How prediction markets work, explained for the gambling industry rather than for traders. The course covers what an event contract is and why its price is a probability, how an exchange forms prices and earns fees without a house margin, the legal argument between federal derivatives law and state gambling law that is deciding who may offer contracts on sport, the integrity risks of resolution, manipulation and insider trading, a side-by-side comparison with a licensed sportsbook on price, limits, age, geography, tax and consumer protection, the distribution layer of brokerages, sportsbooks, leagues and media that carried the product to scale, and a decision framework for operators, exchanges, suppliers, regulators and investors.
Written for sportsbook and casino operators deciding whether to own, partner or abstain, for suppliers and affiliates whose licences are exposed by the answer, for regulators deciding what to protect, and for anyone who needs to explain the product to a board. It assumes you know how a sportsbook prices and settles.
The through-line is a question the course keeps open: is an event contract on a game a bet? The exchanges say no and hold a federal designation; the states say yes and hold the definition of gambling. The course teaches the argument and how to plan for both answers, rather than picking one.
What a Prediction Market Is
15 min
How Prices Form and Who Provides Liquidity
16 min
The Legal Question: Federal Derivatives Law Versus State Gambling Law
17 min
Resolution, Integrity and Manipulation
16 min
Exchange Versus Sportsbook: What the Customer Is Choosing
16 min
Distribution: Brokerages, Sportsbooks, Leagues and Media
16 min
What to Do About It: A Framework by Role
16 min
The senator whose name is on the 2010 Dodd-Frank Act and the CFTC chairman who implemented it have told the Supreme Court that Congress never moved sports betting from the states to the commodities regulator. The American Gaming Association, 145 tribes and tribal groups and Atlantic City's casinos filed too, and there is still nothing on the docket for Kalshi.
The tribe that holds Florida's sports betting monopoly wants a Broward County court to shut down DraftKings' prediction-market sports tab and its Pick6 game, and accuses chief executive Jason Robins personally of racketeering. It is suing under state law, in state court, where DraftKings' federal preemption defence has to be won rather than assumed.
Ohio has led 38 other states and the District of Columbia in urging the Supreme Court to take New Jersey's case against Kalshi, joined by the tribe behind the landmark 1987 tribal gaming ruling, the National Football League and three nonprofits that want the Court to revisit Murphy. Every brief on the docket backs New Jersey; Kalshi's response is due on 9 November.