A Modern Take on a Long Tradition of Sports Forecasting
Human Nature
However, you look at it, predicting the outcome of an event is part of human nature. Whether we do so for money, glory, or smug satisfaction, it seems an irresistible part of our make-up. Forecasting and predicting results seems to stretch back as long as there are records of human activity. There is evidence of Stone Age humans engaging in activities equivalent to gambling and betting.
Ancient history
Archaeologists have uncovered astragali (sheep knuckle bones) in caves dating back over 40,000 years. While early Paleolithic gambling is inferred from the found objects, it is highly unlikely that they were forecasting the outcome of a mere sporting event. Experts suggest that they would have been wagering for wealth, personal freedom, or even life and death. Gambling in Stone Age times was probably a serious business rather than an entertainment.
However, fast forward tens of thousands of years, and there is evidence of ancient Egyptians betting on chariot racing and fencing. Betting was an element of the ancient Olympic Games in Greece, and the Romans bet on games and racing. As now, gambling goes through periods of being legal and being outlawed – the Romans were probably the first to attempt to restrict it, but exceptions were made for high days and holidays.
More recent events
England and Scotland’s King James created the first legal lottery in Britain, and that was an event that directly funded the Jamestown Colony. The ensuing British settlers brought their passion for horse racing with them, and the first racetrack was built on Long Island in 1665. As the US expanded westward, so did the gambling and gaming activities. While some people considered it immoral, others asserted that it was better than brawling! Some cities began licensing certain forms of gambling to raise revenue. The rest, as they say, is history.
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What followed over the next few hundred years was a pattern of banning, people getting around the bans, people gambling illegally, and gambling being legalized. This pattern continues to this day. Until very recently, the latest seismic shift was the Supreme Court’s striking down of the federal PASPA ban on sports betting, which ruled that it was unconstitutional as a federal attempt to control state legislatures. As a result, states have been able to pass their own gambling laws again, and now 38 states (plus Puerto Rico and Washington, DC) have legalized real-money sports betting in some form or another.Â
Bang up to date
However, there is now a new ‘new kid on the block’ in the form of prediction markets, which could again pit state and federal legislators against each other. Prediction markets allow people to take a position on the outcome of an event. However, the ‘odds’ are not set by a traditional bookie.
Rather than betting on props, plays, parlays, and spreads, prediction market apps let you trade on yes or no outcomes of future events. Price movements work like a market, not a sportsbook. This means that prediction markets are regulated at the federal level by bodies like the CFTC and are classified as financial derivatives, despite appearing to be betting products.
Not missing out
While there are a dozen or so specialist operators like Kalshi making a big noise in this space, the Titans of the online gambling industry were not going to let the federal newcomers just steal the market from under their noses. So, one of the country’s biggest sports and casino betting operators has thrown its hat into the ring and launched Fan Duel Predicts. The site is now live in all 50 states and DC, and the team behind it knows a thing or two about customer acquisition. They have the advantage of a legacy brand and the benefit of already being a mobile-first company.
To attract customers to its platform, it is offering a FanDuel promo code for a $25 welcome bonus. This is quite a lot more generous and significantly less restrictive than other prediction market apps, so it seems that FanDuel Predicts means business.
FanDuel Predicts allows users to trade contracts based on future events, and its focus appears to be very much on the finance and sports markets. Where other platforms offer a wider range of topics, this site does not take positions on the Oscars, the Grammys, or who will be the next President of the USA.
As well as ensuring that the new sites do not steal its market share in existing state-regulated gambling markets, FanDuel Predicts primary objective is to offer services in states like Texas and California, where sports betting is still illegal. The platform allows users to take positions on the outcomes of sporting events in a safe and regulated way from their smartphones or other internet-connected devices.
What is on offer
What you will find on offer on FanDuel Predicts does depend on where you live. Where FanDuel already offers traditional online sportsbook options (33 jurisdictions in total), it only offers markets related to finance, economics, and commodities. However, in the 18 states where they do not offer a sportsbook option, they are now offering prediction market options. That means that, right now, even residents of Utah and Hawaii can take a position on the outcome of a real-world event. However you look at it, that is a fairly seismic position and one that will probably not go unchallenged for long.
FanDuel Predicts is a lightweight app available for both iOS and Android Devices. It has a sleek, user-friendly interface that is suitable for both new and experienced traders. It offers a wide selection of sports and event markets, but what is available varies from state to state. Those looking for sports will not be disappointed as trades can be made on the NFL, MLB, MLS, NHL, and NBA. For the moment, niche sports like darts, rugby, cycling, and table tennis are not available, but it is likely that they will be in the not-too-distant future.
Hybrid app
In summary, prediction market trading is a cross between stock trading platforms and sportsbooks. Rather than betting against the house, users buy contracts hoping the event will resolve in a certain way.
Users buy and sell YES and NO positions. Contract prices can fluctuate significantly, and the ‘odds’ are based on other sites that track betting odds and prediction volumes. Players are not playing against the house but other users. All these apps require users to deposit and make purchases to use them. While they are regulated by the CFTC, they are not designed for long-term investments, and users have no stock holdings.
In the news
Prediction markets are making the headlines at the moment, mostly due to tussles between state and federal regulators. States that allow online betting are concerned that sites will divert tax revenue from licensed sites, while states that do not allow real-money betting and gaming are concerned that their restrictions are being circumvented. A federal judge in Arizona has granted the CFTC a temporary restraining order against state officials who have been trying to regulate prediction market platforms after the state tried to prosecute Kalshi for not having a sports betting license.
The market is massive. The Bank of America estimates that sports event contracts alone could be worth as much as $1.1 trillion. Right now, the bank reports that Kalshi controls almost 90% of the volume, but FanDuel has no intention of missing the boat. They might have launched later, but they know about acquisition. It would be interesting to predict where the market might be in five years’ time.