Pirates and Thieves: Derek Stevens Launches Attack on Prediction Markets

A storm is brewing in the world of sports betting, extending far beyond the neon lights of Las Vegas. Derek Stevens, the charismatic owner of Circa Sports, has voiced scathing criticism regarding a new breed of competitors. He is targeting prediction markets like Polymarket and Kalshi, where users trade on the outcomes of events. While tech enthusiasts might view this as innovation, Stevens sees it as a systematic evasion of the law. He argues that these platforms threaten the integrity of the regulated market by operating without the heavy financial burdens that traditional bookmakers must shoulder.

The founder of Circa, known for housing the world’s largest sportsbook at the Circa Resort and Casino, did not mince words. He compared the business model of these markets to criminals hijacking a truckload of televisions and selling them at half price in a retail parking lot. This analogy strikes at the heart of the cost structure. While licensed operators spend millions on licensing fees, responsible gaming funds, and data rights, prediction markets often operate in a legal gray area, dodging specific sports betting levies. Stevens' anger is not merely ideological; it is backed by the fact that his company is feeling the pinch, reporting a loss of handle share to these unregulated entities.

Numbers and facts

Central to Stevens' argument are the financial obligations that Circa Sports fulfills. These include state gaming taxes, federal sports betting excise taxes, official league data fees, and contributions to problem gambling funds. In states like Illinois, for example, every single wager is hit with a 25-cent fee. Because platforms like Polymarket ignore these costs, they can offer significantly more attractive payout rates. Stevens pointed out that his company could easily offer minus 102 splits on both sides of a bet if they were not saddled with these regulatory costs.

Despite Circa Sports operating on a low-hold model—maintaining a hold of roughly 3.5% compared to the US national average of around 10%—the pressure is evident. Stevens admitted that prediction markets have taken a decent amount of handle away from his business. Nevertheless, expansion continues. Circa was recently licensed in Arizona, with plans to go live in January 2027. This follows their entry into Missouri, where Circa secured one of two available untethered licenses for a fee of $500,000. Their strategy is to attract bettors through fair pricing and high limits, a mission made difficult by the tax-free offerings of prediction markets.

Background

The debate surrounding Polymarket and similar sites is reaching a boiling point, as these platforms saw massive surges during major political events and the World Cup. Stevens believes the burden of action lies with the government. He expressed doubt that states like New York would sit idly by while losing billions in potential tax revenue simply because these platforms mask themselves as shrewd prediction markets.

"They’re pirates. They’re thieves. We’d be able to offer minus -102 splits either way as well if we didn’t have all the fees to pay. I tend to believe that more balanced heads are going to prevail." - Derek Stevens, Owner of Circa Sports

Interestingly, Stevens is far more cordial toward traditional competitors. He welcomed the newcomer Boomer’s in Nevada, stating the market is robust enough for the "pie" to be shared. For him, the issue is strictly the uneven playing field created by the lack of regulatory oversight for digital trading hubs. While Circa Sports must prove its sustainability in Missouri despite lower margins, prediction markets operate outside this framework entirely.

Why it matters for German players

For sports betting fans in Germany, this conflict serves as a reminder of the value of regulation. Since the Interstate Treaty on Gambling 2021 (GlüStV 2021), Germany has established clear rules that provide safety despite certain restrictions. Betting with an operator on the GGL whitelist ensures protection through systems like LUGAS and OASIS. This includes the 1,000 Euro monthly deposit limit and the 1 Euro stake limit for slots, reflecting a commitment to player safety that unregulated markets lack.

Players should be aware that supposedly better odds at unlicensed sites or exotic prediction markets are often possible only because they evade taxes that benefit the public and fund player protection in Germany. An operator without a GGL license offers no legal recourse in cases of payment disputes. In Germany, bookmakers must pay a 5% sports betting tax. When a foreign provider ducks this, they act as a parasite on the system. Only playing with licensed German providers ensures fair competition and guarantees that winnings actually reach the player's account.

What it means for GGL-licensed casinos

German online casinos with a GGL license face similar hurdles to those mentioned by Stevens. They must meet high standards for IT security, data protection, and youth safety. Prediction markets, often operating on a crypto basis, attempt to bypass these hurdles. For the GGL, these developments in the US indicate a need for vigilance to prevent hybrid betting forms from flooding the German market uncontrollably. The stability of the German market depends on the success of the channeling mandate, which can only be achieved if licensed operators remain competitive without compromising safety standards.