March Madness, which sees 68 college basketball teams compete for a single trophy, is only days away. And, according to the American Gaming Association (AGA), it will attract a record level of sports betting this year.
The group's estimate of $3.3bn of bets represents a significant increase compared to previous years. However, the AGA have warned that it expects to see more interest in unregulated, black market sites, while the rise of prediction market platforms will also feature.
March Madness popularity
March Madness started in 1939, although the term 'March Madness' itself didn't enter basketball parlance until the 1980s. Its single-elimination format injects serious jeopardy for players and excitement for fans.
It attracts office pool rivalry and draws significant sports betting interest, eclipsing even Super Bowl levels of money, albeit from a roster of more than 60 games compared to the Super Bowl's single event.
Some of the increase in interest will come in Missouri. Missouri launched regulated sports betting in December last year. But figures may be tempered by the prevalence of black-market betting sites, as well as the burgeoning prediction platform market.
Black market betting sites are unregulated and unlicensed sites. They are commonly used by bettors who live in states where sports betting has not yet been regulated. But the lack of regulation means gamblers are not afforded the same protections as players on legitimate sites.
AGA CEO Bill Miller said: "Confidence in your wager – and in the integrity of the games – starts with a fair and compliant betting market.
"That's why it's so important that everyone offering sports bets in the US comply with state and tribal regulations, ensuring that consumers are protected."
The rise of prediction markets
One segment that continues to operate in a grey area, at least according to many state lawmakers, is the prediction market sector.
Prediction markets gained prominence when their users more accurately predicted the 2024 US election than professional polling companies. Their binary options are easier to follow than the often complex betting lines offered by sportsbooks.
These platforms now boast approximately 10 million monthly active users and, according to some forecasts, could reach annual revenue of $10bn by 2030.
Morality of prediction markets
However, prediction markets have come under fire from various parties. They have been accused of facilitating insider trading, with large winning positions taken just before US forces captured the Venezuelan President Nicolas Maduro. Similar accusations were levelled at markets like Kalshi and Polymarket after the US strike on Iran.
There is also an ongoing debate regarding the regulation of prediction markets. Currently, they are considered trading platforms, not betting platforms, and are overseen by the Commodity Futures Trading Commission (CFTC). As such, they can operate legally even in states where sports betting is prohibited.
However, this is at odds with most other markets, where platforms are treated as gambling. A growing number of states have attempted to block the sites, with some state judges agreeing with them, but federal law continues to take precedence.
