Prediction market users trade sports contracts, S&P survey finds

S&P survey finds seven in ten prediction market users trade sports contracts

A survey published by S&P Global Market Intelligence in the third quarter of this year found that 70% of prediction market users had traded on sports-related outcomes — against 36% who traded on economic or financial events, and 33% on political ones. Those numbers do not surprise anyone who has watched this industry for the past three years. What they do is settle an argument.

The argument has been running in regulatory filings, court briefs, and gaming commission hearings from Nevada to Tennessee: are prediction markets a new financial instrument, or are they sports betting with better lawyers? The CFTC has staked a position. State regulators have staked the opposite one. Underdog has now sued seven states to force a resolution. But the S&P data cuts through the jurisdictional framing and lands somewhere uncomfortable for the industry's self-presentation.

When seven in ten of your users are there for the game on Sunday, calling yourself a commodity exchange is a positioning strategy, not a description.

The survey also found that 44% of respondents had never heard of prediction markets at all — which means the customer base that exists is being drawn in primarily through sports advertising, toward sports contracts, and is largely unaware that the underlying legal theory rests on federal commodity law. That is not a retail investor base discovering a new asset class. That is a sports bettor who found a different app.

This is where I part from the consensus read. Most of the regulatory coverage has treated the state-versus-federal conflict as the central question — who has jurisdiction, which court rules first, whether the Supreme Court eventually takes it up. Those are real questions. But the S&P data suggests the more durable problem is upstream of jurisdiction. If the product that users actually want is sports outcome trading, and if the CFTC's authority rests on these being commodity contracts rather than wagers, then the composition of the user base is itself an evidentiary problem for the federal preemption argument.

A court looking at whether event contracts are functionally equivalent to sports betting will eventually look at what people are using them for. The answer, per the survey, is sports betting.

Google reached its own conclusion before any court did. Blocking Kalshi and its competitors from advertising in five states — each of which has active litigation against prediction market operators — is not a legal ruling, but it is a risk calculation by a company with lawyers who read the same briefs the state attorneys general filed. Google does not need the question resolved. It needs to not be on the wrong side of it if resolution goes badly.

The 26% of users trading on news and entertainment outcomes, and the 11% on weather or cryptocurrency, represent the use case that most closely resembles what commodity law was designed to cover. That slice of the market is not what drove the advertising spend, not what attracted the regulatory scrutiny, and not what the S&P survey found anyone particularly aware of.