Disruption is a popular buzzword in the business world, but the actual scale of impact on society can sometimes be overstated.
It would not be overstating things to say that sports betting has been one of the most significant disruptors in modern sports history.
It has been eight years since the United States Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA), which completely upended the long-established buffer between watching sports and betting on them.
At that time, Daily Fantasy Sports was dominating the gaming space and its two titans, DraftKings and FanDuel, pivoted to sports betting and quickly became its leaders.
In less than a decade, sports betting went from being exclusive to one state to being available in 39 states, with Missouri as the most recent addition to the landscape.
Now, a bet is just a few clicks away on the phone, and sportsbook advertisements are as common as fast food commercials.
As it turns out, even the disruptors can be disrupted.
Eight years into a world where sports betting has rapidly expanded across the country, prediction markets have become the newest entrant looking to shake things up.
In a recent American Gaming Association survey, 81 percent of polled gaming executives see prediction markets as a very significant threat.
Kalshi, one of the leading prediction market platforms, was recently valued at $22 billion, making it nearly twice DraftKings’ $12.6 billion market cap.
Polymarket has also emerged as a top competitor to Kalshi.
The rate of change in the space is so dizzying that it can be difficult to imagine the before times, but New York State Sen. Joe Addabbo, who chairs the Committee on Racing, Gaming and Wagering, remembers them vividly.
New Jersey was at the forefront of the fight to end PASPA and immediately took advantage, but New York lagged behind for several years despite being a larger potential market.
Back then, New Yorkers were still crossing bridges and tunnels to place bets in the Garden State.
“I kept looking at [New Jersey’s] numbers on a monthly basis and saying, ‘That’s our money,'” Sen. Addabbo told The Post of his thinking at the time.
Then, the COVID-19 pandemic and subsequent economic downturn accelerated the push for sports betting across the country because states needed the revenue.
More than a dozen states went online with sports betting over a two-year span, including New York, and Sen. Addabbo was out in front trying to move it into the future.
The future he imagined has been lucrative for the state, which leads the U.S. in sports betting revenue, but it has been complicated by a number of factors.
Access to online sports betting has opened the door to scandals across the NBA, MLB and college sports.
Bettors have tried to manipulate the system using mobile sportsbooks, but operators and integrity partners can monitor suspicious activity thanks to technology.
It’s a cat-and-mouse game that likely will always be tested.
Prediction markets also have been a hotbed of controversy, with multiple allegations of users trading on inside information on the platforms.
“Illegal sports betting through sports event contracts is increasingly encroaching on legal, state-and tribal-regulated operators,” AGA President and CEO Bill Miller said in a statement. “It’s clear the legal, regulated industry views this is a threat and will continue to fight back and protect the integrity of our industry.”
Sen. Addabbo agrees that these markets are a danger not only to the regulated industry but also to the people who use them.
“It’s not legal, some of the bets that these prediction markets provide,” Sen. Addabbo said. “It’s dangerous because without guidelines, a minor could obviously [place] a bet, we’re not helping people with an addiction because we haven’t regulated it.”
Prediction markets maintain that they are not betting platforms, but there is mounting pressure from states across the country, including New York, to rein them in.
It’s unlikely the industry is going backward. FanDuel and DraftKings both have their own prediction market products, as well as Coinbase and Robinhood.
After eight years in the weeds on the ins and outs of the sports betting industry, Sen. Addabbo sees stricter regulations as the only sustainable path forward for all parties involved.
“Banning is easy,” he said. “The harder thing to do and the better thing to do is to regulate.”
“It can’t just take one state senator,” he added. “Bottom line, I need the assembly to buy into this, I need the governor’s office to buy into this, I need the gaming commission to buy into this. If they don’t, then we’re at a stalemate, and that’s where we are right now.”
Malik Smith has been immersed in the sports betting industry since 2017. He’s a data nerd with a particular focus on the NBA and combat sports. He spends his weeknights in the winter looking for edges on plus-money NBA player props.
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