Sportsbook Operator Prediction Markets Rollouts Receive Backlash For Lack of Gambling Safeguarding

As more of the best sports betting sites expanded into prediction markets, each company reduced or delayed several responsible gaming protections that had long been standard across their regulated sportsbook platforms, according to Sportico. 

The standalone prediction market apps included only a limited set of consumer safeguards at their launches, such as deposit limits and account self-exclusion. They omitted other widely used tools, including information on the gambling addiction hotline, session time tracking, and detailed betting history visualizations, which were not initially made available when the apps launched last month.

FanDuel later confirmed it would add hotline support, following public scrutiny, and placed the information on its website and subsequently within the app itself. The delayed implementation highlighted broader structural tensions facing prediction market operators. 

To legally offer prediction markets, companies have classified the products as financial instruments rather than gambling. This places them under the authority of the Commodity Futures Trading Commission and exempts them from state gambling laws.

That classification creates friction around consumer protections. Under federal commodities law, the regulator is not intended to oversee gaming activity, and companies risk undermining their legal position if prediction markets appear too similar to sports betting operations. 

As a result, DraftKings Predict, Fanatics Markets, and FanDuel Predict have avoided using gambling-related language in their apps, instead framing participation as trading rather than betting, despite the interfaces closely resembling sportsbook platforms and outcomes being structured so that most users lose money.

The hotline FanDuel eventually added is operated by the National Council on Problem Gambling (NCPG), though references avoid explicit mention of gambling. Advocacy groups have warned that the functional experience of prediction markets closely mirrors gambling, particularly when tied to sports, regardless of legal classification. 

Ontario regulator proposes fine over FanDuel Canada oversight

Concerns about consumer protection and integrity have also surfaced in traditional sportsbook operations. Ontario's gaming regulator has fined FanDuel Canada $350,000 after the operator accepted suspicious betting activity tied to table tennis events and failed to promptly report it.

According to the Ontario Alcohol and Gaming Commission, the incidents occurred between Oct. 23 and Nov. 30, 2024. A total of 144 bets placed through three Ontario sports betting-based accounts on Czech Table Tennis Stars Series matches showed several signs typically associated with match-fixing. These included irregular gambling patterns, focusing bets on players likely to lose, and consistent winning.

The regulator stated that FanDuel Canada did not promptly identify or escalate the suspicious behavior, allowing the activity to continue for several weeks despite prior industry alerts highlighting integrity risks linked to the tournament. The failure to report, rather than the betting activity itself, formed the basis of the proposed penalty.

FanDuel Canada disputed the regulator's characterization, maintaining that it was the only operator to identify and disclose the conduct. It added that it was disappointed in the proposed fine but said that it would still cooperate with the regulator regarding integrity issues. 

The AGCO stated that FanDuel Canada has 15 days to appeal.