The Big Split: Sportsbooks, Prediction Markets Square Off

The rise of prediction markets and the defection of top sportsbooks from the AGA present a new environment for G2E in 2026

Since the historic PASPA decision in 2018, a keynote fireside chat on sports betting has become a staple of the Global Gaming Expo (G2E).

The landmark decision that gave states the ability to legalize sports wagering has brought some of the nation’s top sportsbook executives to Las Vegas for the nation’s largest gambling conference. In 2019, less than 24 months after the ruling, the American Gaming Association secured commitments from NHL Commissioner Gary Bettman, then-FanDuel CEO Matt King and then-Rush Street Gaming CEO Greg Carlin for a symposium on sports betting. (King is now CEO of Fanatics Betting & Gaming; in 2022, Carlin founded G2 Gaming.)

After a one-year pause for the Covid pandemic, the keynote session has returned every year since. The event has typically transpired at the start of the week, as the AGA seeks to open the show with a bang, and over the past few years, stragglers have struggled to find an open seat.

Inside the packed ballroom, throngs of stakeholders have hung on nearly every word from executives like DraftKings’ Jason Robins, FanDuel’s Amy Howe, Flutter’s Peter Jackson and MGM’s Bill Hornbuckle, among others.

Last year’s keynote brought a new twist. Prediction markets, which offer event contracts on everything from interest-rate moves to the daily price of Bitcoin to the price of a World Cup ticket and the winner of the Super Bowl, have taken the world by storm. Initial estimates pegged the total addressable market for predictions at $300 billion a year—one that could mushroom to $1 trillion by 2030.

Two upstart companies, Kalshi and Polymarket, have both sought valuations in excess of $20 billion. According to the Silicon Valley Investclub, Kalshi entered negotiations in August for a new $750 million funding round that would value the company at approximately $40 billion—nearly doubling its current valuation. Scared of missing out, the sports betting executives on last year’s panel devoted a large part of the discussion to how their multibillion-dollar corporations can adapt to changing tidal waves across the industry.

But this fall, a few of the executives will be conspicuously absent. Weeks after last year’s G2E, on November 18, 2025, FanDuel and DraftKings left the AGA over a fundamental disagreement on the regulatory treatment of prediction markets. Fanatics followed soon after, along with bet365, completing the mass exodus from four of the nation’s top six sportsbooks. Only two companies with an outsized Vegas presence, BetMGM and Caesars Sportsbook, remained.

As of late August, none of the departing sportsbooks were scheduled to speak at G2E. Flutter, which has seen its stock clobbered by prediction markets, is in the midst of a leadership shakeup. Over a four-month period through July, both Howe and Jackson announced their intentions to leave the company (FanDuel is 100 percent owned by Flutter).

The ascent of Kalshi and Polymarket has coincided with a challenging period for the two sportsbooks, both of which have lost billions in market capitalization this year. Consider this: Flutter, which traded at an all-time high of $313 a share in August 2025, improbably dropped below $100 this July. The reset on equity markets has left the companies scrambling to reinvent themselves on prediction markets. The market shift will have an immense effect on the tenor of this year’s show.

Leading the Charge

During his introductory remarks at G2E last year, AGA President Bill Miller presented a missive on why he believes sports-event contracts threaten state and tribal sovereignty. Peruse Kalshi at any given moment and you will see thousands of markets on sports, including niche events such as darts, cricket, Aussie Rules football, lacrosse and sailing. Multi-leg offerings are not called “parlays” on prediction markets, but are instead dubbed “combos.”

In July alone, Kalshi recorded more than $36 billion in trading volume with sports comprising roughly 80 percent of all markets. The products function as sports betting in every meaningful sense, Miller said months later in testimony before the Senate Commerce Committee. Since Miller is dismayed by the perception that sports betting is being repackaged as financial derivatives, he has criticized prediction markets for bypassing the consumer protections, responsible gaming standards and the state and tribal regulatory systems established after PASPA.

Prediction market companies “decide where and when they’ll operate, telling states, tribes and citizens they have no voice in the process,” Miller said.

The tax structure for platforms that offer trading on financial derivatives is vastly different from the reporting obligations faced by licensed sportsbooks. In fiscal year 2025, Robinhood Markets, Inc. reported corporate income tax of around $225 million. The figure should be drastically higher this year, considering that trading on event contracts has soared. During the second quarter, Robinhood generated $156 million from event contract-trading, surpassing the $129 million earned from equities trading.

While states wage a full-court press against prediction markets, hardly any have considered taxing them. North Carolina Governor Josh Stein, for one, signed a budget bill into law that imposes a 6 percent tax on prediction-market trading revenues. The measure, effective January 1, 2027, is the first of its kind in the nation.

But the tax provision pales in comparison to some of the largest sports betting duties in the nation. New York, for instance, has a 51 percent tax on sports betting revenues, which is tied for the highest nationwide. The tax policy has brought more than $1 billion to state coffers since the Empire State legalized sports wagering.

Robinhood traders must pay taxes on short-term and long-term capital gains. However, market takers will likely face higher fees on prediction-market exchanges if states impose rates comparable to the 51 percent tax. In the meantime, states are losing out as prediction markets pay a sliver of the taxes in comparison to their sportsbook rivals.

For its part, the American Gaming Association operates a running calculator on the amount states have lost in tax revenues from the explosion of prediction markets. The calculator is remarkably similar to the National Debt Clock in New York, located near the famed Avenue of the Americas. Earlier this summer, the amount on the prediction markets clock topped $1 billion.

