Monmouth Park CEO Dennis Drazin warned racing industry leaders last week about the growing threat of prediction markets to horse racing’s financial ecosystem and regulatory structure.
“I’m growing more and more concerned about the prediction market companies, such as Kalshi, Polymarket, and others that are now offering bets on sports and, I believe, their intention is to do it on horse racing in the future,” Drazin said during the Nov. 19 New Jersey Racing Commission meeting.
Prediction markets function similarly to betting exchanges, allowing users to trade contracts on event outcomes with significantly lower fees than traditional wagering platforms — typically between 0.5% and 2% compared to standard pari-mutuel takeout rates.
These platforms operate without licensing agreements from U.S. racing entities, avoiding state-level regulation and contributing nothing to purse structures that sustain the Thoroughbred industry.
International exchange Betfair has accepted trades on American racing for years, while London-based Smarkets currently offers markets on all U.S. tracks. Both platforms prohibit U.S.-based accounts but are actively seeking legal pathways to operate within America.
“New Jersey has laws on sports betting and on racing,” said Drazin, the attorney who successfully represented the New Jersey Thoroughbred Horsemen’s Association in the landmark 2018 Supreme Court case that overturned federal sports betting restrictions. “And these companies are operating under the Commodity Futures Trading Commission. They’re not paying any taxes. There’s no integrity regulation. And it’s invading sports betting revenue that we currently receive.”
As CFTC-licensed entities, platforms like Kalshi and Polymarket can legally offer event contracts in all 50 states. Polymarket has already generated $1.2 million in trading volume on its 2025 Kentucky Derby market.
Drazin revealed that one prediction market company approached him directly about offering wagers on Monmouth’s signature Haskell Stakes.
“The first slide they showed me was [the 2026] Haskell coming up. And they want to offer a wager, ‘Will the favorite win, yes or no?’ And they don’t believe they have to pay a host fee. They don’t believe they have to compensate the tracks at all,” Drazin explained.
“I believe, to the contrary, that this is controlled by the Interstate Horseracing Act. And I certainly will be in court if they try and offer a [Haskell] wager,” he added.
Major sports leagues have taken varying approaches to prediction markets. The NBA, NFL and MLB expressed written concerns to the CFTC earlier this year about potential integrity issues, while the NHL recently announced multi-year licensing deals with both Kalshi and Polymarket.
The American Gaming Association characterized the NHL’s actions as “deeply concerning” and described the prediction market companies as “backdoor gambling schemes masquerading as ‘financial products,'” according to ESPN.
Regulatory battles are already underway across multiple jurisdictions. New Jersey’s Division of Gaming Enforcement attempted to block prediction markets but was unsuccessful, with the case now on appeal to the Third Circuit. Nevada initially secured an injunction that may soon be reversed, while California tribes and attorneys general in Massachusetts and Maryland have filed separate actions.
“The companies are getting very, very aggressive,” Drazin said. “There’s been more and more going on as the days unroll. So now FanDuel and DraftKings have entered [the prediction] market. As a result of that, the AGA has asked them to leave, because they won’t tolerate someone who’s offering these wagers.”
Some states have taken decisive regulatory action, with Nevada revoking FanDuel’s license and other jurisdictions questioning the suitability of prediction market operators to hold regulated sports betting licenses.
Drazin expressed particular concern about the racing industry’s apparent complacency regarding this emerging threat.
“On the racing front, no one seems to sense the danger yet, because they say, ‘We’ll wait until it happens, and then we’ll deal with it,'” Drazin warned. “I think you have to be proactive with these things. I don’t think you can wait until it happens, and then run to court.”
While acknowledging that the issue will likely reach the Supreme Court in “three or four years,” Drazin emphasized the need for immediate industry attention.
“I’m firing a warning to everybody, not only in New Jersey, but in all the other states, that this is an issue that we’re going to have to deal with or we’re going to lose revenue,” he concluded.
