“If you’re a sportsbook operator in Nevada, for example, there’s a lot you have to do to comply with regulations here and minimum internal control standards,” Gregory Gemignani, a gaming law lawyer and professor at the University of Nevada, Las Vegas, said. “The prediction markets have none of that.”

“What’s happened is the lines between gambling and investing have been blurred,” added John Holden, a business law professor at Indiana University who focuses on sports and gaming law. “Eventually this is going to come to a head.”