NEXTPredict New York, Day 1: Regulators, Sportsbooks and Wall Street Share One Stage

The first day of NEXTPredict Summit New York brought the prediction markets industry together at Convene, 30 Hudson Yards, on Thursday 22 October. Exchanges, brokers, sportsbooks, regulators, investors and economists spent the day on one question: where the market goes next, and who sets its rules. The summit runs across five stages with around 200 speakers, and the midterm elections are less than two weeks away.

SCCG Founder and CEO Stephen Crystal is attending both days. He is there to meet with clients, partners and new contacts, and to spend time with the people shaping this market.

The regulator: enforcement is real

The morning’s main session was the CFTC’s Director of Enforcement, David Miller, interviewed by CNN’s Marshall Cohen. His message was that insider trading and market manipulation rules do apply to prediction markets, and that the agency is acting on them. He pointed to the cases the CFTC has brought this year, and warned campaign staff and company employees that trading on confidential information from their jobs is likely insider trading.

Miller also said the CFTC wants large offshore platforms that reach US customers to register, citing the collapse of FTX. He described the agency as still “very pro innovation.”

The sportsbook: DraftKings says it wins either way

DraftKings CEO Jason Robins, speaking with CNBC’s Contessa Brewer, said DraftKings Predictions has become the “clear number three” exchange within months of launch, even though it operates in fewer than half of US states.

Robins said the company’s choice not to offer sports prediction markets in states where it holds sportsbook licences leaves it well placed however the expected Supreme Court case on sports event contracts is decided. He also said that if sports prediction markets become permanent, he expects states to tax them in the same way as sports betting. And he said DraftKings already applies its sportsbook responsible gaming tools to its predictions product, even though it is not required to.

Integrity and the midterms

Polymarket’s deputy chief legal officer, Olivia Chalos, said the company is watching election markets for manipulation attempts, including by foreign governments, ahead of the midterms, though it has not seen any so far. Other panels covered how exchanges flag suspicious accounts and how well-resourced the CFTC is to police a fast-growing market.

Player protection came up as well. Novig called for a national self-exclusion system, since state-by-state schemes leave gaps. The International Tennis Integrity Agency said it is seeing more “courtsiding”, where people at a match trade on the delay before markets update.

The money: growth beyond sports

Speakers agreed that sports still account for most volume, at around 80% by one panellist’s estimate, but expect that to change:

→ Robinhood said its most popular contract in September was the Federal Reserve’s rate decision, not a sporting event. It also announced approval from Dubai’s financial regulator, ahead of a launch in the UAE.
→ Cboe said a large wave of new event contracts, including company KPI markets, is coming.
→ Market maker White Swan Predicts said combination (parlay-style) contracts carried about $18bn of risk across the industry in a single week, and expects around $30bn a week by Christmas.
→ Investor Neal Berger of Eagle’s View Asset Management said it is possible prediction markets could one day grow bigger than the stock market.

Not everyone was so bullish. Underdog founder Jeremy Levine warned that the current spending on marketing and sponsorship will pay off for only one or two operators. The day closed with economists, among them Robin Hanson and AQR’s Tobias Moskowitz, debating whether the boom is making these markets more accurate.

Why being in the room matters

Day 1 showed how far this industry has travelled. A sportsbook CEO, a federal regulator, a crypto exchange and Wall Street investors shared one stage, and they no longer see each other as separate worlds. The rules, the products and the customers are being decided now, and much of it is happening in conversations like the ones in New York this week.

That is why SCCG covers prediction markets every day, and why Stephen is in New York. Gaming companies know the customer. Prediction markets bring a new market structure. The businesses that understand both, and know the people on both sides, will be best placed whichever way the regulators and the courts decide.

Day 2 turns to the midterm elections. The Main Stage is streamed on YouTube.

Want to meet Stephen while he is in New York? Book half an hour with him, and his team will confirm where to meet at the venue.

Book a time with Stephen

Session details and quotes are from NEXT.io’s live coverage of NEXTPredict Summit New York.