What the Meta/YouTube lawsuit means for sports betting and prediction markets
A digest on sports betting and prediction market reforms
We hold three core positions to reduce the harms of online gambling:
Sports betting doesn’t belong on prediction markets — and shouldn’t be accessible to anyone under 18.
If we’re legalizing online gambling, we need to actually enforce it — which means shutting down illicit offshore sites, especially for young people.
Legal sportsbooks must do more to protect users from compulsive use and financial ruin.
Over the past few weeks, there have been meaningful developments on all three fronts.
Before diving in, it’s worth grounding this discussion in what’s at stake, as my colleague Jonathan D. Cohen laid out in a new PBS roundtable:
The Meta Verdict Is a Liability Warning for Sportsbooks
A jury recently found Meta and YouTube liable for $6 million in punitive and compensatory damages tied to addictive design and mental health harms. That case is a warning shot for tech platforms, including sports betting and prediction markets. As Michael McCann writes in Sportico:
The case invites questions about the addictive qualities of sports betting and sports prediction apps and their exposure to similar legal theories. Sports betting and sports prediction apps might be more vulnerable to arguments they cause users to become addicted and suffer various harms.
Mark Gottlieb of the Public Health Advocacy Institute (PHAI), which is suing DraftKings for unfair and deceptive practices, told McCann:
Much like the social media companies on trial in Los Angeles, the leading sports gambling platforms all use—and compete on the basis of—advanced algorithms created by tracking every click and demographic detail of each of their users to maximize time on device and engagement with their products.
This is the first major deceptive practices lawsuit against a sports betting app to move to a full trial. Legal analysts are comparing it to significant, early lawsuits against the tobacco companies.
PHAI is also supporting a new lawsuit in Pennsylvania alleging that sportsbooks are using fast-paced microbets and defective design to make users addicted to gambling:
This argument is reminiscent of litigation against Meta and other social media companies accused of designing their platforms to cause children to become addicted through engagement boosters such as infinite scrolling and manipulation of algorithmically tailored feeds of photos and videos. Here, the sportsbook apps are depicted as knowingly taking advantage of people with gambling addictions and worsening those addictions.
While the courts consider liability, Congress is moving with unusual urgency on prediction markets.
A Flurry of Prediction Market Legislation
Several bills assert that prediction markets should not function as sportsbooks:
Prediction Markets Are Gambling Act
Introduced in the Senate by Sens. Adam Schiff and John Curtis on March 23, this bill would prohibit CFTC-registered entities from listing contracts that resemble sports bets or casino-style games. It is the Senate companion to Titus’s House sports bill (below) and frames those markets as gambling rather than legitimate financial contracts.
Fair Markets and Sports Integrity Act
This House bill from Rep. Dina Titus would ban prediction markets from offering sports bets and casino-style contracts outside state regulation.
Prediction Markets Security and Integrity Act
Introduced by Sen. Richard Blumenthal on March 11, this is the broadest consumer-protection bill in the set: it would impose federal rules on insider trading and manipulation, ban markets tied to war, death, and military action, require age verification, and push authority back toward the states.
Skepticism is warranted about the passage of any of these bills. But one detail is worth noting: the bipartisan Schiff–Curtis bill comes from states without legal online sports betting, which weakens allegations of industry protectionism or inconsistent views.
At the state level, a Nevada court issued a temporary restraining order blocking Kalshi’s event contracts (including sports) unless it obtains a state license. It explicitly treats these offerings as illegal, unlicensed gambling under state law, even though the platform claims federal oversight.
Public opinion is largely aligned. Americans view purchasing event contracts on prediction markets as closer to gambling than investing (61% to 8%), based on our latest poll with Ipsos.
There have also been several bills addressing ethics and insider trading on prediction markets:
In our poll with Ipsos, just 9% of respondents say they are confident that prediction markets could prevent individuals with non-public information from unfairly profiting on the platforms.
States Look to Refine Regulatory Approach
Several states are contemplating reform bills to address the harms of legalized sports betting. The following bills cluster around three themes: harm reduction (deposit limits, credit card bans), operator constraints (ads, promos, limiting bettors), and market boundaries (especially around prediction markets).
Colorado SB 26-131 (passed committee)
Limits deposits, bans credit cards and push notifications, restricts advertising, and prohibits sportsbooks from limiting winning bettors.
Kentucky HB 904 (passed House)
Raises the age to 21, mandates acceptance of bets up to $1,000, increases transparency around limits, and bans partnerships with prediction market platforms.
Maryland HB 518 (passed House)
Bans college prop bets, prohibits credit card deposits, and requires deposit/time limits.
Massachusetts S 302 (passed committee)
Raises taxes, bans in-play and prop bets, restricts advertising, imposes affordability checks, and mandates data sharing for research.
New York A7962 (in committee)
Imposes deposit and wagering caps, bans credit cards, and restricts advertising and promotions.
You can find more details and analysis of each of these bills from Steve Ruddock.
Offshore and Illicit Gambling Enforcement
The third front, illicit access, is moving more unevenly but in a clear direction.
Last August, all 50 state attorneys general urged the DOJ to crack down on offshore gambling, calling it a “rampant” and growing threat. They specifically asked DOJ to seize domains and assets; pursue injunctions; and work with payment processors to block transactions.
In the meantime, some states are targeting dual-currency sweepstakes apps that mimic casino gambling:
Minnesota HF 4410 would prohibit online sweepstakes games that use dual-currency systems and simulate casino gambling. The legislation followed AG enforcement against illegal gambling sites, including both offshore operators and sweepstakes platforms.
Maryland HB 1140 would prohibit operating, promoting, or supporting online sweepstakes games and would require the state to deny or revoke licenses tied to that activity.
Takes on Gambling in Brokerage Apps
Reining in the Chaos
Federal courts, Congress, state legislatures, and attorneys general are all addressing the chaotic proliferation of online gambling. The Meta/YouTube verdict challenges the addictive design of sportsbook products; Congress is moving to close the prediction-market loophole; and states are tightening rules on both legal operators and gray-market alternatives.
A growing policy consensus treats online gambling less like a neutral entertainment product and more like a high-risk, behavior-shaping system that requires guardrails.
Stay tuned: we’ll continue tracking developments in policy, enforcement, and litigation as they happen.