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US sports betting giants FanDuel and DraftKings have announced their exits from the American Gaming Association after disagreements over the future of prediction markets. Both companies confirmed the move in separate statements, calling it a necessary step as their business strategies evolve.
The operators said the AGA’s current direction no longer aligns with their plans, particularly regarding the association’s stance on prediction platforms. The AGA acknowledged the withdrawals and extended its well-wishes.
The split is notable because it involves the two largest sportsbook operators in the country and the primary trade group representing the regulated gaming industry.
Prediction markets vs. AGA: The strategic clash
FanDuel and DraftKings say prediction markets are now a central part of their long-term strategies, and that shift is the primary driver of their break from the AGA. FanDuel plans to launch FanDuel Predicts in partnership with CME Group and intends to offer event-based contracts in states that do not permit online sports betting.
Meanwhile, after reporting 4% revenue growth in the third quarter, DraftKings acquired Railbird, a federally regulated exchange licensed to offer event contracts. The purchase is part of its effort to reach more customers. DraftKings also hired former Bet365 CEO Christian Bogstrand to lead the expansion.
Both companies argue that prediction markets align with growing consumer interest and reflect the future of online wagering. They say that direction no longer matches the AGA’s policy position, leading to their departure.
The AGA is preparing a resolution that would bar any operator offering prediction-market products from joining the group. It says these platforms can resemble unapproved sports betting sites because they may bypass rules and oversight typically used to regulate gambling.
The AGA cites concerns, including tax avoidance, weaker consumer protections, and the risk of market manipulation. It argues that prediction markets could undermine state-regulated sports betting and the authority of tribal and commercial operators. In a brief statement, the AGA wished both companies well while reaffirming its commitment to legal and regulated gaming.
Market and lobbying fallout from AGA departure
Currently, platforms such as Kalshi and Polymarket lead the prediction-market space. However, the entry of FanDuel and DraftKings is expected to shift momentum. As established sports betting operators, both companies appear positioned to shape the sector rather than wait for slow regulatory progress.
Their departure from the AGA also weakens the association’s influence in policy discussions and redirects attention toward emerging digital platforms. The development mirrors the early disruption created by daily fantasy sports and shows how competition can spur change before regulations catch up.
Leaving the AGA also means FanDuel and DraftKings lose the group’s collective lobbying strength and committee participation. They no longer have a voice in shaping responsible gaming standards, policy positions, and coordinated regulatory messaging. The exit reduces their influence with state and federal regulators and increases exposure to potential investigations or enforcement actions. Traditional casino operators that remain wary of prediction markets may also distance themselves from the companies.
Prediction markets face regulatory scrutiny
Prediction markets sit at the intersection of gaming rules and financial regulation, creating new challenges for consumers and regulators. Some products function more like financial contracts than traditional wagers, which can leave bettors with fewer protections than they receive in a state-licensed sportsbook.
Regulators in states such as Nevada have warned that sports event contracts may still violate state law, even if they fall under federal oversight. Because regulations are unsettled, services can change abruptly, and platforms may offer products with higher risk levels. Both state and federal regulators are now paying closer attention.
In New York, legislators have introduced the ORACLE Act (Assembly Bill 9251), which would restrict or ban most event-based prediction markets, including those tied to athletic events. The proposed law aims to impose consumer-protection rules and penalties for noncompliance, highlighting the regulatory pressures operators face as they expand into this emerging market.
Future of sports betting as prediction markets take center stage
FanDuel and DraftKings will continue to have a platform through the Sports Betting Alliance, which has recently lobbied on behalf of major operators. The industry expects heightened debate as prediction markets grow.
Regulators may review and update rules as prediction markets increasingly resemble financial trading rather than traditional betting. The split could accelerate broader policy discussions over online wagering.
