Making a Mockery
For almost 50 years, I’ve witnessed and reported on the legalization of gaming across America, starting in New Jersey, the first jurisdiction to allow gaming outside of Nevada. Then came the riverboat states. At the same time, tribal government gaming began to ramp up. Later, it was “racinos” as states with some of the nation’s notable racetracks threw a lifeline to horse racing.
Outside the U.S., gaming was widely legalized in Macau, the Philippines and other Asia Pacific nations. Not to mention Europe, South America and now, the Middle East.
The growth of gaming during my career has been stunning. Places where you would never have imagined casinos welcomed them to bring in jobs, tax revenue, infrastructure improvements and other benefits that came along with the legalization of gaming.
Then, of course, the legalization of sports betting and online gaming expanded the scope immensely, with many of the land-based companies jumping on board to create truly omnichannel offerings.
But what did they all have in common? They all went through sometimes tortuous legislative processes, complicated regulatory oversight, rigorous customer protection requirements and often onerous community contributions. Gaming companies are, in effect, some of the most transparent and highly regulated businesses in the world, and that also applies to the sports betting and iGaming companies that went through this process.
But the new “prediction markets” haven’t completed any of those steps. In fact, they’re avoiding the process by creating lawsuits, operating in states where sports betting is illegal and making a mockery of everything gaming has stood for and established over the last 50 years.
To all the governors, legislators and proponents of legalized gambling, prediction markets are putting your promises and pledges into the rubbish bin. Prediction markets have not been vetted by your legislators, are not regulated by your adept state regulators, have little to no consumer protections and are easily manipulated when it comes to cheating and insider “trading.”
To all regulators, prediction markets are saying you’re not necessary. Your oversight and regulations are yesterday’s news, and federal oversight—as slight as it might be—is sufficient to prevent fraud, abuse and cheating. They’re telling you that all the years your state spent refining and improving regulations were wasted. The agency that supposedly regulates predictions companies—the federal Commodity Futures Trading Commission—has only one sitting member appointed out of five seats, with little to no licensing and lax oversight.
To all operators, prediction markets are dismissing all the licensing hearings your executives endured. They’re saying that as long as you’re “trading” and not betting, you’re absolved of any probity checks. Their backgrounds may be checkered but it doesn’t matter, because the federal government doesn’t care whether you’re convicted felons, proven fraudsters or Ponzi schemers. As long as you have the money to “trade,” you’re okey-dokey with the feds. Not to mention the regulatory hurdles you always have to surmount.
To all suppliers, we know you’re salivating as you watch prediction markets grow without your involvement. But they already have data processing systems. As for geolocaters, some prediction market companies are using them to prevent bettors… sorry, traders… from participating in states that have effectively and correctly blocked them legally. And iGaming platform providers? You’re screwed because the prediction markets have their own—albeit shaky—platforms.
Problem gamblers? Hop on board! Prediction markets don’t care if you burn through your savings, wager a rent check or let your kids go hungry! As long as you keep priming the pump, you’re welcome. Sure, they’ll put the 1-800-GAMBLER number on their websites, but don’t expect them to pony up resources for any organization that wants to help you recognize that they’re scamming you.
And gaming journalists? Most of you, unlike myself and others of my era, didn’t go through the legalization wars from the start. You think covering prediction markets is like covering the tech boom or housing explosion or any other legitimate business issue. You parrot the lines and rationalizations of the prediction market gurus whom you lionize as geniuses while failing to realize that they’re just copying a wagering concept that’s as old as internet gambling, betting exchanges. They’re like Bernie Madoff in sheep’s clothing.
Yes, the prediction markets are about to destroy everything we hold near and dear about the gaming industry, everything we fought for, tooth and nail, over the years. Everything we’ve built is in jeopardy. By allowing the federal government to get involved, prediction markets could be the first hole in the dike that washes away the entire industry.
Let’s stop it before it starts. Ban prediction markets from any kind of betting. Because you know they’ve got slot machines and table games in their pocket, ready to go once the legal hurdles are overcome.
