Over the past two years, prediction markets have dived headlong into sports. In fact, sporting events make up a huge majority of volume for Kalshi and Polymarket.
So, with American horse racing’s premier event on tap Saturday, it’s surprising to see prediction markets not involved with Kentucky Derby odds/trading.
But what exactly got prediction market operators to back off this huge event, a seemingly perfect fit?
Horse Racing Pushback
According to multiple reports, requests from horse racing industry leaders — including Churchill Downs itself — helped convince prediction markets to not offer the Kentucky Derby.
ESPN’s Tom Schad reported this week that Polymarket briefly offered Derby trading last week.
“We reached out to Polymarket and asked for the wagers to be removed," Churchill Downs spokesperson Breck Thomas-Ross told ESPN. "And Polymarket complied."
Schad asked Kalshi if it planned to offer Kentucky Derby trading, and a spokesperson declined to comment. But the answer is clearly no at this point, with the race a day out.
The ESPN report also cited the Interstate Horseracing Act as perhaps giving pause to Kalshi and Polymarket on the 152nd Run for the Roses.
The act, signed into law in 1978, provides a federal regulatory framework for betting on horse races — something that doesn’t yet exist in the rest of the sports betting universe, which is guided strictly by state regulations.
As the report noted, the federal framework gives state racing commissions and racetracks more control over wagering on their events.
Tom Rooney, president and CEO of the National Thoroughbred Racing Association, told ESPN:
"Right now, the law's fairly clear on what [prediction markets] are allowed to do without consent by our sport. There is a door that could be opened if a race track or state gaming commission or horseman's group or something like that would give consent. We don't have that yet."
Ingrained in the Sport
Another issue with prediction markets and the Derby or other races: Traditional betting is what makes horse racing possible. It is the bedrock of the sport.
John Holden, an expert on sports betting legislation and regulation and a professor at Indiana, explained that in Schad’s report.
“The wagering at the Kentucky Derby is the event," Holden said. "That's not what a Yankees-Red Sox game is to people. People might bet on it, but people will go to that game without betting on it. When people go to the Kentucky Derby, by and large they're there to bet on the horse race."
The ESPN report noted that all those bets — $234 million on the Derby alone last year — help sustain horse racing in other ways. Specifically, tax revenue — 1.5 cents for every dollar wagered — is used to:
- Generate prize money for future races
- Fund racetrack operations and breeding programs
This explains in large part why Churchill Downs took its stance on Kentucky Derby prediction markets.