“They pay a pittance in taxes and certainly do not generate the $330 billion in economic impact or any of the community benefits we provide,” said Miller at last year’s G2E address.

Federal Preemption

On the other end sits Michael Selig, chairman of the U.S. Commodity Futures Trading Commission (CFTC). Selig, who was appointed as the 16th chairman of the CFTC in December, has continually reiterated that event contracts should remain under the exclusive purview of the federal derivatives regulator. A graduate of George Washington University Law School, Selig previously served as the clerk for former CFTC Chairman Chris Giancarlo, 2014-2015. More recently, in 2025, Selig became the chief counsel for the cryptocurrency task force for the U.S. Securities and Exchange Commission.

Under the 2010 Dodd-Frank Act, the CFTC argues that Congress gave the agency exclusive jurisdiction over event contracts listed on Designated Contract Markets (DCMs). The act, according to the CFTC, expanded the Commodity Exchange Act to broaden the definition of financial derivatives known as “swaps.”

The broader definition, the CFTC notes, states that a swap is defined as “any agreement dependent on the occurrence or contingency of an event with financial, economic or commercial consequences.” Furthermore, the CFTC has argued that the structure has “field preemption” over state laws on sports wagering, contending that the jurisdictions cannot enforce “illegal local gambling or cease-and-desist orders” against federally compliant platforms.

In July, New York Governor Kathy Hochul and state Attorney General Letitia James filed a landmark $36 billion lawsuit against Kalshi. The litigation is ostensibly the most aggressive against Kalshi since the legal wars against prediction markets began several years ago. Among other penalties, the lawsuit seeks damages of $100,000 per unauthorized user on the platform. According to the lawsuit, Kalshi has violated New York’s state gambling laws and has attempted to bypass the state’s minimum age restrictions for sports wagering. Selig vigorously contested the premise of the suit.

“Rather than seek reasoned answers from the courts, James and New York seek to force an unprecedented sudden shutdown of prediction markets nationwide,” he wrote. “The CFTC has already sued to stop this and will continue to defend its jurisdiction.”

By the end of the summer, the CFTC convened the inaugural meeting of its Innovation Advisory Committee, a group that contained heavy hitters such as Robinhood’s Vlad Tenev, Terrence Duffy of the CME Group, Robins and Christian Genetski, Howe’s replacement at FanDuel. Duffy pressed the CFTC on why the regulator has allowed platforms to self-certify contracts such as one from an ex-White House teleprompter operator that has been flagged for potential manipulation.

He also identified a trade on Polymarket’s offshore platform on the ouster of Venezuela President Nicolas Maduro. The trade was placed by a U.S. special forces soldier who had inside information on the military raid.

“The manipulation debate is treating the symptom; the disease is the wager,” says SafeBets founder Alex Konanykhin. “When real money rides on whether a foreign leader is removed from power, you have created a financial incentive for anyone with asymmetric information to exploit it.”

Days after the meeting, former New Jersey Governor Chris Christie discussed prediction markets in an appearance on CNBC. Christie, a strategic adviser for the AGA, previously told GGB Magazine in February that he likes the composition of the Supreme Court on states’ rights issues. A win by the states before the Supreme Court could force the Kalshis of the world to abandon sports-event contracts. Asked if the operators could pivot to election markets if prediction markets are dealt a devastating loss, Christie largely dismissed the possibility.

“They’re sports gaming companies,” he replied. “They wouldn’t be able to turn on the lights.”

Vegas Takes Center Stage

Kalshi offered event contracts on the Super Bowl in 2025, and the platform really took off in February for the matchup between the Seattle Seahawks and the New England Patriots. Trading volume at Kalshi surpassed $1 billion, rising exponentially from the $27 million handled a year earlier. In response, Las Vegas sportsbooks experienced a regression as its Super Bowl handle declined to $133.8 million, its lowest amount in a decade.

More than almost any other state, Nevada has drawn the ire of prediction markets. On August 14, the Nevada Gaming Control Board wrote in a filing that Kalshi had not complied with a court order to block event contracts on election, sports and entertainment contracts by an agreed-upon date. According to the order, Kalshi agreed to be in compliance with state law by August 12 or face fines of $120,000 per day.

Kalshi, in a statement, immediately retorted that it hired a geofencing provider to meet the order, adding that Nevada investigators violated federal law by misrepresenting their residences to the company and circumventing the company’s own geolocation measures.

As of late August, the dispute was not settled. Numerous legal experts believe it could head to the U.S. Court of Appeals for the Ninth Circuit, an appellate court that may uphold a bid from the state regulator to ban Kalshi. On a macro level, a circuit split could compel a party to file a petition for a writ of certiorari with the Supreme Court.

Beyond Nevada, a bipartisan coalition of 44 state attorneys general penned a letter to the CFTC this summer, urging the federal agency to withdraw its proposed rules on prediction markets. On the East Coast, the U.S. Court of Appeals for the Third Circuit ruled earlier this year that federal law preempts New Jersey from enforcing state gambling rules against Kalshi. New Jersey, in turn, has paused district proceeds as it prepares to petition the nation’s highest court for review, according to law firm Holland & Knight.

In a statement on his Twitter account, gaming attorney Daniel Wallach wrote that the Supreme Court could grant certiorari by December. Based on that timeline, the court may hear arguments as soon as next spring, then render a decision before the completion of the June 2027 term, Wallach added.

 “That’s the most expeditious timeline, but it’s contingent upon the New Jersey case being the vehicle,” he told Covers.             On Polymarket, the odds that the Supreme Court will take up the case by December 31 has hovered around 30 percent for most of this year. On the off chance that the court grants certiorari by the new year, a decision could s