Thirty-eight states plus the District of Columbia now offer legal sports betting. The American Gaming Association reports that Americans wagered over $120 billion on sports in 2024. And the convergence of live streaming and in-app betting integration is accelerating — bet365 and FanDuel have both launched embedded streaming features, while Amazon, ESPN, and Disney are all investing in sports betting adjacency.

But here's the part nobody wants to talk about: integrating sports betting into the streaming experience is a regulatory minefield. State-by-state licensing, geo-fencing requirements, responsible gaming mandates, age verification, and the emerging legal battle between prediction markets and traditional sportsbooks all create a compliance landscape that can make or break a platform's strategy.

This guide breaks down the current state of in-stream sports betting, the regulatory frameworks platforms need to navigate, the emerging prediction market question, and the integration models that balance fan engagement with legal compliance.

The Current State of Sports Betting in America

Since the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) in May 2018, sports betting has expanded rapidly across the United States. The current landscape includes 38 states plus DC with legal sports betting, several more states (including Hawaii, Georgia, Mississippi, and Alabama) actively pursuing 2026 legislation, and a mix of retail-only, online-only, and combined markets.

The total handle (amount wagered) has grown exponentially, from $13 billion in 2019 to over $120 billion in 2024. Mobile betting accounts for approximately 80% of total handle in states where it's legal, reflecting the audience's strong preference for digital wagering.

For streaming platforms, this creates an enormous engagement opportunity. The same viewers watching live sports on streaming platforms are simultaneously placing bets on their phones. The question is whether platforms can bring that activity into the viewing experience — or whether regulatory complexity makes it too risky.

Three Models for In-Stream Betting Integration

Not all in-stream betting integrations are created equal. The market has settled on three distinct approaches, each with different regulatory implications.

Model 1: Licensed Sportsbook Streaming

Platforms like bet365 and FanDuel have obtained streaming rights to broadcast live sports directly within their sportsbook apps. The viewer is already inside a licensed, regulated betting environment, so adding a live video feed is a relatively straightforward product enhancement.

Regulatory profile: Low complexity. The sportsbook already holds the necessary licenses. Adding streaming is a feature enhancement, not a new regulatory activity.

Limitation: This model serves existing bettors, not the broader streaming audience. It doesn't help platforms like Hulu, Peacock, or YouTube TV integrate betting for their general viewership.

Model 2: Deep Betting Integration

ESPN Bet (powered by Penn Entertainment) represents the deepest mainstream integration attempt — embedding odds, bet prompts, and sportsbook functionality directly within a sports media platform. Disney's investment in this model signals that the largest media companies see in-stream betting as a core product strategy.

Regulatory profile: High complexity. This model requires either holding sportsbook licenses directly or operating through a licensed partner in every state where the platform has users. Geo-fencing, age verification, responsible gaming disclosures, and state-specific advertising rules all apply.

Limitation: The regulatory overhead is substantial. Each state has different rules about how betting can be promoted, what disclosures are required, and what constitutes an illegal inducement to gamble.

Model 3: Engagement + Handoff

This model integrates betting-adjacent features — live odds displays, bet slip builders, real-time probability trackers — directly into the streaming experience, but hands off the actual wagering transaction to a licensed sportsbook app. The viewer engages with betting content inside the stream but completes the financial transaction in a separately licensed environment.

Regulatory profile: Medium complexity. The streaming platform isn't processing wagers, which avoids the need for a sportsbook license. But displaying odds, building bet slips, and linking to sportsbooks may still trigger state-level advertising and affiliate regulations.

Advantage: This model lets streaming platforms offer betting-enhanced experiences to viewers in all 38+ legal states without obtaining individual sportsbook licenses. The viewer never leaves the stream for the engagement portion — only the transaction itself happens in the partner's regulated environment.

The Prediction Market Complication

The explosion of prediction markets in sports (covered in detail in our article on prediction markets in sports media) adds a new variable to the regulatory equation.

Prediction market platforms like Kalshi operate under federal CFTC regulation as designated contract markets, arguing their products are financial instruments rather than gambling. Traditional sportsbooks operate under state gambling commissions. These are fundamentally different regulatory frameworks covering what critics argue are functionally identical activities.

