DraftKings and the FTC: A Turning Point for Political Betting
DraftKings introduces a new subscription plan offering enhanced odds on selected matches
In the dynamic world of US sports betting, DraftKings, alongside FanDuel, holds a dominant position in the market. However, a recent development has shed light on a potential shift in the industry.
In early 2023, DraftKings announced plans to introduce a new platform for prediction markets on political events, similar to sports betting. This move, while innovative, faced significant opposition due to the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, which tightened regulations on such wagers, including political events.
Organisations such as the Campaign Legal Center and Common Cause, advocating for transparency and democracy, vehemently opposed DraftKings' plans. They voiced their concerns to the Federal Trade Commission (FTC), fearing that such betting could lead to election manipulation, the spread of false information, and conflicts of interest.
The FTC's Role
The FTC, responsible for protecting consumers from unfair or misleading practices, did not issue a formal statement or official ban regarding DraftKings' plans. However, the regulatory pressure and public backlash led DraftKings to withdraw the project, presumably due to regulatory concerns and legal uncertainties.
Other Players
Other US regulatory bodies, including the Securities and Exchange Commission (SEC), view prediction markets with scepticism, as they could be classified as unregulated securities. The Federal Election Commission (FEC) might also express concerns over the influence of money on political processes.
Kalshi's predicament
Meanwhile, another player in the prediction market arena, Kalshi, has faced issues with the Commodity Futures Trading Commission (CFTC) regarding wagers on political races. The CFTC has instructed Kalshi to discontinue wagers on the fate of Luigi Mangione, the presumed killer of UnitedHealth CEO Brian Thompson.
Kalshi, a CFTC-regulated trading company offering prediction markets about the future, could potentially serve as a model for DraftKings' exploration into this new area.
DraftKings' New Venture
Amidst these developments, DraftKings has launched a subscription service called DraftKings Sportsbook+. This service, which went live as a pilot in New York on December 28, 2024, is marketed as an enhancement to the fan experience. The service offers "Unlimited Stepped Up Boost Tokens" to subscribers, which can be applied to parlays and same game parlays. Winning parlays with 11 or more legs can receive up to a 100% profit boost with these tokens.
As DraftKings continues to seek new ways to incentivize spending to maintain its competitive edge, particularly in New York, the potential adoption of Kalshi's prediction market model could be a strategic move. However, the regulatory landscape remains uncertain, and clear guidelines from the FTC regarding prediction markets are yet to be seen.
Read also:
- Brompton Reveals New Processing Technology, Collaboration Initiative
- TikTok's Expansion Proceeds Amidst U.S. Doubt, Boosted by EU Market
- Microsoft developers joining forces with Diablo associates, seeking genuine transformation, as over 450 Blizzard Entertainment staff unite in union.
- Ad agency R/GA appoints Shannon Washington and Erin Lynch as heads of New York's Creative Department.
