The Michigan Gaming Control Board (MGCB) has issued a pointed warning to sportsbook operators across the state: steer clear of prediction markets or risk losing your license. The message, delivered in a memo signed by MGCB Executive Director Henry Williams and sent to every licensed sportsbook and casino in early October 2025, signals a dramatic escalation in the regulatory tug-of-war over the future of event-based betting in the United States.
Michigan’s memo, first reported by The Closing Line and confirmed by multiple sources including Gaming Today and iGaming Business, puts the state in line with a growing roster of regulators nationwide who are sounding the alarm about prediction markets. These markets, run by platforms like Kalshi, Polymarket, and even Robinhood Markets, let users trade “event contracts” on outcomes such as sporting events—contracts that often look, walk, and quack like bets, even if they’re dressed up as financial instruments.
“The MGCB writes to make you aware that any involvement in the offering of sporting event contracts, directly or via an affiliate, key person, related business entity, or other association, will have implications relative to your licensure in Michigan,” the memo warned. That’s regulator-speak for: don’t even think about dabbling, partnering, or experimenting with these products, whether in Michigan or elsewhere. The Board emphasized that even indirect involvement—say, through an affiliate or another business entity—could jeopardize an operator’s suitability for a Michigan gaming license.
What’s behind this sharp stance? According to the MGCB, it’s about maintaining a tightly regulated gaming ecosystem, one where consumer protection, tax fairness, and accountability are paramount. Unlike traditional sportsbooks, prediction markets aren’t licensed or taxed at the state level. Instead, they fall under the jurisdiction of the U.S. Commodity Futures Trading Commission (CFTC), a federal agency more accustomed to regulating commodities and futures than parlay bets on the Lions’ next game.
That regulatory mismatch has left state officials uneasy. In April 2025, the MGCB opened a formal investigation into sports prediction markets, reflecting a broader concern about whether these products violate Michigan’s gambling laws. The Board’s recent memo is just the latest in a series of actions aimed at keeping the state’s gambling industry above board. Earlier in the week, the MGCB issued six cease-and-desist letters to unlicensed gambling sites, underscoring its commitment to a “clean” online gaming environment.
Michigan isn’t alone in its skepticism. Over the past few months, Ohio and Arizona have also issued stern warnings to their licensed sportsbooks, cautioning that any involvement with prediction markets could threaten their licenses. In August, the Ohio Casino Control Commission sent letters to operators warning against such partnerships, while the Arizona Department of Gaming echoed that message in September. Illinois and Montana have followed suit, and other states are watching closely.
The national picture is even more complicated. While the CFTC regulates prediction markets at the federal level, its stance on sports-related contracts is far from clear. In a recent advisory, the CFTC stated that it “has not, to date, taken any official action to approve the listing for trading of sports-related event contracts.” Translation: the federal agency is keeping these platforms at arm’s length, and state regulators aren’t waiting for them to make up their minds.
Meanwhile, the legal battles are piling up. Massachusetts Attorney General Andrea Campbell recently filed a lawsuit against Kalshi, one of the largest event trading platforms, arguing that its activities amount to unlicensed sports wagering. “Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences,” Campbell said in a statement, as reported by iGaming Business. “This lawsuit will ensure that if Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a license and follow our laws.” Similar lawsuits have been filed in California, Maryland, Nevada, and New Jersey, reflecting a nationwide push to clarify where prediction markets end and sports betting begins.
Despite the regulatory headwinds, several major operators are forging ahead. FanDuel has entered a joint venture with CME Group to develop an events-based market platform, reportedly called FanDuel Markets. DraftKings and Fanatics have filed paperwork with the National Futures Association (NFA), a first step toward launching their own event-based trading products. Underdog Fantasy has inked a deal with Crypto.com to facilitate sports contract trading in select states, while PrizePicks recently received NFA approval to operate as a Futures Commission Merchant. Robinhood, for its part, began offering Kalshi’s football markets at the start of the 2025 season, further blurring the lines between Wall Street and the world of sports betting.
The MGCB’s warning is especially significant because many of these companies already operate licensed fantasy or sportsbook platforms in Michigan. The Board’s message is clear: if you want to do business in Michigan, you’ll play by Michigan’s rules—even if your event contracts are technically regulated by a federal agency.
For Michigan bettors, the memo doesn’t change much—at least for now. Licensed sportsbooks, online casinos, and fantasy contests remain available, and prediction markets like Kalshi and Polymarket are still accessible under federal oversight. But the broader debate is about where to draw the line between finance and gambling. As prediction markets continue to expand—Kalshi, for instance, began offering sports event contracts in January 2025 and has since added parlay-style products—regulators will be forced to confront thorny questions about consumer protection, taxation, and fair play.
At a recent joint roundtable held by the CFTC and the U.S. Securities and Exchange Commission, prediction markets received little attention, even as an outgoing CFTC commissioner publicly warned about the segment’s weak oversight. The lack of clarity at the federal level has only heightened the urgency for states like Michigan to take matters into their own hands.
Ultimately, Michigan’s decisive stance may serve as a bellwether for other states with robust gambling industries. With legal battles mounting and the lines between trading and betting growing fuzzier by the day, the coming months could prove pivotal for the future of prediction markets in America. For now, the message from Michigan regulators is unmistakable: if you want to be part of the state’s gaming ecosystem, prediction markets are off the table.
