NY Attorney General Warns Super Bowl Bettors About Risks of Prediction Markets

New York Attorney General Letitia James is warning New Yorkers to think twice before using sports prediction markets ahead of Super Bowl LX, saying they operate outside state oversight and expose users to heightened financial risk.

In a Feb. 2 statement, James said many of these platforms operate without basic consumer protections or oversight by the New York State Gaming Commission (NYSGC), leaving users at “significant financial risk.”

She pointed to safeguards that licensed sportsbooks must follow, but prediction markets often lack. These include age verification, safeguards against problem gambling, limits on deceptive advertising, and responsible gaming tools.

James also flagged rising consumer debt and loan defaults that financial firms have begun associating with prediction-market activity. She urged New Yorkers to confirm that any betting platform holds a license from the NYSGC before placing money.

This is not James’s first action against gray-market gambling models. Last year, her office issued cease-and-desist letters to 26 online sweepstakes casino operators, alleging they were offering illegal, unlicensed gambling to New Yorkers through dual-currency prize-redemption systems.

Prediction Markets Fight Back

Prediction market platforms continue to push back. They argue federal law — not state gaming rules — governs their operations.

A spokesperson for the Coalition for Prediction Markets told ESPN that the coalition agrees consumers should avoid unregulated platforms. The group said its members hold licenses from the Commodity Futures Trading Commission (CFTC), ban insider trading, and offer responsible gambling tools.

The coalition also plans a seven-figure marketing campaign, including a full-page ad in the Washington Post last week. Its goal is to push back against claims that prediction markets lack oversight or encourage reckless spending. Notably, Polymarket is not part of the coalition and does not explicitly ban insider trading.

Ongoing Legal Case Between Kalshi and NYSGC

The NYSGC has already taken direct action. In October, it issued a cease-and-desist order against Kalshi, accusing the platform of offering illegal sports betting in New York. Kalshi fired back with a lawsuit, arguing that federal law governs its business.

Momentum recently shifted when a Massachusetts judge barred Kalshi from targeting residents without proper licensing. The NYSGC quickly added that ruling to its own case as supplemental authority. A decision on Kalshi’s request for a preliminary injunction is expected soon in the Southern District of New York.

Other States Target Operators, Not Consumers

New York’s move also goes further than similar actions elsewhere. Regulators in Ohio, Arizona, Illinois, Nevada, Michigan, Washington, and Louisiana have recently issued advisories to licensed sportsbooks and operators. They’ve warned that involvement with prediction markets could violate state law or jeopardize licensure.

James’ alert, by contrast, is directed at bettors themselves — marking one of the first high-profile consumer warnings from a state official rather than a notice to industry participants.

That shift signals regulators are beginning to frame prediction markets not only as a licensing issue for operators, but as a potential consumer-protection risk for the public.

All Eyes on the NFL Finale

Super Bowl LX may now serve as the first major stress test for. Industry watchers plan to compare Kalshi’s trading volume with that of traditional sportsbooks like DraftKings and FanDuel.

Despite mounting legal pressure, Kalshi is pressing ahead with promotions in New York. The company announced it will give out free groceries for three hours in Manhattan’s East Village on Feb. 3. Kalshi is also rebranding the Westside Market on Third Avenue, offering up to $50 in groceries per person. More than 1,550 people have already RSVP’d.

Other prediction platforms are also stepping up promotions. Webull announced zero-commission trades on the Super Bowl and launched markets tied to broadcast comments, protests, and ads.

Still, prediction markets won’t appear in any Super Bowl ads as the NFL continues to ban them. Traditional sportsbooks, by contrast, already have their ad slots locked in.

With regulators scrutinizing promotions and lawsuits still pending, the Super Bowl could determine whether prediction markets can expand alongside — or outside — state-regulated sportsbooks.