The Arizona Department of Gaming (ADG) has warned licensed fantasy and sports betting operators that involvement with unregulated prediction markets—even outside of Arizona—could jeopardize their licenses.
In a letter sent on September 15, ADG Director Jackie Johnson stressed that both direct and indirect connections to entities offering event contracts without proper state authorization may be grounds for license revocation or other penalties.
“If the Department believes that an entity related to a licensee is partnered with a company that is selling event contracts in a jurisdiction outside Arizona in violation of the laws of that jurisdiction, that might (depending on circumstances) impact a licensing decision,”Johnson wrote.
State’s Stance: No Event Contracts Without a License
Event contracts – bets on the outcome of real-world events—are being offered by entities like Kalshi, a Designated Contract Market (DCM) regulated by the Commodity Futures Trading Commission (CFTC). These markets operate similarly to sports betting exchanges and are gaining traction among firms looking to expand their offerings.
The ADG clarified that such contracts cannot be legally sold to Arizona residents without a state license. The letter stated that even out-of-state activity involving event contracts could be used to assess an operator’s “suitability” to maintain a license in Arizona.
The Department also cautioned that “associating, coordinating, or partnering—directly or indirectly—with entities facilitating such contracts” could trigger regulatory consequences.
Industry Movement Prompts Regulatory Scrutiny
The ADG’s action follows industry moves into the prediction markets space. Underdog, a licensed fantasy sports operator in Arizona, recently began powering sports event contracts in 16 states via a partnership with Crypto.com – though Arizona was not included.
Meanwhile, FanDuel has plans to launch a financial markets-based prediction platform through a partnership with CME Group, also a DCM.
In May, the ADG issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com for unauthorized gambling operations. Six other states took similar steps.
The letter referenced earlier communications with operators regarding DCMs and Futures Commission Merchants (FCMs). Some operators, the ADG noted, are exploring acquiring or partnering with DCMs or FCMs to expand into prediction markets—moves that raise regulatory red flags in Arizona.
Protecting Arizona’s Regulated Market
The ADG’s letter mirrors, but goes beyond, similar guidance issued last month by the Ohio Casino Control Commission. Arizona’s message includes explicit threats of suspension, fines, or license conditions for those found to be in violation.
The warning also arrives as the state ramps up its public awareness efforts during Responsible Gaming Education Month. With football season underway, the ADG is reminding players to use licensed platforms and watch for scams involving unregulated gambling sites.
“Unregulated platforms lack responsible gaming safeguards, age verification, and offer no consumer protections, which puts Arizonans at risk,” Johnson said in a separate statement.
Arizonans are urged to verify operators using the Check Your Bet tool, consider the self-exclusion program, and contact the 1-800-NEXT-STEP helpline for support.
Source:
“Arizona Warns Regulated Operators, Via Letter, Against Offering Prediction Markets”, ingame.com, Sep 17, 2025.
The post Arizona Issues Warning to Operators Over Unlicensed Prediction Markets first appeared on RealMoneyAction.com.