A Wisconsin legislator advocating for the expansion of mobile sports betting issued a caution on Wednesday, stating that national prediction markets could capitalize on the absence of state authorization.

Rep. Tyler August, a Republican from Walworth and co-sponsor of Assembly Bill (AB 601), emphasized that failing to clarify state law would pave the way for federally regulated prediction platforms to establish a presence without the safeguards for Wisconsin consumers, oversight, or revenue protections.

“If a gray area is left in state law, national prediction platforms will exploit it absent our compact framework, state oversight, or consumer protections,” August stated in a memo to fellow lawmakers. “AB 601 directs activities into a regulated, Wisconsin-specific environment with well-defined jurisdiction and responsibility, thereby safeguarding consumers, honoring tribal sovereignty, and ensuring revenues remain within Wisconsin rather than flowing to misaligned national applications.”

If passed, AB 601 would allow all 11 of Wisconsin’s tribes to provide mobile sports betting services to individuals physically present in the state, as long as the sportsbook servers are maintained on tribal land. The bill must be approved by the Senate and receive the signature of Democratic Governor Tony Evers, who has expressed support for maintaining gaming partnerships with the tribes.

Prediction markets are swiftly gaining popularity, with platforms such as Kalshi and Polymarket facilitating real-money contracts on various events, akin to sports betting. These platforms operate under federal regulation by the Commodity Futures Trading Commission (CFTC) and do not remit state taxes. Kalshi reported $230.2 million in activity during Week 11 of the NFL and an impressive overall total of $1.3 billion during the week of November 3, surging from $900 million in early October.

Significant industry players are also pivoting their strategies. Major betting companies FanDuel and DraftKings recently exited the American Gaming Association and are planning to intensify their investments in prediction market technologies in states that have not legalized mobile betting.

August’s memo included a 15-page legal review by attorney Ryan Walsh, representing the Forest County Potawatomi Community, asserting that the proposed legislation aligns with both federal and state laws. “The Bill and related compacts will not infringe upon any provisions of the U.S. Constitution, federal laws, or the Wisconsin Constitution, and should withstand any legal scrutiny,” Walsh asserted.

The Sports Betting Alliance, which comprises industry giants like DraftKings, FanDuel, BetMGM, Fanatics, and Bet365, endorses statewide mobile betting but advocates for a revenue-sharing framework with tribes that is more sustainable than the approximately 60% required under the Indian Gaming Regulatory Act. “That rate is excessively high to permit those companies to operate in the state,” stated SBA counsel Damon Stewart.

The measure successfully passed through the committee with backing from Rep. Robert Wittke, a Republican from Caledonia. “I believe our Wisconsin citizens are better served by keeping this new platform within our existing gambling structure,” he remarked.