In a public letter released on Monday, Locke states that, while the PM sector may yet be reshaped and diminished as regulation starts to catch up, the cultural and consumer behaviours that it has already fostered will lead to new opportunities for those well-positioned to reap the benefits.
Locke says: “The future of sports prediction markets is being discussed as though it hangs on a single legal answer: either today’s model survives or the opportunity disappears.”
He disagrees, though he clearly does not see the current prediction market operators as necessarily being the beneficiaries of any lingering opportunities.
Locke adds in his public note: “Some current advantages will disappear, and today’s winners may not be tomorrow’s” – but his messaging is clear: “Americans are going to keep wagering on sports, and Genius will be paid however they do it.”
Demand and momentum
In practice, what is Locke suggesting might happen?
He claims that “the demand created by the rise of prediction markets is here to stay,” and he hopes to continue capitalising on that demand even if the regulatory structure that prediction markets work in is fundamentally altered.
For this to be possible, he is banking on states’ reluctance to leave tax dollars on the table.
He hopes that, in states where sports betting is legal, prediction market customers will migrate to the traditional sportsbooks, and in those 11 holdout states, there will be a renewed momentum to legalise some form of sports betting to fulfil the demand.
And it’s in those holdout states where the upside for legalising is largest, both in terms of population and because, according to Eilers & Krejcik’s numbers for July, 69% of Kalshi’s retail demand is in states with no online sportsbooks.
Conversely, Kalshi’s combined handle in mature online-betting states is supposedly at just 2%.
If the Supreme Court does carve out sports betting from prediction markets, it’s possible, albeit a significant speculation, to think that the likes of California and Texas will suddenly have a 180-degree policy shift.
However, it has likely been clear to politicians in these states for many years how much they stand to generate in tax by legalising sports betting, and it hasn’t changed their minds so far.
So whose is the opportunity?
For Locke and Genius, the long-term winners will be the suppliers, whether that’s those companies that supply the technology to facilitate betting, or those that can deliver customers to operators.
But if the suppliers are profiting, it means that there is also likely some thriving competition in the operator space.
Many of the operators like FanDuel and DraftKings, more established sportsbooks that have developed prediction market products, have taken blows as prediction markets have grown.
But if new regulation does end up seriously hampering those start-up prediction markets like Kalshi and Polymarket, the previous incumbents could come back stronger than ever, benefitting themselves and suppliers alike.
Locke notes that “Flutter describes FanDuel Predicts as a way to acquire customers ahead of state regulation, with incremental economics in the meantime; the relationship is worth having under today’s product and the next one.”
A message to Genius Sports shareholders
Clearly, Locke believes that Genius is one of those well positioned to capitalise regardless of legal outcomes, due to its diversity of offering.
He wrote: “We provide official data, settlement and integrity services to the platforms, including DraftKings, FanDuel, Kalshi and Polymarket. We sell data and pricing to the market makers who provide liquidity on exchanges. And through Legend and our wider media platform we help operators acquire the customers all of them are competing for.”
At a point of serious uncertainty in US sports betting and prediction markets alike, Genius Sports has seen its share price tumble nearly 10% over the past five days.
The company began to recover over the past six months, following a mass sell off at the beginning of the year, when it was announced that Genius was acquiring the sports media business Legend.
With the publication of his letter, Locke is reminding shareholders of the positive angle on that acquisition and seeking to reassure them that the future holds plenty of promise, whichever way the pending regulatory questions end up going.
Dingnews.com 21/09/2026