New York State Attorney General Janet Lo released a consumer and industry alert on February 2nd, warning New Yorkers to be cautious of so-called “prediction markets” and the potential financial risks they may bring. She also cautioned related businesses that unauthorized sports betting violates New York state gambling laws and could result in civil and criminal liability.
Lo pointed out that some online platforms offer “event contracts” that allow users to bet on political elections, sports events, or other future occurrences. However, these platforms are not regulated by the New York State Gaming Commission and lack basic consumer protection mechanisms, exposing people to significant financial risks.
She emphasized that while these prediction markets may appear to be modern and high-tech “prediction tools,” they operate similarly to unregulated gambling activities. In contrast to legal sports betting platforms, they lack several safeguards required by New York state, such as resources for preventing gambling addiction, prohibitions on underage gambling, banning misleading or exploitative advertising, identifying and assisting users at risk of gambling addiction, prohibiting insider betting, and undergoing regulatory scrutiny.
The Attorney General’s office noted that recent reports from the financial sector have also warned that prediction markets could lead to excessive borrowing, increased credit risks, and higher loan default rates, further exacerbating financial pressures on individuals and families.
To protect their own interests, the Attorney General urged New Yorkers to pay attention to the following two points before placing bets:
– Verify legality: Confirm whether the platform has been approved by the New York State Gaming Commission; operating without authorization is illegal.
– Gamble responsibly: Do not invest funds that you cannot afford to lose. Prediction markets are high-risk activities with no guaranteed returns and no assurance of being able to withdraw funds at any time.
Officials also cautioned that the convenience of online betting can lead people to overlook actual financial risks. The New York State Office of Addiction Services and Supports (OASAS) recommended that individuals set time and monetary limits for betting and avoid gambling while under the influence of alcohol or drugs.
If individuals or their loved ones encounter gambling problems, the Attorney General’s office encouraged them to seek assistance from the New York Council on Problem Gambling (NYCPG) and Gamblers Anonymous, or contact the 24-hour gambling addiction helpline at 1-877-846-7369 or text HOPENY (467369).