Mark Locke: Prediction Markets Can Outlast Today’s Rules

For Mark Locke, prediction markets can remain meaningful in US sports wagering despite changing rules. State taxes and a disputed Kalshi settlement show how access, costs and customer trust can shift.

Why Genius can sell across market structures

Genius Sports published its chief executive’s September 14 investor letter on September 15. Locke acknowledged that commercial winners could change:

“Some current advantages will disappear, and today’s winners may not be tomorrow’s.”

— Mark Locke, Genius Sports

The agreements show why the supplier perspective matters. Exchanges need information to define and settle contracts, alongside services to support distribution and integrity. For Genius, commercial exposure therefore includes selling inputs as well as helping partners reach customers.

The company’s August 5 Kalshi announcement covers an official soccer-data portfolio alongside media and integrity services. Its August 4 Polymarket announcement covers selected US competitions, official data, streaming and integrity services. These agreements establish specific commercial relationships, not universal coverage of every sport or contract. That soccer agreement does not establish that Genius supplied data for the Western Michigan football market.

Locke says Genius earns at least as much per comparable wagering dollar from prediction markets as from sportsbooks. That is management’s commercial assessment.

The diagram maps relationships, not revenue shares. Its central business question is whether useful services retain paying customers as distribution changes. Product restrictions could reduce the volume requiring those services, while stronger settlement requirements could make reliable information more valuable. Neither outcome guarantees a particular supplier’s earnings.

What the demand estimates actually establish

Eilers & Krejcik Gaming’s July monitor puts 69% of modeled retail demand in states without legal online sportsbooks. That is a geographic model, not a count showing that 69% of customers are new to wagering. It supports examining access as a reason for demand, but cannot establish how those customers would behave after an access restriction.

The roughly 2% handle-share figure cited by Locke also needs its original denominator. DraftKings’ May 7 presentation cites EKG’s April 28 work using first-quarter data for 17 states with more than eight online sportsbooks, spanning mature and developing markets. Handle means the amount wagered, rather than operator revenue.

EKG’s July summary separately gives a provisional 2–4% substitution estimate in competitive online-sportsbook states. Substitution estimates wagering displaced from sportsbooks; market share describes a share of measured activity. The periods and measures differ, so the figures cannot be treated as a simple revision from 2% to 4%.

These distinctions matter for the idea that liquidity will stay. Liquidity is the ability to find a trade at available prices, which requires counterparties as well as interested customers. Geographic demand estimates do not prove retention at Kalshi or another venue. Dyutam’s coverage of Kalshi’s March Madness pricing comparison addresses another part of the competitive offer; pricing alone cannot settle the retention question.

Four ways the rules can reshape the market

Access is being contested in court. The Third Circuit supported preliminary protection in the New Jersey dispute on April 6; the Ninth Circuit reached a contrary result in the Nevada litigation on August 28. Both decisions concern preliminary injunctions, which govern interim protection. New Jersey’s Supreme Court petition was filed September 2 and docketed September 8 as No. 26-299, with a response due October 8. A request for review is not a grant of review or a merits ruling. The Third Circuit ruling and preemption dispute explain the underlying federal-versus-state issue.

Product rules are being proposed federally. The CFTC announced its framework June 10 and published it June 12. It remains a proposal, including contract-specific public-interest review and provisions addressing reliable settlement information. It allows multiple appropriate data sources; it does not require exchanges to buy Genius data. That distinction separates a possible commercial opportunity from a regulatory entitlement. Dyutam’s CFTC sports prediction-market rules coverage examines the broader proposal.

Taxes can alter costs without resolving access. North Carolina enacted a 6% levy on apportioned net trading-fee revenue, effective January 1, 2027. Illinois enacted a different base: 1.75% on the first 5 million exchange wagers in a fiscal year and 3.5% thereafter. Those percentages are not directly comparable because one applies to fee revenue and the other to wagers.

Illinois also requires a procedural qualifier. A June 29 agreement bars enforcement against Kalshi pending a preliminary-injunction decision; InGame reported September 12 that the pause remained. The levy has not thereby been invalidated. HB 5811, introduced September 2, proposes repeal but has not passed, and current receipts have not been verified. The separate Pennsylvania prediction-market licensing proposal offers another example of a state considering its own framework.

