Prediction Markets Finally Found a Sport They Can’t Offer

The Kentucky Derby appears to be a perfect match for prediction markets, which have rapidly expanded into sports over the past year. But you won’t see the Derby on platforms like Kalshi and Polymarket.

Last year, the Kentucky Derby drew a record $234.4 million in wagers on the race itself and roughly $349 million across the full Derby Day card. Although the two-minute race seems like exactly the kind of event prediction markets have been built to highlight, leaders in the world of horse racing have made clear that platforms should stay away. And while prediction markets have pushed into other sports amid controversy, they are listening to leaders in the horse racing world who have warned them to stay away.

Breck Thomas-Ross, a spokesperson for Churchill Downs—which owns the Derby—tells Front Office Sports that a federal law called the Interstate Horseracing Act requires prediction markets “to get certain consents, including the host track’s, to use a track’s content.” While Churchill has “provided those consents in some instances,” including to certain traditional sport betting companies, “we haven’t in others,” Thomas-Ross says, referring to prediction markets.

During an earnings call in October, Churchill CEO Bill Carstanjen said any prediction-market platform offering odds on the Derby would be breaking federal law.

“We have federal law that governs how we operate,” he said. “And certainly, to the extent people act counter to having a deal with us and act counter to the Interstate Horseracing Act, will pursue all our rights and remedies under the Interstate Horseracing Act.”

He didn’t explicitly threaten litigation, but reading between the lines, Carstanjen was putting platforms on notice that event contracts based on horse racing—if they do not have deals with the operator of those races—are illegal and would carry consequences.

More recently, earlier this month, the National Thoroughbred Racing Association filed a letter with the Commodity Futures Trading Commission laying out the same argument. “The Commission has authority under the [Commodity Exchange Act] to prohibit contracts that are contrary to the public interest. Event contracts based on horseracing outcomes that circumvent the Interstate Horseracing Act of 1978 fall squarely within this category and are furthermore preempted by other federal laws.”

Kalshi declined to comment on why they don’t have any Derby offerings available. A representative for Polymarket did not respond to a request for comment. Polymarket’s international platform has previously offered markets on the Derby. This year, it had a market on the Derby for a short period of time before taking it down, according to ESPN. 

Churchill’s Thomas-Ross told ESPN the company asked Polymarket to remove the market, “and Polymarket complied.” 

The prohibition on horse racing markets doesn’t end with the Derby, which takes place Saturday. Barring major changes in the relationships between platforms and the horse racing industry, there will also be no markets on the Preakness Stakes, which will be held May 16, or the Belmont Stakes, scheduled for June 6.

Traditional Sports Betting

The horse racing world’s resistance to prediction markets comes even as traditional wagering on the sport has faced criticism, including from those within the industry. One of those critics is Mike Repole, the beverage entrepreneur and prominent owner who says he has roughly 350 horses, some of which have competed in races like the Derby and Belmont. 

Repole told Front Office Sports during a recent episode of Portfolio Players that, unlike standard sports betting where odds are locked in, horse racing allows prices to shift up until the race begins—meaning a bettor who thought they had certain odds can end up with shorter odds by the time the race actually starts. “It’s not fair,” he said. 

“And it’s fixable,” he added. “Except that certain people don’t want to fix it, which is sad.”

FanDuel and DraftKings, which have launched prediction-market platforms of their own, are also not offering Derby markets on those products. They do, however, offer traditional betting on the Derby; but due to regulatory restrictions, both companies have separate racing apps—FanDuel Racing and DraftKings Racing—that are only available in certain states.