The Federal Trade Commission has begun an early stage review of the online sports gambling industry that is expected to focus on sportsbooks such as DraftKings and FanDuel, probably over allegations of deceptive and misleading advertisements, and is not expected to include prediction markets such as Kalshi and Polymarket, The Washington Sun reported on Tuesday, October 13, citing three sources familiar with the matter. Legal Sports Report independently reported the same scope on Tuesday, and CDC Gaming carried the Sun report the same day.
The review has not been previously reported and remains preliminary, according to the Sun. Both political appointees and career staff at the FTC have been involved in reviewing online sportsbooks, the sources told the Sun, and the adverse effects researchers have documented among users, including increased rates of suicide, hospitalizations and bankruptcies, are expected to be part of the review, one of the sources said. The Sun put the size of the industry at 167 billion dollars.
No company has been formally contacted, on the public record so far. A spokesman for DraftKings told the Sun the FTC has not sent it a Civil Investigative Demand, the kind of subpoena the agency issues, and spokespeople for both DraftKings and FanDuel confirmed to Legal Sports Report that the companies have not heard anything from the FTC. FanDuel declined to comment to the Sun, and an FTC spokesperson declined to comment to Legal Sports Report, saying: "FTC investigations are nonpublic so we generally do not comment on whether we are investigating a particular matter."
The reported focus is marketing. DraftKings and FanDuel have faced heavy scrutiny from state regulators and members of Congress over deceptive marketing allegations, Legal Sports Report noted. The New York Times reported last month that DraftKings targets losing bettors with promotions that encourage more gambling, citing interviews with more than 40 employees, and FanDuel faced a charge that it delivered a personalized video of MLB player Bryce Harper to a gambler who was 1.5 million dollars in debt, the Sun reported. Both companies have denied wrongdoing, according to the Sun.
Industry defenders pushed back in the same report. Joe Maloney, president of the Sports Betting Alliance, told the Sun that the Responsible Online Gaming Association code of conduct represents a commitment by its members to uphold consistent marketing standards, and he pointed to Nielsen Ad Intel research commissioned by the American Gaming Association that found sportsbooks accounted for 0.8 percent of spending on television commercials in 2024, while alcohol ads accounted for 1.4 percent. Maloney also disputed claims that online sports gambling contributed to increases in suicide, hospitalization and poor financial outcomes, citing a Progressive Policy Institute study, the Sun reported.
The pressure is also coming from inside the administration's own coalition. Jon Schweppe, a former FTC senior policy adviser under FTC Chair Andrew Ferguson who is now with the American Principles Project, has argued it is time to put the online sportsbooks in the hot seat, the Sun reported. A February poll by the Siena Research Institute and St. Bonaventure University's Jandoli School of Communication found about half of men age 18 to 49 have an active account with an online sportsbook, according to the Sun.
For prediction markets, the reported exclusion is the story. Experts are divided on whether platforms such as Kalshi and Polymarket should be left out, the Sun reported: the venues argue their sports prices are set by the public, which reduces the incentive for misleading promotions, while sportsbooks make money only when the house wins. Senator Richard Blumenthal of Connecticut has announced legislation to police platforms like Kalshi, arguing they offer services substantially the same as sports gambling, and in June the Wall Street Journal reported that Polymarket had flooded social media with deceptive videos by paid creators, according to the Sun. Monica Vaca, a consumer protection attorney who practiced for more than two decades at the FTC, told the Sun the allegations fall squarely within the agency's authority and would justify opening an investigation of all the platforms involved.
The reported FTC line also lands four days after the Commodity Futures Trading Commission moved in the opposite direction on classification, proposing on October 9 to include event contracts in the definition of a swap while excluding casino style gambling products, a pairing The Agent Bets covered as the CFTC swaps rulemaking. Complicating any clean sportsbook versus prediction market split, both DraftKings and FanDuel now operate prediction market products of their own, as Legal Sports Report and the Sun both noted, while their traditional sportsbook businesses remain far larger.
Analysis: Two federal agencies are now drawing the same boundary from opposite sides. The CFTC's October 9 rulemaking says event contracts are derivatives and casino style gambling is not, and the FTC's reported review, as described by the Sun's sources, aims its consumer protection scrutiny at sportsbook advertising while leaving the CFTC regulated venues outside the scope. That alignment is favorable to Kalshi and Polymarket in the near term, because marketing practices are where sportsbooks are taking their heaviest regulatory and congressional fire, from the Massachusetts Gaming Commission review of DraftKings to congressional letters over FanDuel VIP videos, both noted by Legal Sports Report. It is not a settled exemption: the FTC has not confirmed the review or its scope on the record, neither operator has heard from the agency, and the criticism quoted in the Sun, from Blumenthal's legislation to Vaca's view that all platforms involved belong in scope, gives the agency a ready path to widen it. Watch whether a Civil Investigative Demand to either sportsbook becomes public, and whether the FTC's scope, if it confirms one, names prediction market products run by the sportsbooks themselves.