Supplier scrutiny can extend beyond exchanges. Connecticut announced nine cease-and-desist actions and nearly 30 subpoenas on September 10. The subpoena recipients included Genius Sports Media and Genius Tech International. Connecticut explicitly said recipients were not under investigation. Information requests can expose business relationships to scrutiny without establishing wrongdoing by the companies receiving them.

Each mechanism changes a different operating condition. A favorable access decision would not settle tax treatment, and a settlement-data rule would not determine customer acquisition costs. The matrix therefore separates legal status from the business consequence each measure could produce.

The Michigan correction tests settlement trust

Michigan beat Western Michigan 13–12 on September 5 after a second was restored to the game clock. Both universities’ accounts establish the sporting outcome. ReadWrite reported September 6 that Kalshi corrected an incorrectly settled winner market, citing CNN reporter Marshall Cohen’s figure of approximately $18.6 million in market trading volume.

That volume is not a verified measure of money clawed back. It cannot be substituted for the value of incorrect payouts, affected balances or customer losses. Using it as a clawback total would turn a market-activity figure into a claim the evidence does not establish.

A separate September 6 Kalshi notice invoked Rule 5.11 for review and potential cancellation of certain multivariate trades, or combinations of outcomes. It covered trades after September 5 at 22:50:56 Eastern containing Western Michigan “Yes” or Michigan “No.” That review must be distinguished from correcting the standalone winner market. The notice does not by itself establish that every reviewed trade was canceled.

ReadWrite reported September 7 that Coinbase said it would credit underpaid winners while leaving incorrect payouts in place for its customers. That was a reported commitment, not independently verified completion. Kalshi’s help material also distinguishes market closure from outcome determination, but does not explain the root cause of this incident.

The commercial test is what happens after a correction: whether customers understand the contract, accept the resolution and return to trade. Reliable data can support settlement, but confidence also depends on how platforms apply and communicate their rules. Public disclosures provide no platform-wide retention evidence resolving that question.

What would test the durable-demand argument

The next evidence will come from distinct decisions and customer behavior: whether the Supreme Court takes the dispute, how the CFTC changes its proposal, North Carolina’s 2027 implementation and the Illinois litigation and repeal bill. None alone establishes that today’s market structure will survive.

For the commercial thesis, the missing measures are equally concrete: customer retention after restrictions or settlement disputes, trading depth under changed costs, and disclosed supplier economics. Sustained interest in sports wagering could coexist with activity moving between exchanges, sportsbooks and other available products. Durable demand leaves the destination of that activity unresolved.

FAQs

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Sources

• Docket No. 26-299 — Supreme Court of the United States
• Third Circuit opinion in the New Jersey litigation — United States Court of Appeals for the Third Circuit
• Opinion in the Nevada litigation — United States Court of Appeals for the Ninth Circuit
• Event-contract framework announcement — Commodity Futures Trading Commission
• Proposed event-contract framework — Federal Register
• Session Law 2026-41 — North Carolina General Assembly
• Sports Wagering Act — Illinois General Assembly
• June 29 filing concerning enforcement against Kalshi — United States District Court, Northern District of Illinois, via CourtListener
• HB 5811 bill status — Illinois General Assembly
• Illinois prediction-market tax repeal bill reporting — InGame
• September 10 prediction-market actions and subpoenas — Office of Connecticut Governor Ned Lamont
• Americans Are Going to Keep Wagering — Mark Locke, Genius Sports
• Kalshi data, media and integrity partnership — Genius Sports
• Polymarket official-data, streaming and integrity partnership — Genius Sports
• Prediction Markets Monitor, July 2026 — Eilers & Krejcik Gaming
• May 7, 2026 presentation, slide 8 — DraftKings, hosted by Seeking Alpha
• Michigan’s account of the September 5 game — University of Michigan Athletics
• Western Michigan’s account of the game — Western Michigan University Athletics
• Kalshi winner-market settlement correction and reported volume — ReadWrite, citing CNN’s Marshall Cohen
• September 6 Rule 5.11 trade-review notice — Kalshi
• Coinbase’s reported response to the Michigan settlement error — ReadWrite
• Market FAQs — Kalshi Help Center