Hebert Gaban, Chief Commercial and Marketing Officer for Latin America at KBET, an online sportsbook and casino operator, has stated that prediction markets are 'no long term threat' to the sports betting industry.
Speaking to SiGMA News, the exec recognized how the industry has seen movements like this before - often in an attempt to bypass stricter gambling rules, regulations and taxes.
"Prediction markets remind me of movements we've seen before, like social games and sweepstakes, which tried to reinterpret or work around the traditional iGaming model," stated Gaban.
"I don't see this movement as a real long-term competitor to sports betting. If they manage to scale globally, they'll likely occupy their own space, with a different audience and a very different profitability logic."
Prediction market hype expanding across the US
The movement has become a legal minefield in the United States as companies try to find their USP whilst managing regulations and tax levels that differ from State to State. Something that Gaban explains when recognizing the differences between the two products:
"The distinction is important when assessing structural differences between the two models. Prediction markets benefit from lower operational risk, thinner margins and significantly reduced barriers to entry. I don't see this as a shift in direction, it's more about reading opportunities well."
The controversies of prediction markets reached the US Senate on April 30 as they voted to ban all senators from engaging in prediction markets trading. It's believed the same rules might soon be applied to President Donald Trump's administration.
This line of business allows customers to 'buy' shares on real-world outcomes with markets ranging from political decisions to how much rainfall there'll be in a location during a specified period of time. The popularity of platforms such as Polymarket and Kalshi has soared in recent months.
Sports betting vs prediction markets
On the other hand, iGaming companies such as FanDuel, DraftKings and Caesars Entertainment have argued that prediction markets replicate betting without the need for the providers to apply the same rules; such as: KYC checks, taxes and responsible gambling tools.
Legal challenges have increased as a result with courts soon having to decide whether these companies should be treated as financial products.
Regulators in New York, Maryland and Connecticut have already warned licensed iGaming operators from promoting or partnering with these platforms, with the possible loss of license being a potential punishment.
"In regulated markets, legal complexity escalates quickly," argued Gaban. "This pattern is likely to repeat in other jurisdictions as regulators seek to close gaps and maintain control over gambling-related activity.
"One thing that should happen though is these prediction markets will push the industry to innovate, I have no doubt about that. There's room for both to coexist, as long as the regulatory framework is balanced. Otherwise, it becomes a game of loopholes rather than real value creation."
