MGCB opens investigation into unlicensed predictions markets
Michigan’s investigations align with similar actions taken by other state regulatory bodies, focusing on how these offerings may jeopardize the integrity of the state’s legal betting system.
Key Points
- The MGCB stated these unlicensed platforms offer what are described as “innovative financial products,” allowing users to trade predictions on the outcomes of sports events
- Beyond concerns over lost tax revenue, the MGCB worries these platforms could expose residents to various risks, including fraud, identity theft and inadequate data security
The Michigan Gaming Control Board (MGCB) has initiated investigations into unlicensed sports predictions markets operating throughout the state, which are said to “bypass” the state’s regulatory framework and raise “significant” concerns over consumer protections.
“We take consumer protection very seriously and are committed to ensuring that Michigan residents are engaging with safe and legal sports betting options,” MGCB Executive Director Henry Williams said.
“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. We are actively investigating these practices and will pursue appropriate measures to protect Michigan bettors.”
Michigan’s investigations align with similar actions already taken by other state regulatory bodies, such as Nevada, New Jersey, Connecticut and Ohio, while focusing on how this form of unlicensed offering may jeopardize the integrity of the state’s legal sports betting system.
Williams went on to describe how predictions markets could deceive typical sports bettors, having said, “Sports betting is meant to be a form of entertainment, not a financial investment. By framing sports contracts as investment vehicles, these platforms risk confusing consumers and undermining the state’s commitment to responsible gaming.
“Moreover, many of these unlicensed platforms are often accessible to individuals as young as 18, in stark contrast to Michigan’s 21-plus age requirement for legal sports betting.”
Good to know: The Illinois Gaming Board began investigating Kalshi, a predictions markets operator, over alleged unlicensed sports wagering on April 3
Beyond concerns over lost tax revenue, the MGCB stated these unregulated platforms may expose Michigan residents to various risks, including fraud, identity theft and inadequate data security.
Unlike licensed sportsbooks, which are required to adhere to strict regulations such as age verification, anti-money laundering measures, self-exclusion policies and integrity monitoring, unlicensed entities are reportedly operating without such safeguards.
The MGCB stated it will “continue to investigate and take all necessary steps as deemed appropriate” to protect consumers from what it describes as a “serious risk” to the industry.
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