I Fought The Law
Why every victory against illegal gambling is worth celebrating.
It gets lonely out here, battling illegal gambling. So we have to savor some of the sweet victories as they happen.
The decision in Pennsylvania that so-called “skill games” should be regulated, taxed and treated just like casino slot machines is certainly rewarding. Let’s not forget that while these devices were nice little profit centers for the corner store, gas station and fraternal organization, they contributed nothing to the state, allowed illegal game manufacturers to profit, and exposed children and problem gamblers to activities they should not be doing.
Frank Legato gives us a recap of the Pennsylvania decision and its implications in his feature this issue. But for now let’s just revel in the win.
We all know who benefits from the “black” market in gaming. It’s companies that participate in gambling enterprises in areas where gambling is illegal by statute. “White” markets require companies to be licensed, regulated and taxed, so the differences are, well… black and white.
“Gray” markets are a bit different. Skill games probably fall into that category. They might not be illegal by clearly written laws, but what they offer is gambling, without a doubt. Same goes for sweepstakes casinos, which carefully threaded legal loopholes where laws did not specifically prohibit them. But now that more than 20 states have banned sweepstakes casinos, it’s more clear and gives us cause to celebrate those victories.
On the supplier side, it’s a much more nuanced issue. Suppliers provide the technology that runs the “gray” and “black” market operations but claim to have no role in illegal operations. Some even say they have no knowledge of how their products are being used. Right. Definitely a murky gray area.
As for illegal prediction market companies, there are plenty of recent court decisions we can celebrate because most of the time, jurists have common sense. They know gambling when they see it, even though it’s thinly disguised as “trading.” And when it comes to the “black” designation, yes, prediction markets wear this mark, because they’re definitely violating state laws in all 50 states and U.S. territories.
We first noticed prediction markets a couple of years ago, when they started to take bets on sports. We were outraged because sports betting and all gambling has always fallen under the purview of the states. So when a quasi-federal agency known as the Commodity Futures Trading Commission (CFTC) contends that its rules trump state laws (no pun intended), it’s laughable. The original CFTC regulations ban activity in “gaming,” but the Trump administration is attempting to change the rules of the road to allow sports betting and even casino betting.
Prediction markets have come under fire as well for offering “trading” on war! One member of the military was indicted for using “insider” information when the U.S. took out Venezuelan President Victor Maduro. Prediction companies also were embroiled in controversy when they refused to pay out on the death of the Iranian ayatollah. Betting on death is different from taking part in the once-popular “dead pools.” It is dark and despicable.
Election betting by prediction markets is also coming under fire. Although the odds on prediction market election betting have proven to be quite accurate, it too has fallen victim to insider trading, as campaign staffers have knowledge of the actions of their candidates and therefore stand to profit.
So while we are mostly opposed to sports betting by prediction markets, the ethics of many of their other “trading” options are so outlandish, we hope that Congress shuts them down too. And what will they have left when sports betting, war and election betting are banned? Probably what they were intended to be—hedges for or against the prices of stocks going up or down.
Some say the prediction market is now too big to fail. Some say go along to get along. No, that’s not the way. Let’s get the Kalshis and Polymarkets of the world out of sports, war and election betting. The world will be a better place, and the legal and regulated gaming industry can get back to doing what it does best, serving its customers. Then we can really celebrate.
