Michigan Investigates Sports Prediction Markets

As alternative betting models gain traction in the U.S., Michigan has stepped into the spotlight with a formal investigation into sports prediction markets operating outside its regulatory oversight.

These markets, which allow users to buy and sell contracts based on the outcomes of sports events, have sparked national debate. While proponents argue they offer financial innovation, regulators warn they may pose real risks to consumer safety and legal sports betting integrity.

The Michigan Gaming Control Board (MGCB) now joins other state regulators in scrutinizing these platforms for bypassing the rules established under state law for sports betting.

With concerns mounting, the MGCB has confirmed active investigations into prediction market activity and is weighing enforcement action.

Michigan Gaming Control Board Investigates Sports Prediction Markets Over Regulatory Violations

Key Points:

• MGCB targets prediction markets: The Michigan regulator is investigating platforms offering sports-based trading contracts without a license.
• Consumer protection risks flagged: The MGCB warns these sites bypass legal safeguards such as age checks, AML protocols, and KYC rules.
• Potential for confusion and financial harm: Promoting betting as an “investment” undermines responsible gambling standards and misleads users.

Michigan Joins National Crackdown on Unregulated Betting Markets

The Michigan Gaming Control Board (MGCB) has officially confirmed an ongoing investigation into unlicensed sports prediction markets, raising alarms over the growing popularity of platforms offering “financialized” sports wagers.

While similar probes have emerged in states like New Jersey, Nevada, and Massachusetts, Michigan’s announcement underscores the wider regulatory unease surrounding the blurred lines between betting, investing, and trading.

What Are Sports Prediction Markets?
Unlike traditional sportsbooks, prediction market platforms allow users to trade contracts tied to sports outcomes—such as whether a team will win or if a player will score a set number of points. While they resemble financial derivatives in format, they operate without the licensing or oversight required under Michigan law.

These sites are marketed as “investment opportunities” or tools for price discovery, but regulators argue that they exploit loopholes to sidestep state gambling laws.

MGCB’s Concerns: Regulation, Revenue, and Risk

Henry Williams, Executive Director of the MGCB, issued a strong statement on the issue:

“Unlicensed entities not only pose a risk to consumers but also undercut the integrity and revenue-generating potential of the state’s regulated sports betting industry.”

The MGCB has expressed specific concerns, including:

• Age Restrictions Ignored: Many platforms allow users as young as 18, while Michigan mandates a 21+ requirement for legal betting.

• Lack of Responsible Gambling Tools: Unregulated operators are not bound by self-exclusion policies, gambling limits, or addiction support mechanisms.

• No Consumer Safeguards: These platforms may expose users to fraud, identity theft, or unauthorized use of personal data due to inadequate security standards.

• Confusing Product Positioning: Presenting sports betting as a financial asset class undermines its status as a form of entertainment and can mislead less-informed users.

A Broader Regulatory Movement

Michigan’s investigation mirrors growing concern across the U.S. over the legal ambiguity of sports prediction markets. While some platforms claim to operate under Commodity Futures Trading Commission (CFTC) oversight, others remain unlicensed altogether.

In Congress, lawmakers have begun questioning whether these offerings should be treated as gambling or financial products, with implications for how they’re regulated.

Meanwhile, tribal gaming groups and state lotteries have warned that unlicensed platforms could siphon revenue away from regulated channels that support public services and tribal communities.

Industry Caught in the Crossfire

While some fintech innovators argue that prediction markets enhance engagement and market efficiency, traditional stakeholders — including sportsbooks, regulators, and consumer protection groups — remain skeptical.

Operators like BetEx and Kalshi have pushed for clearer federal guidelines, but in the absence of consensus, state-level bodies like the MGCB are asserting jurisdiction where possible.

Responsible Innovation or Regulatory Evasion?

As sports prediction markets continue to grow in popularity, Michigan’s decision to investigate reflects a broader effort to ensure that innovation does not come at the cost of consumer protection.

The MGCB’s stance is clear: sports betting must remain a licensed, regulated, and responsible activity — not a speculative loophole disguised as financial trading.

As the investigation unfolds, platforms operating in this space will need to demonstrate compliance or face the possibility of enforcement, including cease-and-desist orders and potential legal action.

The outcome of Michigan’s probe could set a precedent for how other states — and possibly federal agencies — approach this contentious and evolving sector of the gambling industry.