MIAMI BEACH, Fla. — Sports betting should be regulated as a federal financial product rather than a state-licensed casino product, two prediction-market entrepreneurs said Thursday at Consensus Miami 2026, arguing that the current sportsbook model is structurally flawed and forecasting a multi-year legal fight over how the market should be governed.

Market Outlook

Jacob Fortinsky, co-founder and CEO of sports betting platform Novig, told attendees that the legacy sportsbook approach treats consistent winners as if they were cheaters, distorting market quality and discouraging professional participation. He described sports event contracts as binary financial instruments that have long been categorized as gambling products despite, in his view, fitting more naturally within a financial-market framework. Globally, he said, sports betting represents a “$2 trillion asset class still dominated by these legacy casinos,” a scale he argued warrants regulation aligned with financial markets rather than state-by-state casino oversight.

Fortinsky outlined a near-term operating plan for Novig, saying the company is on track “this summer” to move from a sweepstakes model active in 35 states to a federal DCM framework that he said would allow operations in all 50 states. An earlier bid to pursue state-level licensing in Colorado proved instructive, he added, characterizing the experience as a wake-up call about the priorities of state regulators. According to his account, regulators communicated that tax revenue took precedence over consumer protection, innovation, or market efficiency.

Analyst Views

Adding a practitioner’s perspective, Adam Mastrelli, founder of 57 Maiden, a firm building AI-driven trading strategies for prediction markets, backed the critique with personal experience. He said he and a partner were removed from two major sportsbooks within two months because their trading was considered too sharp. He likened the practice of off-boarding successful bettors to sidelining elite athletes for excelling, a comparison intended to highlight what he views as structural misalignment between sportsbook incentives and open, liquid markets.

Mastrelli said his team turned to Novig because it charges no fees and permits the construction of synthetic positions, features he said better support systematic strategies. Even so, he described how edge in these markets decays rapidly. Out of 154 proposed trading strategies his firm evaluated, only three currently run at a profit. The implication, in his view, is that sustainable performance depends on building systems capable of adapting as alpha is competed away. He noted his most profitable season came in the WNBA, underscoring that opportunities can be highly segment-specific and time-limited.

Key Factors

Beyond platform design, the speakers emphasized that the central variable for market development is the regulatory pathway. Fortinsky argued that the question of whether prediction markets — including sports — fall under federal financial oversight or remain subject to state gambling regimes is likely to be settled in the courts. He projected that the federal-state conflict could reach the U.S. Supreme Court within two or three years, citing what he described as 15 pending lawsuits among the Commodity Futures Trading Commission, Kalshi, Robinhood, and various states.

Within prediction markets, Fortinsky contended that sports is “counterintuitively actually the safest vertical,” pointing to higher perceived risks of insider trading and manipulation in political and broader event-driven contracts. That view frames sports markets as a comparatively lower-risk entry point for regulators seeking to balance innovation with market integrity, though the speakers’ comments acknowledged that oversight and enforcement remain decisive for investor protections and platform conduct.

Future Trends

The panelists’ outlook centers on the migration of sports betting toward a financial-market paradigm, with platforms positioning themselves for federal frameworks that they believe could deliver broader access, deeper liquidity, and more consistent rules. Fortinsky’s plan for Novig to shift from a sweepstakes model to a federal DCM framework reflects that thesis, as does Mastrelli’s decision to avoid offshore venues entirely and focus on environments that mirror equities-style competition.

Mastrelli compared mature prediction markets to equities exchanges, evoking a landscape where sophisticated firms compete head-to-head and advantages narrow over time. In that envisioned future, he suggested, the market becomes a contest of research, technology, and execution rather than a venue where sharp traders are excluded. The rapid erosion of edge he described — moving from more than a hundred candidate strategies to just a handful that remain profitable — serves as both a caution and a forecast: any outperformance may be fleeting, and systems must evolve continuously to keep pace.

For now, the speakers’ expectations hinge on legal outcomes and regulatory clarity. If sports markets are ultimately treated as financial products, they anticipate a shift toward practices common in other asset classes, including broader participation by disciplined traders and greater tolerance for winners. If state-led gambling oversight prevails, they foresee continued friction between platform incentives and market efficiency. Either way, the panel framed the next two to three years as decisive for prediction markets, with sports positioned — in their view — as the segment most likely to advance under stricter, federally oriented rules.

As the debate moves forward, the speakers emphasized that their perspectives are forecasts about market structure and regulation rather than guarantees. The path they outlined — from state casino frameworks to federal financial oversight — remains contingent on court decisions, regulatory priorities, and how quickly platforms and traders can build systems that adapt as advantages compress in increasingly competitive markets.