New York Moves to Curb Prediction Markets

A proposal introduced in the New York State Assembly could significantly alter the future of prediction markets in the state, placing new limits on products that allow users to trade on the outcomes of real-world events. Assembly Member Clyde Vanel has introduced Assembly Bill 9251, formally known as the Oversight and Regulation of Activity for Contracts Linked to Event Act, or ORACLE Act, which would establish one of the most comprehensive state-level regulatory frameworks for prediction markets in the United States.

The bill has drawn attention because it would effectively ban most event-based prediction markets in New York, including many tied to sports, politics and other high-profile outcomes. The move comes as large U.S. sports betting operators, including DraftKings, are increasingly exploring products modeled on prediction markets, blurring the line between gambling and financial-style trading.

Broad restrictions on event-based trading

If enacted, the ORACLE Act would amend New York’s General Business Law to create a new section governing platforms that facilitate trading on future events. Under the proposal, users would be prohibited from opening positions linked to a wide range of outcomes, including catastrophic events, political results, deaths, securities and most athletic events.

The bill’s treatment of sports-related markets is particularly detailed. It would prohibit trading on the outcome of a single game or on discrete in-game events, explicitly referencing prop-style markets. However, the legislation carves out notable exceptions. Markets based on the outcome of a full tournament or series would remain legal. Examples cited in the bill include contracts tied to which team will win an NBA championship or bracket-style markets for events such as the NCAA men’s basketball tournament.

Supporters of the measure argue that these distinctions are intended to reduce the risk of manipulation and excessive speculation while still allowing broader, season-long markets that resemble traditional futures-style betting.

Beyond restricting which markets may be offered, the ORACLE Act sets out extensive consumer protection requirements for any prediction platform that continues to operate in New York. These provisions closely mirror safeguards already imposed on licensed sportsbooks in the state. Under the bill, users would have to be at least 21 years old. Platforms would be required to offer responsible-trading tools, including options for players to set deposit, spending and time limits. Mandatory self-exclusion programs would need to be available, and operators would be required to prominently display New York’s problem gambling helpline.

The legislation would also ban credit card payments, prohibit push notifications that encourage trading activity, and restrict advertising aimed at individuals under 21. Marketing language such as “risk-free” would be barred, and operators would have to clearly disclose how and when markets are settled. Taken together, these measures would formally align prediction markets with the regulatory standards applied to sports betting, reinforcing the state’s view that such products pose similar consumer risks.

Enforcement powers and steep penalties

The bill would grant significant enforcement authority to New York Attorney General Letitia James. Under the proposal, the attorney general could ask courts to issue orders against platforms that fail to comply with the new rules. Financial penalties would begin at up to $10,000 for a first violation and rise to $50,000 for repeat offenses.

In extreme cases, the legislation allows for fines of up to $1 billion per day for platforms that continue operating after defying a court order to cease activity. The bill also places restrictions on liquidity providers involved in gaming-related prediction markets, a provision that could affect entities connected to large sportsbook operators. Such penalties underscore the state’s intent to assert strong oversight, but they also raise questions about enforceability, particularly in light of ongoing disputes over jurisdiction.

Prediction market operators have long argued that their products fall under federal oversight, specifically the jurisdiction of the Commodity Futures Trading Commission (CFTC). Because the federal government has not moved to substantially revise existing commodities laws, these companies maintain that state gambling statutes should not apply to their contracts. That argument has already been tested in court. Platforms such as Kalshi have taken legal action against several states after receiving cease-and-desist notices, claiming that state regulators are exceeding their authority. Critics of the ORACLE Act warn that New York’s proposal could trigger further litigation, intensifying the debate over whether states or federal regulators have the final say on event-based contracts.

Industry growth fuels legislative urgency

The timing of the bill reflects broader shifts in the gaming industry. As sportsbooks seek new growth avenues, prediction-style products have emerged as an attractive option. DraftKings, for example, has announced plans to roll out its Predictions product in multiple states, offering markets that resemble event contracts rather than traditional wagers.

DraftKings has also reported continued financial growth, with third-quarter 2025 revenue exceeding $1 billion, up 4% year over year. For New York lawmakers, the expansion plans of major operators appear to have sharpened the urgency to establish clearer rules before prediction markets gain a larger foothold. Supporters of the ORACLE Act argue that early intervention allows the state to protect consumers while maintaining regulatory control over products that occupy a gray area between sports betting and financial trading.

This bill reflects New York’s effort to bring prediction markets under the same consumer protection and oversight standards that already govern sports betting.

An uncertain path forward

The bill has been referred to the Assembly Committee on Consumer Affairs and Protection, marking the start of the legislative process. Its future will be debated when the legislative session begins in January. Political support, including whether Senate Gaming Committee Chair Joseph Addabbo Jr. backs a companion measure, is likely to be decisive.

If passed, the ORACLE Act would position New York as a leading regulator of prediction markets, potentially setting a model for other states. In the near term, the proposal may prompt platforms to scale back offerings or withdraw from the New York market altogether as lawmakers weigh the balance between innovation, consumer protection and regulatory authority.

As prediction markets continue to grow and evolve, the debate in New York highlights a broader national question: how to regulate products that challenge traditional definitions of gambling and trading, while ensuring transparency and responsible participation.