Prediction Markets Are Upending U.S. Gambling: What It Could Mean For Non-Investment Grade Credit
Summarize this article with:
Neuberger Berman3.24K FollowersFollow5ShareSavePlay(9min)CommentsSummaryA 2024 court ruling allowed prediction markets to operate as federally regulated event contract exchanges.Federal regulation of these markets has allowed their operation in all 50 states, including the roughly 20 states covering half of the U.S. population that have no or limited online sports betting.In the meantime, this nearly instantaneous nationwide legalization of a gambling-adjacent product threatens to disrupt existing gambling markets. tumsasedgars/iStock via Getty Images A 2024 court ruling allowed prediction markets to operate as federally regulated event contract exchanges. With nationwide reach, these products are pressuring state-regulated sports books, lotteries and casinos - raising new considerations for non-investment-grade issuers and investors.This article was written byNeuberger Berman3.24K FollowersFollowNeuberger Berman was founded in 1939 to do one thing: deliver compelling investment results for our clients over the long term. This remains our singular purpose today, driven by a culture rooted in deep fundamental research, the pursuit of investment insight and continuous innovation on behalf of clients, and facilitated by the free exchange of ideas across the organization. From offices in 39 cities across 26 countries, Neuberger Berman manages a range of equity, fixed income, private equity and hedge fund strategies on behalf of institutions, advisors and individual investors worldwide. With 763 investment professionals and 2,850 employees in total, Neuberger Berman has built a diverse team of individuals united in their commitment to client outcomes and investment excellence. Our culture has afforded us enviable retention rates among our senior investment staff, and has earned us citations as first or second (among those with 1,000 or more employees) in the Pensions & Investments “Best Places to Work in Money Management” survey each year since 2014. As a private, independent, employee-owned investment manager, Neuberger Berman is structurally aligned with the long-term interests of our clients. We have no external parent or public shareholders to serve, nor other lines of business to distract us from our core mission. And with our employees and their families invested alongside our clients—plus 100% of employee deferred cash compensation directly linked to team and firm strategies—we are truly in this together. The firm has $538 billion in assets under management as of June 30, 2025. For more information, please visit our website at www.nb.com.For important disclosures: https://www.nb.com/disclosure-global-communicationsQuick InsightsHow does Kalshi's court win affect state-regulated gambling operators?Kalshi's federal regulation enables nationwide prediction markets, eroding state control and introducing competition in jurisdictions previously insulated from legal gambling alternatives.What strategic moves are DraftKings and FanDuel making in response to prediction markets?DraftKings and FanDuel are investing hundreds of millions to launch prediction market offerings, seeking to capture market share amid regulatory shifts and new opportunities.Which issuers are most at risk from the rise of federally regulated prediction markets?Non-investment grade lottery issuers, particularly in states with limited competition, may face negative impacts as prediction markets divert users and revenues.Recommended For You