The North American Association of State and Provincial Lotteries (NASPL) is advocating for the regulation of prediction markets as gambling products, emphasizing the necessity for them to be treated with the same licensing and regulatory scrutiny as conventional betting. They have raised concerns that ignoring such classification could jeopardize consumer safety, public funding, and the integrity of sports.

In a recent policy announcement, NASPL highlighted that technological innovations have led to the rise of “prediction markets,” a novel category of gambling that they argue is merely a different term for established betting practices.

The organization warned that the lack of a suitable regulatory structure could compromise the integrity of sports and related lottery activities, weaken responsible gaming initiatives and consumer protection protocols, diminish public benefit funding, and complicate law enforcement’s fight against issues like tax evasion, money laundering, and racketeering.

NASPL contends that products that yield financial rewards or losses based on the outcomes of upcoming events fit the gambling definition under numerous legal standards.

Even though some players might argue that prediction markets involve an element of skill, the association emphasized that results are mainly determined by chance, meaning such contracts could be deemed illegal gambling if they operate outside recognized regulatory systems.

In their statement, NASPL referenced a recent position paper from the World Lottery Association (WLA), which characterized prediction markets as “unlicensed betting under a different guise” and cautioned that these markets pose risks to sports integrity, consumer safety, as well as the regulated lottery and betting industries.

Quoting the WLA document, NASPL indicated that the proliferation of prediction markets has generated “growing friction with gambling regulations and frameworks designed to ensure sports integrity, emphasizing the necessity for precise legal definitions and the appropriate treatment of prediction markets under gambling law.”

NASPL expressed its support for the WLA’s demand for “immediate regulatory clarity across all jurisdictions where prediction markets currently operate or intend to offer contracts related to sports events.”

The association highlighted that “if a product provides a financial return based on the result of an event—whether in sports, politics, or other areas—it constitutes a wager or bet. This requires it to be licensed and regulated, regardless of the operator’s chosen terminology.”

NASPL noted that regulated lotteries function within established public policy frameworks that necessitate uniform legal definitions, operational transparency, fiscal accountability, and compliance standards that can be effectively enforced.

The association further emphasized that its members are responsible for assisting policymakers in recognizing and tackling the regulatory challenges posed by prediction markets while safeguarding the public interest and those reliant on funding sourced from lottery revenues.