These platforms maintain that they offer financial services that shouldn’t be considered wagers. But are they really so different? “Pragmatically, I think for the retail individual, they don’t see a difference,” says Kim. “I think retail individuals trading on these platforms are not thinking of it as not gambling. They’re just thinking of it as one more outlet for them to participate in the opportunity to put money on an event.” Recent research supports this, with a study from the American Gaming Association finding that most Americans view sports-related prediction markets as a form of gambling.10 But at the same time, Kim sees some legitimate arguments from these platforms that they are offering swaps and not wagers, at least when it comes to a strict reading of the law.
Slide from a report by the American Gaming Association, titled “Nearly All Americans Recognize Sports Events Contracts as Gambling, Not a Financial Instrument”. Contents: “What are prediction markets most like? Thinking specifically about sports related prediction contracts now. Imagine a scenario where you pay 50 cents to buy a contract that the New York Yankees will win tonight’s game. If the Yankees win, you’ll be paid $1, if they lose you would lose your 50 cents and have nothing. Would you consider this specific type of sports prediction market to be:” Pie chart, showing 85% say “A form of 10% gambling, like sports betting”, 6% say “A financial instrument, like options or commodity futures”, 10% s