The rules will change. The demand will not.

By Mark Locke, Co-Founder and CEO, Genius Sports

Genius Sports Limited ("Genius Sports" or "Genius") (NYSE:GENI) today issued a note from Mark Locke, Co-Founder and CEO.

The views here are the author's own, not investment advice or a forecast of Genius Sports' results. Please refer to the important forward-looking statements notice at the end of this note.

The future of sports prediction markets is being discussed as though it hangs on a single legal answer: either today's model survives or the opportunity disappears.

After 25 years across sports, betting and technology, my conclusion is different. Prediction markets will remain a meaningful part of US sports trading, but I do not expect today's structure to survive unchanged. Some current advantages will disappear, and today's winners may not be tomorrows.

Prediction markets did not invent the desire to wager on a sporting outcome. They offer another way to express it, and what is durable is the demand underneath.

Customers want to take positions on sporting outcomes; capital wants to provide liquidity around them; and distributors want those customers. Regulation can change the route the activity takes without removing the activity.

Where Genius gains

Genius Sports supplies all three. We provide official data, settlement and integrity services to the platforms, including DraftKings, FanDuel, Kalshi and Polymarket. We sell data and pricing to the market makers who provide liquidity on exchanges. And through Legend and our wider media platform we help operators acquire the customers all of them are competing for. [1]

That is why I see prediction markets as a net benefit for Genius. I believe they create more businesses to supply, more ways to monetise the same sports activity and more competition for the customers we help operators win. Most of the demand they have surfaced appears new: Eilers & Krejcik Gaming's July monitor places 69 per cent of Kalshi's retail demand in states with no online sportsbook and puts its share of combined handle in mature online-betting states at about 2 per cent, a provisional ceiling on substitution. [2] These are modelled estimates, and some of those customers were already betting offshore; what has changed is that more of the activity from these customers is now taking place through identifiable platforms subject to federal oversight. Increases in wagering volumes support the demand for Genius products, irrespective of the form that wagering takes. Supplying rivals is how we have always worked: DraftKings and FanDuel compete for the same customer yet both buy from us. And I believe that the settlement standards regulators are now writing will raise the value of official data.

We believe the demand created by the rise of prediction markets is here to stay, but not necessarily today's structure. Demand can endure while access narrows, activity falls or customers move between products. The distinction is between confidence in the underlying appetite for sports wagering and confidence in any particular platform's current business model. Genius does not need to make the second bet to benefit from the first. If prediction-market customers do not stick, the activity returns to the sportsbooks we already supply. Where there is no licensed sportsbook to return to, I expect the activity to be too large for a state to leave potentially billions of dollars untaxed for long, which still presents opportunity for Genius. If customers do stick, Genius can continue to benefit.

Winning in court settles the regulator, not the rules

A substantive victory for prediction market platforms at the Supreme Court would settle which laws apply to sports-event contracts offered on CFTC-registered exchanges. It would leave product rules, taxes and consumer safeguards open, and the Commodity Futures Trading Commission ("CFTC") is already proposing a more detailed framework for event contracts. [3]

The politics resist a partisan forecast. Kalshi's advisers include Donald Trump Jr. and the Democratic strategist Stephanie Cutter, while the bill to prohibit sports and casino-style contracts has bipartisan sponsors. This is bipartisan institutionalisation without bipartisan agreement. [4]

Recent state action (such as in Connecticut) has indicated increased reporting, and information demands on licensed suppliers and other businesses connected with prediction markets. [5] These requests demonstrate a closer scrutiny of the wider prediction-market ecosystem. At this stage, the states are looking for assistance in evaluating the industry, and Genius always has and always will welcome cooperation and engagement with regulators.

Pricing can come from anywhere. Settlement cannot.

A market maker can form a price from public information and its own models. Settlement answers a different question: what happened. Specifically, whether the contract's condition was met, and how errors are corrected. That question demands a different standard of data. Pricing tolerates approximation, because the market corrects it. Settlement does not, because it is final and it pays. Each contract needs an authoritative source the market has agreed to trust. The standard rises in live and player-level markets, where latency and privileged information matter most.

On 5 September Kalshi settled the Western Michigan at Michigan market as a Western Michigan win when the broadcast clock reached zero. Officials then restored one second, Michigan scored on the replayed Hail Mary, and Kalshi clawed back and re-paid an estimated $18.6 million market, with the same wrong result showing on Coinbase, which settles off Kalshi's infrastructure. [6] The CFTC's proposal places weight on objective settlement, surveillance and cooperation with sports governing bodies. [3] That standard will be defined by relationships with the leagues and the data those relationships produce. That weekend showed the cost of settling without it.

Market makers are a second buyer of data and pricing

The obvious objection to Genius' position is that an exchange needs less of our pricing and data than a sportsbook does, because on an exchange the pricing is done by whoever is quoting. That is true, and it moves the buyer rather than removing them. Institutional market makers are starting to build dedicated event-contract operations. Market makers quote both sides, absorb temporary imbalances and let customers enter and exit positions. To do that they buy data, pricing and risk tools, and that demand is separate from anything the platform buys. Liquidity concentrates in a few exchanges, but the market makers behind them are many, and many of them are the buyers of Genius data and services.

