Prediction markets are testing the boundaries of traditional sports betting, but the battle is far from decided. But, as the regulatory tensions rise and operators reassess strategy, the question is less about disruption and more about how both models will coexist in near future.
Hebert Gaban, the Chief Commercial and Marketing Officer for Latin America at KBET, offered his measured views of ongoing developments in prediction markets in the United States.
Speaking exclusively to SiGMA News, Gaban stressed that prediction markets are not entirely new. “They remind me of movements we’ve seen before, like social games and sweepstakes, which tried to reinterpret or work around the traditional iGaming model,” he said. While he acknowledged innovation in monetisation and product dynamics, he pointed out that the growing number of legal disputes suggests the model is already under pressure.
PENN abandons sports betting
This tension is becoming harder to ignore in the United States, where the line between betting, trading, and entertainment has grown almost impossibly thin. In November 2025, the much-talked-about partnership between Penn Entertainment and ESPN quietly unravelled. What was once pitched as a natural union between media muscle and betting infrastructure never quite delivered, and the two companies walked away from the deal before it even ran its course.
PENN, in its official statement, acknowledged that its sights are now firmly set on iGaming, stepping back from the aggressive sports betting push it had been known for.
Observers believe that this didn’t happen in a vacuum. Prediction markets are gaining serious ground, and they’re starting to make operations uncomfortable for traditional sportsbooks. Platforms like Kalshi and Polymarket work under federal regulation and package their products as event-based derivatives, not gambling.
That distinction saves them from legal scrutiny as it lets them operate in states where sports betting is still off the table, scooping up users who would have otherwise ended up on a licenced operator’s platform. By some industry estimates, established players are already losing billions in wagering volume every year to these upstarts, and the pressure is only building.
Sportsbook challenges federal backing
For established sportsbooks, this creates an uneven playing field. Companies like DraftKings, FanDuel, Caesars Entertainment and MGM Resorts have stepped up lobbying, saying prediction markets are just betting websites packed in a different wrapper. As per them, these platforms behaves like a bet, and so, it should follow the same rules KYC (Know Your Customer) checks, responsible gambling safeguards, and state taxes included.
Regulators are starting to take that seriously. States like New York, Maryland, and Connecticut have already warned licenced operators to keep their distance from these platforms. In some cases, the message is blunt, any kind of link, whether it’s promotion or partnership, could put licences at risk.
Meanwhile, the legal side is getting messy. A growing number of lawsuits are now questioning the core idea behind these platforms including questions like are they really financial products, or just unlicenced betting dressed up differently?
‘Not’ an existential threat
Despite this growing friction, Gaban does not see prediction markets as a direct existential threat. “I don’t see this as a real long-term competitor to sports betting,” he said. “If they manage to scale globally, they’ll likely occupy their own space, with a different audience and a very different profitability logic.”
He further added, “The distinction is important when assessing structural differences between the two models. Prediction markets benefit from lower operational risk, thinner margins, and significantly reduced barriers to entry.”
“I don’t see this as a shift in direction. It’s more about reading opportunities well.”
– Hebert Gaban, Chief Commercial and Marketing Officer, KBET
In addition, unlike how sports event contracts work, prediction markets do not require deep liquidity pools to balance odds and manage exposure. This makes them particularly attractive in emerging or unregulated markets, where traditional betting frameworks are either absent or still evolving.
However, those advantages are less clear-cut in fully regulated environments. “In regulated markets, legal complexity escalates quickly,” Gaban noted, pointing to examples such as France and Belgium, where initially permissive conditions tightened rapidly. This pattern, he suggested, is likely to repeat in other jurisdictions as regulators seek to close gaps and maintain control over gambling-related activity.
Rather than replacing sportsbooks, prediction markets are more likely to act as a catalyst for change. “They will push the industry to innovate, no doubt about it,” Gaban said.
There are already signs of this shift. Some operators, including FanDuel and Fanatics, are exploring prediction-style formats, though it remains unclear whether this represents a long-term strategic pivot or short-term experimentation. For many, the priority is balancing innovation with regulatory compliance, ensuring that any new offering does not jeopardise existing licences.
Ultimately, the future of this dynamic will depend on how regulators choose to act. Gaban stresses that a “balanced framework could allow both models to coexist, each serving different segments of the market. An overly restrictive approach, however, risks pushing innovation into grey areas.”
In the end, his conclusion is pragmatic. “There’s room for both to coexist, as long as the regulatory framework is balanced,” he said. “Otherwise, it becomes a game of loopholes rather than real value creation.”
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