his thoughts via a LinkedIn post on Monday, believes the current “participation” markets surrounding men’s tennis stars Jannik Sinner and Carlos Alcaraz represent a vital tool that third parties can use to hedge against unexpected outcomes that could severely impact their firms’ bottom lines.
As of early Tuesday morning, it is already known that Sinner officially withdrew from US Open contention over the weekend. Carlos Alcaraz has tentatively confirmed he will play in both the men’s singles and mixed doubles tournaments in New York City.
According to Hammon, who is a UCLA School of Law graduate, player injuries are “a genuine economic risk for the ticket resale market, corporate sponsors, and media rights holders, since these two are the biggest draws in men’s tennis.”
Hammon also points out that businesses would be unable to secure an equivalent hedge by using traditional sportsbooks.
“There is no practical way to hedge this risk on sportsbooks. State gaming laws don’t allow this type of wager and even if it was allowed, it would be almost impossible for sportsbooks to manage the risk as the sole counter-party.”
According to Hammon, multiple tennis media outlets are actively citing participation-based prediction markets in their preliminary coverage leading up to the 2026 US Open. “Every tennis podcast I listen to has mentioned these markets in passing over the last few weeks,” stated Hammon at the end of his LinkedIn post.
Industry observers who may oppose Hammon’s take on the value of sports participation markets may begin by pointing out how they are uniquely susceptible to manipulation and insider trading activity. The examples used would likely revolve around past scandals involving sports prop bets, which prediction market advocates believe are very different from the sports contracts that exchanges offer. Yet the potential for insider activity exists for both services.
In 2024, former Toronto Raptors center Jontay Porter pleaded guilty to conspiracy to commit wire fraud after authorities criminally charged him with faking injuries to profit from sports prop bets that were directly linked to his statistical performance for individual games. Porter received a lifetime ban from the NBA and is currently awaiting sentencing.
Last year, the FBI arrested NBA veteran Terry Rozier, accusing him of faking an injury to likewise impact statistical prop bet outcomes for his on-court performance while he played with the Charlotte Hornets. However, Rozier has outright denied the accusations and is presumed innocent at this time.
Whether sportsbook prop bets and prediction market participation contracts will remain in two distinct regulatory categories once the corresponding legal battles reach the Supreme Court remains to be seen. And while participation markets do lend themselves to the possibility of small business hedging, they may be just as fickle as sports prop bets due to their outcome relying exclusively on decisions made by a lone individual.
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