The two operators handling roughly 80% of US sports betting have walked away from the industry’s trade body, because the AGA regards the product they are building as illegal sports betting.
DraftKings and FanDuel have relinquished their American Gaming Association membership over prediction markets, and Fanatics has since followed. This is not a subscription lapsing — it is the largest operators in a regulated industry concluding that their growth product sits outside the framework their trade body exists to defend.
Key Facts:
• DraftKings and FanDuel have quit the AGA over prediction markets, with Fanatics following — PlayUSA
• FanDuel holds 43.6% and DraftKings 36.4% of US handle — combined 80%
• The National Futures Association approved DraftKings Predictions as an FCM on July 14, 2026
• Sports betting is legal in 39 states, Washington D.C. and Puerto Rico
• The AGA holds that sports-related contracts equate to illegal sports betting
Why the split happened
The disagreement is structural, and all three said so on the record. DraftKings framed it as strategic drift: “As the company’s business strategy evolves – including with prediction markets – DraftKings determined that its plans no longer fully align with the AGA’s direction in certain areas and have decided to relinquish its membership.”
FanDuel’s statement was near-identical: “We recognize this direction is not aligned with the American Gaming Association’s current priorities for its member operators. After thoughtful consideration, we have decided to step back from our AGA membership at this time.”
The AGA’s reply was studiedly warm — “We wish them the best, and we expect to maintain close ties in our mission to promote and protect legal, regulated gaming” — the language of a body that cannot afford an open fight with 80% of its market (Sports Betting Dime).
The regulatory arbitrage underneath it
The commercial logic is not subtle. A state-licensed sportsbook operates market by market: 39 separate legalisations, licences, tax rates and approvals. A federally regulated prediction market operates under Commodity Futures Trading Commission oversight and reaches all 50 states at once.
That is why the National Futures Association’s approval of DraftKings Predictions as an FCM on July 14 matters more than the AGA exit itself. FCM status lets a firm carry customer accounts and hold funds directly — the plumbing of a brokerage, not a sportsbook. An operator with that licence needs no state regulator’s permission to offer a sports-outcome contract in Texas or California.
The AGA’s objection is that this is sports betting with different paperwork. Its members pay state gaming taxes and follow state advertising rules; a CFTC-regulated venue offering the same exposure does neither. Defending that boundary is the association’s job. For DraftKings and FanDuel, it is the opportunity.
What This Means for Bettors
Market impact: expect product divergence rather than price movement. Sports-outcome contracts will appear in states with no legal sportsbook, under the same brands. Pricing conventions differ — contracts settle in cents that read directly as probability, with a trading fee rather than embedded vig, so comparison to a moneyline is not like-for-like. A -110 line carries roughly 4.5% hold; contract fees work differently.
One concrete idea: watch for divergence between a sportsbook line and the same outcome priced as a contract on the operator’s own prediction venue. Two products, one company, two regulators, different fee structures and liquidity pools will not stay aligned. Where they diverge, the gap says which book the operator is managing risk on — as in our Kalshi Skubal contract analysis.
Where the legal markets are: state-regulated betting remains supervised by the New Jersey Division of Gaming Enforcement and the New York State Gaming Commission, both requiring licensing and in-state geolocation. Prediction contracts sit under the CFTC instead. Know which you are using — protections, dispute routes and self-exclusion tools are not equivalent.
Odds correct as of July 25, 2026. Informational only — not financial or betting advice. 18+ / 21+ depending on jurisdiction. See Responsible Gambling notice below.
FAQ
Why did they leave the AGA?
Both cited prediction markets. The AGA holds that sports-related contracts equate to illegal sports betting — incompatible with their stated strategy. Fanatics has since also withdrawn.
Does this change existing sportsbook accounts?
No. State-licensed products continue under the same regulators. The change is a separate, federally regulated line — potentially in states where those operators cannot currently take a wager.
Is a prediction contract the same as a bet?
Economically similar, legally distinct. Contracts fall under CFTC oversight rather than state gaming law, changing the licensing regime, fees and consumer protections. For pricing in practice, see our MLB market coverage.
Gambling carries financial risk and can be addictive. If you or someone you know needs help, visit GamCare (UK), call 1-800-GAMBLER (US), or see our Responsible Gambling page. 18+ / 21+ depending on jurisdiction.
