Genius Sports says prediction-market demand will survive regulatory change

Genius Sports has said that sports prediction markets will remain a significant part of American sports trading even if regulation changes the way they operate, arguing that the underlying demand for wagering is more durable than any one platform or legal structure.

In an investor letter dated Aug. 5, Mark Locke, the company’s chief executive, wrote that “the rules will change” but demand would not. He argued that a regulatory shift could alter access, products and tax arrangements without eliminating the appetite for sports wagering.

The company has recently secured event-contract settlement agreements with two leading prediction-market operators, according to Casino.org. Locke’s broader case is that Genius can serve several participants in the market, rather than depending on the survival of a particular exchange model.

Genius supplies official data, settlement and integrity services to DraftKings, FanDuel, Kalshi and Polymarket, Locke wrote. It also sells data and pricing to market makers that supply liquidity on exchanges, while its Legend business and wider media platform help operators acquire customers.

That positioning is central to Locke’s argument. If prediction-market customers stay with exchanges, Genius expects to benefit from the data, settlement, integrity and pricing services required by those venues and their liquidity providers. If those customers move back to conventional sportsbooks, he wrote, the activity would return to sportsbooks that Genius already supplies.

Locke drew a distinction between belief in demand for sports wagering and belief in the current commercial structure of any individual platform. “Demand can endure while access narrows, activity falls or customers move between products,” he wrote, arguing that the company did not need to make the latter bet in order to benefit from the former.

He cited Eilers & Krejcik Gaming data showing that, as of July, 69% of Kalshi’s retail demand came from states without a legal online sportsbook. Kalshi’s share of combined handle in mature online-betting states was about 2%, according to the monitor. Locke said this suggested that a curtailment of prediction markets could redirect customers toward licensed sportsbooks in regulated states, while increasing political pressure to legalize sports wagering elsewhere.

Still, he acknowledged that even a Supreme Court outcome separating sports betting from prediction markets would not necessarily produce immediate legalisation in states that have held out. He said lawmakers had long understood the potential tax revenue without acting on it.

Settlement is one area in which Locke sees a distinct need for authoritative sports data. Pricing can be generated from public information and market-makers’ models, he wrote, but settlement determines whether a contract condition was met and how errors are corrected. That need becomes more acute in live and player-level markets, where latency and privileged information carry greater weight.

Locke pointed to a Kalshi contract involving Michigan and Western Michigan. After the broadcast clock reached zero, officials restored one second and Michigan scored on a replayed Hail Mary. Kalshi clawed back and repaid an estimated $18.6 million market after the result changed.

The executive also argued that exchange liquidity supports a wider commercial ecosystem. Institutional market makers quote both sides of trades and absorb temporary imbalances, purchasing data, pricing and risk tools in the process. Although liquidity is concentrated in a small number of exchanges, he wrote, many market makers behind them are customers of Genius.

Locke said that exchanges such as Kalshi and Polymarket retain less from comparable activity than a sportsbook, with more of the spread accruing to market makers. Genius earns from supplying platforms and through minimum fees and profit shares from market makers, he wrote, and can also earn on customers introduced through Legend.

Competition for sports customers may provide another route to revenue. Locke wrote that Kalshi, Polymarket, DraftKings, FanDuel and others are pursuing the same audience, increasing the value of differentiated products and efficient customer acquisition. He cited Flutter’s description of FanDuel Predicts as a customer-acquisition tool ahead of possible state-level regulation.

The legal framework remains unsettled. The Commodity Futures Trading Commission proposed rules in June covering public-interest determinations for event-contract derivatives, including which types of contracts could be barred from trading or clearing through CFTC-registered entities. The proposal would also establish factors for those decisions and define “gaming” for this purpose.

The CFTC said prediction markets were rapidly gaining popularity and that total trading volume across CFTC-registered prediction markets exceeded $25 billion in 2025. Locke said a substantive Supreme Court win for prediction-market platforms could settle which laws apply to sports-event contracts on CFTC-registered exchanges, but would still leave questions over product rules, taxation and consumer safeguards.

Genius had previously told the CFTC that it supports a federal approach led by the agency, while warning that data and integrity risks could rise sharply if in-play, player-proposition or other individual-performance markets are offered as sports event contracts. The company said it works directly with more than 400 sports organisations and provides real-time integrity monitoring for major leagues worldwide.

For Locke, the outcome is less important than the persistence of betting activity. He wrote that today’s prediction markets were unlikely to retain their present form, but that the new liquidity brought into sports wagering would be captured, taxed and regulated under a federal regime, a state regime or both.