Arizona Warns Operators and Consumers About Risks Linked to Prediction Markets

Warning to Licensed Operators

The Arizona Department of Gaming (ADG), led by Director Jackie Johnson, sent a letter to all licensed and registered operators. The letter warned that involvement with prediction markets, or “event contracts,” outside Arizona could put operators’ licenses at risk.

Johnson wrote that if the department believes an entity tied to a licensee is partnered with a company offering event contracts illegally in another jurisdiction, that relationship could affect licensing decisions in Arizona. The letter also made clear that offering or selling such contracts in Arizona without authorization violates state law.

ADG said it has learned that some operators, including fantasy sports companies, are considering entering prediction markets by acquiring or partnering with designated contract markets (DCMs) or futures commission merchants (FCMs). The department warned that any association, direct or indirect, with unlicensed event contract activity could become a “poison pill” for Arizona licensure.

Broader Context

This warning goes further than one issued earlier this year by the Ohio Casino Control Commission. Arizona regulators have already acted against companies they say operated illegally in the state. In May, ADG sent cease-and-desist letters to Kalshi, Robinhood, and Crypto.com for offering betting products without state licenses.

ADG has also argued that unregulated DCMs threaten the state’s carefully negotiated compacts with tribal nations and place licensed sportsbooks at a competitive disadvantage.

Regulators stressed that even if the federal Commodity Futures Trading Commission (CFTC) sets rules for event contracts, such oversight would not cover responsible gaming, geolocation, and other consumer safeguards required in Arizona.

Warning to Consumers

Alongside its letter to operators, ADG issued a public warning to consumers about unlicensed gambling sites. Regulators noted a rise in complaints about offshore platforms, including frozen accounts, unclear terms, and delayed or refused payouts.

Johnson emphasized that unregulated sites lack responsible gambling protections and age verification, putting Arizonans at risk. To address this, ADG launched a new Responsible Gaming website, a “Check Your Bet” tool to verify licenses, a statewide self-exclusion program, and promoted its 1-800-NEXT-STEP helpline.

Elise Mikkelson, who directs Arizona’s problem gambling office, said licensed operators are required to provide safeguards that do not exist on unregulated platforms. She added that more than 11,000 residents have enrolled in the state’s self-exclusion program since its creation, underscoring both the risks and the availability of help.