New York AG Flags Super Bowl Prediction-Market Risks for Bettors

With Super Bowl LX approaching, New York Attorney General Letitia James warned that prediction markets don’t have state-level supervision or standard consumer protections, a tougher stance that follows her office’s earlier crackdown on sweepstakes-style casinos.

New York Attorney General Letitia James is urging New Yorkers to be cautious about using sports prediction-market platforms ahead of Super Bowl LX, arguing that these products sit outside state oversight and can leave users facing higher financial exposure.

In a Feb. 2 statement, James said many of these services operate without core consumer safeguards and without supervision from the New York State Gaming Commission (NYSGC), which can put users at “significant financial risk.”

She contrasted that with the requirements imposed on licensed sportsbooks, noting that prediction markets often don’t provide comparable protections. She specifically cited age checks, problem-gambling protections, restrictions around misleading marketing, and responsible-gaming tools.

James also highlighted a trend in which financial institutions have begun linking prediction-market activity to increasing consumer debt and rising loan defaults. She advised New Yorkers to verify that any platform they use is licensed by the NYSGC before wagering money.

This warning follows earlier enforcement steps by her office against other gray-area gambling formats. Last year, the office sent cease-and-desist notices to 26 online sweepstakes casino operators, alleging they were offering illegal, unlicensed gambling to New Yorkers via dual-currency prize-redemption models.

How Prediction Markets Are Responding

Prediction-market companies continue to dispute these characterizations. They contend that federal law, rather than state gaming regulation, is the relevant framework for their operations.

A spokesperson for the Coalition for Prediction Markets told ESPN that the coalition agrees consumers should steer clear of unregulated operators. The group said its member platforms are licensed by the Commodity Futures Trading Commission (CFTC), prohibit insider trading, and include responsible-gambling features.

The coalition is also preparing a seven-figure advertising push, including a full-page Washington Post ad that ran last week. The campaign aims to counter arguments that prediction markets are unsupervised or promote reckless spending. Notably, Polymarket is not a coalition member and does not clearly prohibit insider trading.

Kalshi vs. NYSGC: A Case Still in Motion

The NYSGC has already intervened directly. In October, it issued Kalshi a cease-and-desist order, asserting the company was offering unlawful sports betting in New York. Kalshi responded by filing suit, maintaining that federal law governs its activity.

The trajectory shifted recently after a Massachusetts judge blocked Kalshi from marketing to residents there without proper licensing. The NYSGC soon incorporated that decision into its New York matter as additional supporting authority. A ruling on Kalshi’s motion for a preliminary injunction is expected soon in the Southern District of New York.

Most States Focus on Companies, Not the Public

New York’s approach also appears broader than what’s happening elsewhere. Regulators in Ohio, Arizona, Illinois, Nevada, Michigan, Washington, and Louisiana have recently issued guidance to sportsbooks and other operators, warning that participation in prediction markets could breach state law or threaten licensing status.

James’ notice, however, targets bettors directly — making it one of the more prominent consumer-facing warnings from a state official, rather than a communication aimed at industry players.

That change suggests regulators are increasingly presenting prediction markets not just as an operator-licensing question, but as a consumer-protection concern for the wider public.

The NFL Championship Under the Microscope

Super Bowl LX could become the first major proving ground for these products. Observers plan to compare Kalshi’s trading activity against traditional sportsbook metrics from companies like DraftKings and FanDuel.

Even as legal pressure builds, Kalshi is continuing marketing efforts in New York. The company said it will hand out free groceries for three hours in Manhattan’s East Village on Feb. 3. Kalshi also plans to rebrand the Westside Market on Third Avenue and offer up to $50 in groceries per person, with more than 1,550 RSVPs already recorded.

Other prediction platforms are escalating promotions too. Webull announced zero-commission Super Bowl trades and introduced markets linked to broadcast remarks, protests, and advertisements.

Even so, prediction markets won’t be featured in Super Bowl commercials because the NFL continues to prohibit those ads. Traditional sportsbooks, on the other hand, have already secured their commercial placements.

With promotions under heavier scrutiny and litigation still unresolved, the Super Bowl may shape whether prediction markets can grow alongside state-regulated sportsbooks or attempt to expand outside that framework.