Get Together
Every part of the legal gaming industry is opposed to prediction markets. Their blatantly illegal activity and their aggressive defense mechanisms are continuing. How can legal gaming get the upper hand? It’s time to REALLY unite.
Like the illegal sweepstakes casinos consumed the gaming industry a couple of years ago, the prediction markets (PM) have now replaced sweepstakes as the greatest concern. And rightly so. Sweepstakes, while illegal and troubling, was a complicated procedure to move onto the real money side of the website. Gold coins vs. sweeps coins, and how to convert them? It was a mess. And when challenged by states’ attorneys general, the sweepstakes sites backed down.
Prediction markets have been completely different. First of all, it takes nothing to sign up. Give them an ID and 2 minutes later you’re betting, unlike legal sports books, which goes through a thorough vetting process before you can wager. And let’s immediately do away with the PM’s contention that it’s investing, not betting. We’re not stupid.
Depositing money with PMs is equally as easy. Credit cards, PayPal, Venmo… they accept all forms of payment. I haven’t done a withdrawal yet, but I assume it’s equally as simple. However, my losses on PMs aren’t unusual. According to a recent study, consistent winners on the PMs are less than 10 percent of the customers. That’s exactly what happened at the fantasy sports sites that so annoyed us almost a decade ago. So if you hope to win on PM, good luck.
This just the beginning of ticking off the list of negatives that PMs bring to society. Illegal gambling tops the list of course resulting in lost jobs, no state taxes, little or no consumer protection, unfettered exposure to problem gamblers and more. It continues with a degradation of the integrity that gaming has built over the last 50 years of legalization in the U.S. and around the world and threatens to produce scandals so vile that they will smear all gambling with the filth of PMs. And more importantly it attacks the very sovereignty of states and tribal nations, making them subservient to federal regulations, which in this case, have shifted 180-degrees to a pro-PM policies. Is it a coincidence that one of the main drivers of this shift is Donald Trump Jr.?
That’s why it is so important for the legal gaming industry to coalesce together to defeat this existential threat to the industry. There’s no doubt that all segments of the industry oppose PMs. In April, attendees at the Indian Gaming tradeshow in San Diego were bombarded with anti-PM messages. Victor Rocha, who put together the conference program at the show, is truly a warrior in the PM war, and the Indian Gaming Association is one of the bulwarks.
At the East Coast Gaming Congress the next week, there were similar concerns. I moderated a panel on PMs that included Nevada Gaming Control Board Chairman Mike Dreitzer, Penn Entertainment VP Eric Schippers and Sports Betting Alliance President and CEO Joe Maloney. Sporttrade CEO Alex Kane drew the short draw representing the PMs and did a credible and respectful job defending the indefensible, but it was clear that common sense is against him.
Also at ECGC a panel of lottery officials and experts expressed the same alarm as the commercial and tribal gaming industries have felt about PMs. That makes it almost unanimous. The only outlier so far is the sports betting industry, some members of which are biding their time deciding whether it’s a fit for them, or simply waiting for a legal opinion one way or another. And of course, the two market monsters in sports betting, DraftKings and FanDuel, along with other licensed sports betting companies, immediately jumped into the PM sewar so there’s not much doubt where their sympathies lie.
So we’ve got the unity. Do we have the will required to do what’s necessary? There are multiple lawsuits across the country at the state and the federal levels. Many have been launched by the PMs, however. They are very aggressive in defending their position, unlike the sweepstakes casinos, which folded their hand early and went home. All assistance must be given to states that are being challenged by the PMs. Gaming groups can submit “friend of the court” additions, which tribes have already begun to do. Federal courts are a different ballgame. The 3rd Circuit handed Kalshi a win when it found that New Jersey regulators didn’t have jurisdiction over PMs. But New Jersey may request an “en banc” session of all the court members, not just the 2-1 majority who ruled in this decision. That’s the next step.
More alarmingly, the Commodity Futures Trading Commission (CFTC), the agency tasked with regulating PMs on the federal level, is now clearly in their corner, with a chairman blatantly advocating for them. And now the CFTC has filed suits against states that seek to control the spread of PMs. This will be a big showdown hinging on states’ rights.
A bipartisan bill has been introduced into Congress that strips PMs of sports betting—which accounts for up to 90 percent of their revenue. You would think with gaming legal in 48 of the 50 states that would be a no-brainer to pass, but it is Congress and there are always lots of backstabbing going on.
Hopefully, all elements of the industry can put aside their self-interests and biases and get behind the American Gaming Association in its efforts to derail PMs. The time to do it is now. Most observers believe the issue will wind up in the lap of the U.S. Supreme Court, but that process could take two years or more, at which time individual PM companies like Kalshi and Polymarket could have a value of $1 trillion! Is it possible that they could get too big to fail? Let’s not find out. Let’s push Congress to act via the AGA and let’s ask the courts to streamline their decisions so it will reach SCOTUS in a timely fashion and we can put this foolishness to rest.
