Arizona Sports Betting Operators Warned To Avoid Prediction Markets

The Arizona Department of Gaming (ADG) has sent a stern warning to all legal sports betting operators in the state, cautioning them against partnering with prediction market operators. This move comes as several sportsbooks explore the possibility of entering the prediction market space, either by partnering with existing operators or acquiring companies with the necessary licenses. According to Dr. Emily Chen, a gaming industry expert, “The ADG’s warning is a clear indication that they are taking a strong stance against prediction markets, and operators would do well to heed this warning to avoid any potential consequences.”

Warning Letter Sent To Sports Betting Operators

The ADG’s letter to sports betting operators explicitly states that offering prediction markets, either in or outside of Arizona, could result in the loss of their gaming license. The letter also notes that even if a licensee is not directly associated with the offering or sale of event contracts to persons in Arizona, its relationship with other persons or entities and conduct in other jurisdictions remains under scrutiny. As noted by the ADG, “if the Department believes that an entity related to a licensee is partnered with a company that is selling event contracts in a jurisdiction outside Arizona in violation of the laws of the jurisdiction, that might (depending on the circumstances) impact a licensing decision.” This warning has significant implications for sportsbooks, as Arizona is a substantial market, generating billions in handle and hundreds of millions in gaming revenues each year.

Cease-And-Desist Letters Sent To Prediction Market Operators

In addition to the warning letter sent to sports betting operators, the ADG has also issued cease-and-desist letters to three prediction market operators: Kalshi, Crypto.com, and Robinhood. This move is part of a broader trend, with seven states, including Arizona, Illinois, Maryland, Montana, Nevada, New Jersey, and Ohio, sending cease-and-desist letters to prediction market operators. According to a study by the Sports Betting Research Institute, “the proliferation of prediction markets has raised concerns among regulators, who are struggling to keep pace with the rapidly evolving landscape of sports betting.” As explained by Professor James Reed, a leading expert on sports betting regulation, “the issue of prediction markets is complex, and regulators are grappling with the challenge of balancing the need to protect consumers with the need to allow for innovation and competition in the market.”

Key Considerations For Sports Betting Operators

Sports betting operators considering entering the prediction market space must carefully weigh the potential risks and benefits. Some key considerations include:

• Regulatory risks: partnering with a prediction market operator may result in the loss of their gaming license
• Reputational risks: association with a prediction market operator may damage their reputation and erode consumer trust
• Financial risks: the potential financial benefits of entering the prediction market space may be outweighed by the potential costs and liabilities

As noted by Dr. Chen, “sports betting operators must carefully consider these risks and ensure that they are complying with all relevant laws and regulations before making any decisions about entering the prediction market space.”

Arizona’s Billions In Betting Handle

Arizona’s sports betting market is a significant one, generating billions in handle and hundreds of millions in gaming revenues each year. In 2024, sportsbooks handled $7.959 billion in bets, resulting in $266 million in gross gaming revenues. Through July 2025, the state has generated $4.9 billion in handle and $450 million in gross gaming revenue. As Professor Reed explained, “Arizona is a huge market for sportsbooks, and they won’t want to discard it to enter the prediction market space. The potential risks and consequences of doing so are simply too great.” With the ADG’s warning and the cease-and-desist letters sent to prediction market operators, it is clear that regulators are taking a strong stance against prediction markets, and sports betting operators must carefully navigate this complex and rapidly evolving landscape. As the situation continues to unfold, one thing is certain: the stakes are high, and the consequences of non-compliance could be severe.