EXCLUSIVE: Prediction markets launch coalition amid sports betting fight

Several prediction markets are forming a coalition to promote and defend their political interests amid a growing fight over sports betting, people involved in the effort tell Axios.

Why it matters: Prediction markets are rapidly expanding their presence throughout the U.S., offering "event contracts" on sports, elections, news, entertainment and other topics.

Driving the news: Kalshi and Crypto.com will announce Thursday that they have convened an alliance to create the Washington, D.C.-based Coalition for Prediction Markets.

• Initial members include Kalshi, Crypto.com, Robinhood, Coinbase and Underdog.
• The coalition's focus will include promoting federal regulation — via the Commodity Futures Trading Commission (CFTC) — and warding off legal attempts by state gaming regulators to block their services.

State of play: 39 states have legalized sportsbooks, but prediction markets are live in states that haven't done so — and in some states that have — under the premise that they are regulated by the CFTC, a federal agency.

What they're saying: "Americans deserve clarity, not 50 conflicting interpretations," Sara Slane, executive board member of the new coalition and head of corporate development at Kalshi, said in a statement

• Slane added that "a unified industry voice was needed to advocate for access and consistency nationwide."

Friction point: The coalition's formation comes amid a growing fissure in the gambling industry over prediction markets.

• The American Gaming Association — whose members include land-based casino chains like MGM and Caesars — has launched a campaign blasting prediction markets as unlawful.
• The AGA has placed ads on YouTube and on social media ripping prediction markets, saying "it's still sports betting" — hitting at the core of the legal dispute.

• DraftKings, FanDuel and Fanatics recently left the AGA in a dispute over the issue. Fanatics has already launched its own prediction market, Fanatics Markets, while DraftKings and FanDuel are expected to introduce similar services in the coming weeks.

How it works: Businesses that compete with each other but share similar political interests often combine their voices in Washington via interest groups that lobby policymakers.

• In the auto industry, for example, numerous auto companies are members of the Alliance for Automotive Innovation, including rivals such as GM and Ford.

What to watch for: Whether Polymarket joins.

• Polymarket has a fierce business rivalry with Kalshi, but their political interests are largely aligned.