Derek Stevens, owner of sportsbook operator Circa Sports, sharply criticized the fast-growing prediction market sector, alleging that companies like Kalshi and Polymarket have an unfair advantage over licensed operators. He argues that businesses that compete directly with sportsbooks for the same customers should face comparable regulations.
Lower Fees Give Prediction Platforms an Advantage
In a recent interview for media outlet CDC Gaming, Stevens referred to prediction markets as “pirates” and “thieves.” He argued that their ability to offer attractive prices is partly due to the lack of additional costs associated with regulated sportsbooks. Prediction markets have mostly avoided the significant payments required by the regulated sector, as these platforms claim that their products are financial instruments rather than bets.
Licensed sportsbook operators pay state and federal taxes, league-related fees, and contribute to responsible gambling programs. They also face licensing fees and other regulatory costs. These costs add up. According to Stevens, Circa could offer significantly more competitive odds if it did not have these extra fees. The operator’s low-hold approach is especially vulnerable to such competition.
We’re paying all those fees. They don’t. Effectively, they’re thieves. Just because Kalshi and Polymarket are avoiding those fees, does that make them better? I think no.
Derek Stevens, Circa Sports owner
Unfair taxation is only part of the dispute. Consumer safeguards, such as differences in age minimums and responsible gambling protections, are another problematic topic. Prediction market critics contend that allowing 18-year-olds to participate in markets that function like sports betting creates a gap between prediction platforms and state-regulated sportsbooks.
The Dispute Is Unlikely to Settle Down
Stevens’ frustration is part of a larger battle spreading across the US gambling sector. That disagreement has sparked lawsuits between states and prediction market operators as regulators seek to assert their authority over what they consider to be another form of sports betting. Stevens believes states will not simply accept a federal regulatory framework that will cut into their gambling tax revenue.
Jurisdictions like New York and Nevada are unlikely to allow federally regulated prediction markets without a fight. States have constructed their sports betting systems around licensing fees and regular taxation. The rising threat of prediction markets has forced sportsbooks to side with regulators as they aim to preserve the status quo.
Despite these challenges, Circa continues to expand. The company recently got its Arizona license and is aiming for a 2027 online launch with possible retail expansion further down the line. However, the threat of prediction markets continues to loom large. Experts believe that the dispute will reach the Supreme Court sometime next year, delivering a decisive verdict.