Headline: Prediction-market founders argue sports betting belongs under federal financial rules, not state gambling regimes
At Consensus Miami 2026, leaders in the prediction-market and trading space made a forceful case for reclassifying sports betting as a regulated financial product rather than a state-licensed casino activity.
Jacob Fortinsky, CEO and co-founder of Novig, said the current sportsbook model is "structurally broken" because it routinely penalizes successful bettors. "Sports betting is really the only industry in the country that regularly limits and bans their power users," he told the conference, framing bets on sports outcomes as binary financial instruments that should be governed like other financial products. Globally, he noted, sports betting represents roughly a $2 trillion asset class still dominated by legacy casino operators.
Adam Mastrelli, founder of algorithmic trading firm 57 Maiden, backed up the critique with first-hand experience. Mastrelli said he and a partner were removed from two major sportsbooks within months for being too "sharp"—drawing the analogy, "It's like LeBron James getting kicked out of the NBA for being too good." After getting barred, his team moved to Novig, which he said charges no fees and allows traders to build synthetic positions.
Mastrelli also offered a sober view of how hard it is to sustain an edge in markets: of 154 strategies his shop considered, only three are currently profitable, and their best season came from WNBA markets. "This edge will go away," he said. "So if you can build systems that can keep up with that alpha… then it becomes really, really intriguing."
Regulatory pivot: from sweepstakes to a federal DCM model
Fortinsky said Novig plans to shift this summer from a sweepstakes-based product that operates in 35 states to a federal DCM (designated contract market) framework, which would fall under CFTC oversight and potentially allow operation across all 50 states. He described an earlier state-level regulatory effort in Colorado as a reality check: regulators told Novig they care less about "consumer protection or innovation or market efficiency" and more about tax revenue, he said.
Fortinsky warned a broader legal fight is coming, predicting the federal-versus-state jurisdiction battle could reach the U.S. Supreme Court in two to three years. He pointed to about 15 pending lawsuits involving the Commodity Futures Trading Commission, Kalshi, Robinhood and several states as evidence of escalating clashes over whether certain event markets should be regulated as financial instruments.
Why sports might be the safest prediction-market vertical
On manipulation risks, Fortinsky argued sports markets are relatively safer than other event-driven markets (like political contracts), where insider trading and manipulation concerns are higher. Mastrelli echoed that view by comparing mature prediction markets to equities trading: a stable ecosystem is characterized by competing, sophisticated players—"AQR against SIG"—rather than disappearing liquidity.
What this means for crypto and prediction markets
The debate at Consensus highlights a growing push to fold prediction markets into established financial-regulatory frameworks, which could broaden access and legitimacy but also invite stricter oversight. For crypto-native prediction platforms and traders, the stakes are high: reclassification as financial products could standardize market structure and protections, but would also subject participants and platforms to a different set of compliance obligations.
The exchange between Fortinsky and Mastrelli underscores two core tensions facing the space: legacy sportsbooks' limits on professional bettors versus the operational and regulatory hurdles of running market-style products under federal authorities. How regulators, courts and market operators resolve those tensions will shape the next chapter for prediction markets and crypto-linked event trading.
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