The World Lottery Association (WLA) published a position paper over the weekend that categorizes sports-related contracts offered on prediction market apps as illegal sports betting. Along with labeling prediction exchange contracts as “bets,” (when they relate to sports events), the advocacy organization accused prediction markets of “deliberate regulatory arbitrage.”
“Forecasts suggest the sector could reach annual trading volumes of USD 1 trillion or more by 2030. This growth has been fueled by deliberate regulatory arbitrage,” states the WLA. “Prediction market operators describe their products using financial terminology, referring to wagers as ‘contracts’ and participants as ‘traders.’ This framing may contribute to positioning these products outside existing regulatory regimes applicable to lotteries and sports betting, including licensing, consumer protection, and sports integrity requirements.”
The group’s publication represents the latest legal and regulatory take on what has been a heated debate over how prediction market products should be categorized and licensed. Just last week, tempers flared on the ‘X’ social media platform when Kalshi head of enforcement Robert J. DeNault and DraftKings co-founder Matt Kalish exchanged barbs and defended their respective positions.
Although much of the WLA position paper focuses on European countries such as Spain, Belgium, and France (which have moved to outright ban prediction markets), the advocacy group points out the ongoing legal battle that has been brewing for over a year in the United States. The WLA view that prediction exchange “contracts” are solely a fancy term to describe sports betting is in line with recent opinions expressed by the American Gaming Association and US-based tribal governments.
State attorneys general have also gotten involved in the prediction market debate, penning a public comment letter to the CFTC that was signed by 41 top state-level prosecutors. Additionally, the state of Minnesota recently became the first US jurisdiction to criminalize prediction market operators, along with their collaborators, by passing an outright ban that goes into effect on August 1st.
The federal government has been equally as adamant that prediction markets that operate in the US, including but not limited to sports-related contracts, fall under the exclusive regulatory framework of the CFTC. The federal agency, chaired by Mike Selig, has filed suit against Arizona, Wisconsin, New York, Illinois, Connecticut, and now Minnesota to halt state-sponsored challenges to exchanges like Kalshi and Polymarket.
In a virtual guest appearance at the 2026 Bitcoin Conference in April, the US Department of Justice signaled an era of cooperation with digital asset innovators and prediction exchanges. The stance expressed by FBI Director Kash Patel and acting US Attorney General Todd Blanche is shared by the CFTC, which signed a data sharing agreement with the NHL to protect prediction market integrity on May 22nd of this year.
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