Key Moments:
- The Washington State Gambling Commission has publicly warned that providing event-based contracts online constitutes “unauthorized activity” within the state.
- Fanatics Markets has launched its prediction market product in 24 states, but does not hold a local partnership or operate sports betting in Washington.
- Washington regulators are closely watching ongoing legal cases that will influence the next steps for event-based contracts.
Regulatory Signals for Online Prediction Markets
The Washington State Gambling Commission has released a public notice cautioning that online event-based contract offerings by operators are viewed as unauthorized within state boundaries. Unlike a formal directive to licensees, this general advisory reinforces the current stance on permissible gambling activity. At present, Washington state only allows sports wagering on tribal land; mobile betting applications are permitted for use on such properties, but online sports wagering remains restricted elsewhere. Several major operators, including FanDuel and DraftKings, have established partnerships with tribal casino operators in Washington.
Recent Market Developments and Operator Expansion
Fanatics, despite not maintaining a local partnership or sports betting operation in Washington, has launched its prediction market product, now operating in 24 states. After its initial debut in 10 states, Fanatics Markets expanded rapidly through collaboration with Crypto.com and by acquiring Paragon Global Markets, an introducing broker that enables the offering of event contracts through platforms like Crypto.com and Kalshi.
Broader Consequences and Regulatory Stance
The commission’s notice, while not a cease-and-desist order, signals potential regulatory consequences beyond Washington. Past advisories by regulators in Arizona, Illinois, and Nevada have warned that entering sports-related event contract markets in places where such offerings are illegal, or working with partners who do so, may affect operator suitability for licensure in their states. Fanatics currently holds sports betting licenses in Arizona and Illinois, but not in Nevada.
The commission emphasized that this latest alert is a precaution, not an enforcement action. No recent regulatory enforcement steps have been undertaken toward prediction market operators in Washington. The commission acknowledged ongoing uncertainty about the legal and regulatory treatment of event-based contracts at both state and federal levels. According to the commission, future actions will depend significantly on litigation outcomes.
Official Statements and Industry Watch
“While prediction markets are an unauthorized activity in Washington State, we acknowledge that the future of prediction markets, including those for sports, political events, etc., remains a subject of ongoing litigation both federally and in other states,” the commission said.
“We will continue to monitor the ongoing cases as they progress through the court system and will provide updates once the courts provide further guidance.”
Precedents and Penalties in the Sector
Washington regulators have previously taken action against sector participants, including the issuance of a cease-and-desist order to Polymarket in 2021. At that time, Polymarket was not authorized to service U.S. customers and subsequently incurred a $1,400,000 civil penalty from the Commodity Futures Trading Commission for failing to register as a swap execution facility. The platform exited the U.S. market in 2022 and recently resumed its operations this month.
| Operator | Status in Washington | Relevant Actions |
|---|---|---|
| Fanatics | No local partnership or sports betting operation | Launched prediction market in 24 states |
| Polymarket | Cease-and-desist issued in 2021 | Received $1,400,000 civil penalty, exited US market, resumed in 2022 |
- Author
Daniel Williams
