NY Attorney General Targets Prediction Markets: A Shift

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New York Attorney General Issues Consumer Alert on Prediction Markets

New York Attorney General Letitia James has recently issued a consumer alert concerning prediction markets. During her tenure, which has been notably active, she highlighted the risks associated with these platforms, particularly their operation outside of New York’s regulated sports betting laws.

The alert pointed out that prediction markets often present themselves as federally regulated event contract systems but lack essential legal safeguards. This absence includes failure to guarantee payouts, verify the age of bettors, and implement responsible gaming limits among other protections that licensed New York sports books adhere to.

This warning from the Attorney General’s office draws parallels between unregulated prediction markets and other illegal betting operations, such as offshore sports books, emphasizing the risks involved for consumers. Additionally, it was highlighted that these markets do not contribute to New York's 51% tax on sports betting, potentially influencing regulatory and legal actions moving forward.

With New York often setting trends in legislative and regulatory practices, this move might encourage other states to follow suit, especially given the existing legal challenges against prediction markets. Nine lawsuits have already been filed, and New York joining this battle could have significant implications, especially with upcoming rules from the Commodity Futures Trading Commission (CFTC) and the potential outcomes of ongoing court cases.