In a concerning shift for responsible gaming, major platforms such as DraftKings, Fanatics, and FanDuel are facing scrutiny for the erosion of addiction safeguards in their newly launched prediction market applications. These platforms, which debuted their prediction markets in December 2022, have not integrated the full suite of anti-addiction tools available in their traditional mobile sportsbooks, raising alarms among advocacy groups and users alike.
The recently launched prediction market apps permit users to set betting limits and temporarily lock their accounts, but they lack essential features such as gambling addiction hotline information, session time statistics, and comprehensive betting history visualizations. A spokesperson for FanDuel indicated that a support hotline would be added soon, albeit relegated to the fine print of their website.
This retreat from robust responsible gaming practices appears to stem from the platforms’ need to classify prediction markets as financial assets. This classification allows them to operate under federal jurisdiction, specifically the Commodity Futures Trading Commission (CFTC), while avoiding state gambling laws and taxes on gross betting revenue. However, the Commodity Exchange Act prohibits the CFTC from endorsing event contracts based on “gaming,” creating a conflict that these companies are navigating carefully.
As a result, DraftKings, Fanatics, and FanDuel have refrained from openly discussing “gambling” within their prediction market apps, framing user activities as “trading.” This rebranding comes despite the visual and operational similarities between their prediction markets and traditional sportsbooks, where the average user often incurs losses. While FanDuel claims that its soon-to-be-implemented hotline will be run by the National Council on Problem Gambling (NCPG), it is also clear that explicit references to “gambling” will be avoided.
This apparent hypocrisy raises ethical questions about the prioritization of corporate interests over consumer protection. Cole Wogoman, director of government relations for the NCPG, emphasized the need for prediction market operators to adopt the same core safeguards expected of regulated sportsbooks. He stated, “From a problem gambling perspective, buying and selling futures contracts through prediction markets is functionally gambling,” underscoring the inherent risks associated with these platforms.
Historically, DraftKings, Fanatics, and FanDuel have marketed their responsible gaming resources as morally grounded, not merely a response to regulatory pressures. Their commitment to addiction resources was often highlighted during discussions about the advantages of licensed sportsbooks over unregulated offshore options. Information about gambling addiction hotlines was prominently displayed across their marketing materials and user interfaces.
Tim Dent, the former chief compliance officer for DraftKings, once noted, “From the moment someone registers a DraftKings account, our top priority is ensuring every user has an engaging, fun and, most importantly, a safe experience.” Yet, as they pivot to prediction markets, the commitment to those principles seems to wane.
FanDuel, a partner of the NCPG, previously showcased the organization as a source of “hope and guidance for change.” However, the launch of prediction markets raised concerns, particularly when former NCPG executive director Keith Whyte suggested that framing these markets as anything other than gambling could lead to harmful consequences. Whyte himself has stated that there are “no meaningful psychological distinctions” between traditional sportsbooks and prediction markets regarding addiction risks.
In a response to inquiries about responsible gaming in its prediction market app, a Fanatics spokesperson highlighted consumer protections and tools aimed at promoting responsible trading. These include limits on deposits, session time, and self-exclusion options. However, critics argue that these measures are insufficient and lack the depth of resources found in traditional sportsbooks.
With the landscape of prediction markets still emerging, comprehensive studies on addiction risks associated with these platforms are limited. Anecdotal evidence suggests that users experience similar pitfalls to those found in traditional gambling settings, with reports of overconfidence and loss-chasing behavior echoing familiar themes in problem gambling.
The NCPG has not taken a definitive stance on the legality of CFTC-regulated sports betting but has expressed concerns about the inconsistent responsible gaming standards that have surfaced between state and federal frameworks. Wogoman emphasized the need for uniformity in responsible gaming tools, arguing that this would reassure consumers that their welfare is being taken seriously.
The contradictory behaviors of sportsbook operators illustrate a broader issue in the gambling industry. While some may argue that such shifts in policy are simply the realities of business, the implications for responsible gaming cannot be overlooked, especially as gambling addiction rates rise in the wake of expanded legalized betting options.
The ongoing situation warrants close attention as traditional sportsbook operators evaluate their approaches to prediction markets. With potential shifts in policy and practices, the ultimate impact on consumer protection and responsible gaming standards remains a critical conversation in the evolving landscape of sports betting.