It also explains why the platform's take is the wrong measure of the economics to Genius. Kalshi and Polymarket retain less from comparable activity than a sportsbook does, and it is tempting to conclude that activity moving into prediction markets must be worth less to the businesses supplying it. That conclusion treats the platform's share as though it represents the entire commercial opportunity. A sportsbook's hold is the spread. On an exchange the spread belongs to the market maker, and the platform charges a fee on top. The spread has not disappeared; it has moved. We earn from data supplied to the platforms and from minimum fees and profit shares from the market makers we serve. Taken together, under our current commercial arrangements, we believe the economics to Genius from a comparable dollar of prediction market activity match or exceed those generated through a sportsbook. [7] That comparison also excludes the economics we earn on customers introduced through Legend. As platforms mature, I expect them to raise their own take through higher fees. Where our agreements participate in that revenue, Genius benefits, provided the fees preserve the economics that attract customers and market makers in the first place.

More bidders for the same customer

Kalshi, Polymarket, DraftKings, FanDuel and others are competing for the same valuable sports customer. Flutter describes FanDuel Predicts as a way to acquire customers ahead of state regulation, with incremental economics in the meantime; the relationship is worth having under today's product and the next one. [8] The years while the rules settle are part of the opportunity, and Genius is earning from them. More well-funded bidders for that customer raise the importance of differentiated product and efficient acquisition, and the competition is already feeding into premium customer-acquisition pricing. Legend and our wider media platform give us exposure to the spending required to win those audiences. [1]

The liquidity is here to stay

Prediction markets have brought new liquidity into sports wagering: new customers, most of them in states that had no legal online product, and new capital committed to pricing their trades, from institutional market makers to the sportsbooks now running market-making desks of their own. That liquidity is here to stay. The prediction markets of today are very unlikely to look like the prediction markets of tomorrow: the rules on access, tax and product will move, and some of today's advantages will move with them.

What is almost certain is that the liquidity will be captured, taxed and regulated under some regime, federal, state or both. That journey has started: North Carolina already taxes exchanges' net trading-fee revenue, Illinois has added a transaction levy, and the CFTC is writing its framework. [3, 9] It will take years.

We are confident that Genius is well positioned to be paid at every point along it. Today we supply the exchanges, the market makers behind them and the sportsbooks competing with them for the same customer. At the endpoint we will supply whoever the rules leave in charge of the activity, and at every stage in between we will supply both sides. The route decides who pays us. The demand decides that we are paid.

Americans are going to keep wagering on sports, and Genius will be paid however they do it.

ENDS

Forward-Looking Statements

This note contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 — including, without limitation, statements about the regulatory environment and outcome for sports prediction markets, Genius Sports' commercial arrangements and business opportunities, and expected market and product developments. Words like "expect," "believe," "anticipate," "intend," "estimate," "project," "will" and "may" identify them, though not every forward-looking statement uses one. They reflect the author's personal views and judgments as of this note's date, not guidance, projections or forecasts of Genius Sports' financial results. Actual outcomes could differ materially because of risks and uncertainties, including regulatory and legal developments affecting sports prediction markets, the outcome of pending litigation and appeals, changes in applicable law, developments in our industries, competition, and deterioration, loss or absence of, or adverse changes to commercial arrangements and business opportunities. Additional risk factors are described in Genius Sports' filings with the U.S. Securities and Exchange Commission, including its most recent Annual Report and subsequent periodic filings. Genius Sports undertakes no obligation to update or revise any forward-looking statement, except as required by law.

Sources

Regulatory expectations and the durability tests are the author's judgments. Statements about Genius Sports describe current commercial arrangements and are not a forecast.

Genius Sports agreements with Polymarket (4 August 2026) and Kalshi (5 August 2026); Genius Sports Q2 2026 results and earnings call, 6 August 2026. Rights and settlement provisions apply to covered products and agreements.
Eilers & Krejcik Gaming, Prediction Markets Monitor, July 2026 public summary (69 per cent in states without online sports betting; about 2 per cent share of combined handle in mature states). Modelled estimates.
CFTC event-contract proposal, 10 June 2026; settlement and integrity provisions at pp. 115 to 117
Kalshi adviser appointments: Donald Trump Jr., January 2025; Stephanie Cutter, 2 April 2026. Schiff-Curtis bill announcement, 23 March 2026.
Connecticut Department of Consumer Protection announced its cease-and-desist orders to nine prediction-market platforms and accompanying subpoenas to gaming service providers and media outlets, 10 September 2026
Kalshi exchange notice under Rule 5.11 on the Western Michigan at Michigan market, 6 September 2026; contemporaneous reporting of the reversal and the $18.6 million market volume (CNN, 6 September 2026).
Author's description of current commercial arrangements: platform data sales; market-maker minimum fees and profit shares. The comparison concerns comparable sports-betting activity under current terms and is not a claim that every contract has identical economics.
Flutter Q2 2026 results, 5 August 2026, p. 4.
North Carolina General Assembly fiscal note, 7 July 2026, p. 13; Illinois Sports Wagering Act, s. 25-90(d-20).

About Genius Sports

Genius Sports is a global leader in real-time sports data, and the official technology and media partner powering the global sports ecosystem. Its platform is used in more than 150 countries, connecting leagues, teams, sportsbooks, broadcasters, brands and fans through official data, video, analytics and fan engagement solutions.

Genius Sports partners with more than 1,000 sports organizations worldwide, including the NFL, English Premier League, NCAA, DraftKings, FanDuel, bet365, CBS, NBC and ESPN. Through AI, computer vision and live sports technology, Genius Sports helps rights holders capture, manage and commercialize their content across the full fan journey.

For more information, visit geniussports.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20260914306471/en/

Genius Sports

press@geniussports.com

Brandon Bukstel, Investor Relations Manager

+1 (954)-554-7932

brandon.bukstel@geniussports.com