New York Bill Seeks to Ban Most Prediction Market Wagers
New York considers restricting the operations of prediction markets by introducing comprehensive regulations and banning most wagers on sporting events and sensitive topics.
The legislative effort centers on Assembly Bill 9251 (A9251), known as the Oversight and Regulation of Activity for Contracts Linked to Events Act (ORACLE Act), introduced by Assembly Member Clyde Vanel. The bill has been sent to the Assembly Committee on Consumer Affairs and Protection, though the legislative session does not begin until January.
Prohibited Markets and Scope of the Ban
The ORACLE Act proposes to prohibit prediction markets from offering speculative positions to New York users on a wide range of subjects. Key markets slated for exclusion are:
- Political Markets. Contracts tied to federal, state, or municipal elections or the conduct of government authorities.
- Sensitive Events. Markets related to catastrophes, deaths, acts of terrorism, or public health crises.
- Security Markets. Contracts linked to the pricing of publicly traded companies.
- Athletic Events. The bill bans markets related to the outcome of a specific athletic event or “events within an athletic event.” The legislation specifically lists prop betting (wagers on granular in-game outcomes) as prohibited.
The bill does not ban all sports contracts. Markets focusing on the final outcome of an entire tournament, such as which team will win the NBA championship, or bracket-style markets for combined results remain permissible.
Strict Consumer Protection Measures
The ORACLE Act imposes rigorous consumer protection rules on prediction market platforms, mirroring those required of licensed sports betting operators. These requirements aim to treat prediction market activity as a form of regulated gambling.
- Minimum Age. Users must be at least 21 years old.
- Responsible Gaming. Platforms must implement robust self-exclusion tools and allow users to set personal limits on deposits, spending, and time spent on the platform. A request to increase a limit requires a 14-day waiting period.
- Payment Restrictions. Platforms are prohibited from accepting credit cards or any other credit-based payments to fund accounts.
- Advertising Rules. Platforms are banned from using terms like “risk-free” in promotions. They must also clearly display the HOPE NY problem gambling helpline.
Limiting Sportsbook Involvement
A key clause in the ORACLE Act targets the potential involvement of major licensed sportsbooks, such as DraftKings and FanDuel, in this emerging market.
The law seeks to prohibit prediction market platforms from using any individual or entity that “knowingly engages in gaming activities in the ordinary course of business”, including affiliates and subsidiaries, as a liquidity provider or market maker.
This clause is designed to prevent large betting operators from easily entering the prediction market space for sports contracts.
Enforcement and Penalties
The bill grants the New York Attorney General’s office the authority to pursue injunctions and enforce civil penalties against non-compliant platforms. Standard civil penalties for violations are up to per violation, or up to for persistent violations.
Should a platform continue to operate in New York after a court-ordered cease-and-desist is issued, it faces a massive daily fine of million per day.
This legislative action follows a cease-and-desist order issued by the New York State Gaming Commission against a platform in late October.
The platforms involved, such as Kalshi and Polymarket, contend that their “event contracts” are commodities regulated exclusively by the federal Commodity Futures Trading Commission (CFTC), suggesting the state lacks the jurisdiction to ban their activity. The viability of New York’s sweeping ban is expected to be fiercely contested.
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