New York Attorney General Warns Consumers, Operators of Prediction Markets

• New York Attorney General Letitia James warned consumers and the gaming industry of risks posed by prediction markets
• Promotion of unlicensed sports wagering, she said, violates New York’s gambling laws
• James reported prediction markets do not offer same consumer protections

---

New York Attorney General Letitia James issued a warning to the New York sports betting industry and consumers regarding prediction markets ahead of Super Bowl LX.

James issued a consumer alert warning New Yorkers of the risks posed by prediction markets, describing them as “online platforms offering bets masquerading as ‘event contracts’ on the outcomes of political events, sporting events, or other future events.”

“Ahead of the Super Bowl, New Yorkers need to know the significant risks with unregulated prediction markets,” James said. “It’s crystal clear: so-called prediction markets do not have the same consumer protections as regulated platforms. I urge all New Yorkers to be cautious of these platforms to protect their money.”

Warning Operators to Stay Away

Prediction markets operate without the regulation of the New York State Gaming Commission, James reported, which puts New Yorkers at significant financial risk. She also warned the industry that the conduct, advertisement, and promotion of unlicensed sports betting violates New York’s gaming laws.

If operators promote or engage in these markets, James said this could lead to civil and criminal liability.

These markets, she said, operate as unregulated gambling without the basic protections New York consumers experience from properly licensed operators. These include allocated resources to develop and fund programs to combat problem gambling, implement procedures to prevent underage gambling, and enforce restrictions to prevent predator or deceptive advertising, among others.

New York is currently embroiled in a lawsuit with Kalshi over its sports event contracts. Kalshi filed a lawsuit against members of the New York State Gaming Commission just two days after the regulatory body sent a cease-and-desist letter to the prediction market company on Friday, Oct. 24.

The state’s notice demanded an immediate cease-and-desist from “illegally operating, advertising, promoting, administering, managing, or otherwise making available an unlicensed mobile sports wagering platforming” in the state. The gaming commission defined Kalshi’s sports event contracts and CFTC-filings as “sports wagering within the meaning of New York law,” which the company does not hold a license for in the state.

James Hinting at Further Action?

While none of the licensed New York sports betting operators offer sports event contracts in the state, several offer them elsewhere throughout the country. DraftKings, FanDuel, and Fanatics Sportsbook all offer sports event contracts in states where they are not licensed to offer sports betting.

Additionally, Underdog and PrizePicks, both licensed to offer daily fantasy sports in the state, offer sports event contracts in other states but not New York.

James warned the industry that any promotion or relationship with prediction market companies could lead to civil and criminal liability. The state, it seems, may consider the option of taking legal action against these companies for being involved in what they have defined as “unregulated” and “unlicensed” sports betting.

The New York State Gaming Commission could also get involved, potentially taking a similar tact as the Arizona Department of Gaming against license operators involved in the prediction markets.

The Arizona Department of Gaming issued a notice of intent to revoke Underdog’s fantasy sports contest operator license on Dec. 5, 2025, due to its partnership with Crypto.com and its involvement with sports event contracts.

In an email obtained by Sports Betting Dime through a public records request, the Arizona Department of Gaming notified Underdog on Dec. 5 of its intention to revoke the company’s fantasy sports contest operator license. It classifies Crypto.com’s sports event contract offerings as “illegal gambling in Arizona.”

Underdog has held a fantasy sports contest operator license in the state since Aug. 23, 2021.

No final determination has been made on the Arizona Department of Gaming’s notice of intent to revoke Underdog’s fantasy sports contest operator license, but both sides are currently engaged in active discussions.