The Nevada challenge: Nevada has taken legal action against Kalshi, arguing that event contracts on sports outcomes are functionally indistinguishable from sports bets and should be regulated as such. If Nevada's position prevails, prediction markets could face the same state-by-state licensing requirements as sportsbooks.

The CFTC question: The CFTC has historically been more permissive than state gambling regulators about event-based contracts. But as prediction markets move deeper into sports (the NHL, MLS, UFC, and Rangers deals all happened in 2025-2026), regulatory attention is increasing.

What this means for streaming platforms: Platforms integrating prediction-style features (polls, picks, probability displays) need to be aware that the legal distinction between "prediction" and "betting" is actively contested. Features that feel like gamification today could be reclassified as regulated betting activities tomorrow, depending on how regulators interpret the line between entertainment and wagering.

State-by-State Compliance Considerations

For platforms offering any form of betting integration, these are the key compliance dimensions that vary by state:

Geo-Fencing

Platforms must verify that users are physically located in a state where sports betting is legal at the time of any wagering activity. This requires real-time geolocation technology — not just IP-based location detection, which can be spoofed. For streaming platforms using a handoff model, the geo-fencing requirement typically falls on the sportsbook partner, but the streaming platform may still need to suppress betting-related UI elements for viewers in non-legal states.

Age Verification

Every state with legal sports betting requires bettors to be at least 21 years old (with a few exceptions at 18). Streaming platforms displaying betting-adjacent content need age-gating mechanisms that go beyond a simple "Are you 21?" checkbox. For COPPA compliance, platforms must also ensure that betting-related content is not served to users under 13.

Responsible Gaming Requirements

Most states require licensed operators to display responsible gaming messages, provide links to problem gambling resources, and offer self-exclusion mechanisms. Some states (like Massachusetts and Ohio) have particularly detailed requirements about the frequency and placement of responsible gaming disclosures.

For streaming platforms using a handoff model, the question is whether displaying odds and bet slips triggers responsible gaming disclosure requirements even when the platform isn't processing wagers. The answer varies by state and is still being tested.

Advertising Restrictions

State regulations on sports betting advertising are inconsistent and evolving. Some states limit the hours during which betting ads can air. Others restrict certain types of promotional offers. A few require pre-approval of advertising creative. Platforms that display dynamic odds and betting prompts may find these elements classified as advertising rather than content in certain jurisdictions.

Building a Compliant In-Stream Betting Experience

Given the complexity of the regulatory landscape, streaming platforms pursuing in-stream betting integration should follow several principles:

Partner with Licensed Operators

Rather than attempting to obtain sportsbook licenses directly, streaming platforms should partner with established, multi-state licensed operators. The partner handles regulatory compliance, KYC (Know Your Customer), geo-fencing, and transaction processing. The streaming platform provides the engagement layer.

Separate Engagement from Transaction

The cleanest compliance model keeps all betting-related engagement (odds display, bet slip building, outcome predictions) inside the streaming experience while routing all financial transactions to the licensed partner's regulated environment. This separation makes it clear which entity is responsible for which regulatory obligations.

Build Geo-Aware UI

The streaming platform's interactive layer needs to be intelligent enough to adapt based on the viewer's location. Viewers in states with legal sports betting see odds, bet slips, and sportsbook handoff options. Viewers in non-legal states see the same interactive features (predictions, polls, trivia) without the betting integration. This requires real-time geo-detection integrated into the content delivery system.

Design for Regulatory Evolution

The legal landscape will continue to change. More states will legalize sports betting. The prediction market vs. gambling question will be adjudicated. New responsible gaming requirements will emerge. Platforms need modular, configurable systems that can adapt to regulatory changes without requiring complete rebuilds of the interactive experience.

The Opportunity in Regulatory Complexity

The regulatory complexity of in-stream sports betting is real, but it's also a competitive moat. Platforms that solve the compliance problem — offering engaging, contextual, legally sound betting integration — will be extremely difficult to displace. The regulatory overhead deters casual entrants and rewards platforms that invest in getting the architecture right.

The model that's emerging — engagement inside the stream, transaction in the sportsbook, real-time geo-aware content adaptation — represents the most scalable approach to serving fans in a 50-state patchwork of regulation. The platforms that build this infrastructure now will be positioned to scale as the legal landscape continues to expand.