As hoops betting spikes, it’s states vs. prediction markets : NPR

The state of New Hampshire receives revenue from sports betting made with DraftKings, but officials worry people will turn to new prediction market platforms.

Zoey Knox/NHPR

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Zoey Knox/NHPR

Two things are making New Hampshire State Senator Tim Lang feel down.

“I have a bracket. It broke pretty hard,” Lang, a Republican, says of the dismal state of his NCAA men’s basketball tournament predictions.

He also says he’s concerned about the state’s revenue outlook. New Hampshire legalized sports betting in 2019, a year after the U.S. Supreme Court cleared the way for states to legalize and regulate sports betting. Since then, the state has raised more than $170 million through a partnership with betting company DraftKings. Lots of money in a small state.

The rise of Kalshi and Polymarket – major players in the fast-growing world of prediction markets – could reduce that revenue, Lang fears. He says he plans to introduce legislation as soon as this week that would allow New Hampshire to join U.S. states in suing prediction market companies.

“We have a revenue model for our sports betting that allows us to fund education and other public services that Kalshi completely circumvents by circumventing our gaming laws,” he says. “They should not be able to circumvent our state’s laws.”

States sue to regulate prediction markets

Prediction companies allow their clients to buy “yes” or “no” futures contracts on the outcomes of world events, elections and, crucially for states, sports. Because the companies say they operate as a financial marketplace and not a sports betting site, states receive no share of the revenue.

States like Connecticut, Michigan and Washington are in legal battles with prediction market companies. Arizona went so far as to charge Kalshi in criminal court for offering illegal sports betting.

Kalsi and Polymarket did not respond to a request for comment for this story. In its legal filings, Kalshi argued that it was already regulated by the federal Commodity Futures Trading Commission and that it was not possible to operate in 50 different ways to appease 50 different states. So far, the Trump administration supports this view.

So far, the courts have issued mixed decisions, leaving a complicated situation on the ground, particularly when it comes to what is considered sports gambling.

The law is not yet settled

“Are the sports betting market and predictions synonymous, or are they distinct enough that there is different treatment under the law? I mean, it’s an open question,” says Michael McCann, director of the Institute of Sports and Entertainment Law at the University of New Hampshire.

Even with the prospect of lost revenue for the state, not everyone in New Hampshire is eager to crack down on prediction markets. John Stephen, an elected Republican member of the board that oversees state contracts, likes the competition that prediction markets bring.

“Businesses trying to make money and that entrepreneurial spirit that we have in this country, I appreciate that,” he says.

Todd Bookman is a general assignment reporter for New Hampshire Public Radio.