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Prediction markets are starting to impact the one metric sportsbooks value above almost all others: customer acquisition.
BetMGM is citing rising acquisition costs amid increased competition, with prediction market platforms playing a growing role in that shift. On the surface, this might sound like a standard industry complaint; in reality, it highlights a deeper shift in how users enter betting and trading ecosystems.
For the first time, sportsbooks aren’t just competing with each other. They’re competing with an entirely different type of product.
The rising price of player acquisition
Those costs are typically justified by long-term value: Once a user is active, they tend to continue betting over time. But that equation is changing. As more platforms enter the market—including prediction markets—competition for those same users is intensifying. This drives up acquisition costs as companies must spend more to stand out in a saturated field.
How prediction markets challenge traditional betting
Prediction markets don’t compete in the same way with traditional sportsbooks. They don’t rely on traditional odds formats, and they often avoid framing the activity as “betting.” In many cases, they position themselves as a form of trading or forecasting.
That distinction matters. For some users, prediction markets feel more like investing than gambling. Even if the mechanics are similar, the perception is different. This attracts users who might otherwise avoid sportsbooks.
It also creates a new decision point. Instead of choosing between rival sportsbooks, users are now choosing between sportsbooks, prediction markets or a combination of both.
The overlap is most obvious in sports. Prediction markets offering contracts on game outcomes are entering the direct territory of sportsbooks. From a user perspective, the difference is often minimal: You pick an outcome, put money behind it and receive a payout based on the result. This similarity makes substitution easy.
The psychology of pricing vs. payouts
A primary factor is how these platforms are presented. Sportsbooks are clearly positioned as betting platforms, with experiences built around odds, wagers and payouts. Prediction markets often use different language, emphasizing:
- Probabilities
- Contracts
- Market pricing
That framing can change how users perceive risk. For some, it makes the experience feel more analytical or strategic; for others, it simply feels fresh. Regardless, it lowers the barrier to entry for a different user segment, and that is exactly what sportsbooks are reacting to.
Competing for share of mind
Customer acquisition in sports betting has always been a high-stakes game. Platforms compete through sign-up bonuses, free bets, advertising campaigns and sponsorship deals.
While prediction markets may not yet match the spending levels of major sportsbooks, they are competing for the same user attention. This forces established sportsbooks to spend more to maintain their “share of mind.”
Prediction markets often encourage more frequent interaction. Instead of placing a single bet and waiting for the outcome, users can:
- Enter and exit positions
- React to new information in real time
- Trade throughout an event
This creates a dynamic engagement model that appeals to users familiar with financial trading platforms. For sportsbooks, the challenge isn’t just winning the sign-up—it’s winning the user’s time.
Regulatory friction and the search for profitability
Rising acquisition costs affect profitability, growth strategies and long-term sustainability. If acquisition becomes too expensive, platforms must pivot toward better retention or improved monetization.
There is also a regulatory component. Sportsbooks operate under strict state-level regulations, including heavy licensing fees and tax obligations. Prediction markets, depending on their classification, may operate under different frameworks. This can create an uneven playing field where sportsbooks carry higher regulatory costs than their new competitors.
The convergence of betting and forecasting
As the lines between betting, trading and forecasting continue to blur, users are choosing platforms based on experience and perceived value rather than rigid categories. Prediction markets are tapping into this shift, offering a different way to engage with the same outcomes. They aren’t just participating in the evolution of the industry—they are helping drive it.
