The federal regulator that monitors predicting markets will conduct a round table discussion next week to gather testimony for decisions that it will make on sports results offered by some markets.
New York-based Kalshiex LLC and Nevada Gaming Control Board are right over Kalshi, which recently offers sports results on their website. The control board looks at these offers as a type of sports venture and sent Kalshi a termination order that requires it to stop offering sports and election outcomes in Nevada.
Kalshi responded by submitting a mood in the US District Court in Nevada and sought an injunction to prevent the Control Board from prosecuting the company. On April 8, the district court Andrew Gordon granted a preliminary injunction.
Since then, New Jersey Gaming Regulators has been involved in similar fights with Kalshi.
What are prediction markets?
Prediction markets, also known as information markets and futures derivatives, are a way for the public to predict the result of a current event by investing in that result. Participants generally invest on each side of a proposal, for example “will Pietro Parolin be the next pope?” Or “Will today’s high temperature in New York are over 75 degrees?”
In October, several prediction markets began to take measures against the result of elections and raise Nevaden’s officials as the state’s constitution prohibits investment in the result of an election.
At the end of 2024 and early 2025, some markets began to set up proposals involving sports. For example, Kalshi now has a market for the result of several of the first round of National Hockey League Stanley Cup Series.
The federal supervisory authority that monitors Kalshi, Commodity Futures Trading Commission, foreseen disputes between state and federal jurisdictions in February and then decided to conduct a round table discussion on April 30.
‘Sinkhole of uncertainty’
Acting CFTC Chairman Caroline Pham called disputes a “sinking of legal uncertainty” when he announced plans in February for the round table.
PHAM sees prediction markets as “an important new limit for utilizing the power of the market to assess the feeling to determine probabilities that can give the truth to the information age.”
PHAM hopes to be able to gather information from both sides of the issue to determine how CFTC regulates sports proposals that Kalshi and other market exchanges offer.
CFTC invited written submissions on the subject and the published comments from 29 sources, including the American Gaming Association, Rep. Your Titus, D-Nev., And Nevada Resort Association.
“Nevada stands as the country’s home for legal play and we have spent decades offer safe legal sports games to Americans,” said Nevada Resort Association President and CEO Virginia Valentine in its written submission. “To allow sports that are investing outside state -regulated channels put citizens at risk and jeopardize the critical economic support game.”
Valentine also said that when the US Supreme Court overturns the Act on Professional and Amateur Sports Protection 2018 and opened the door to sports games to other states, Nevada was usually a state’s first stop to gain insights from a state that had monitored sports games for decades.
“With the support of decades of experience in regulating sports games, we prevailed other jurisdictions on types of investments, possible restrictions, licensing, enforcement, integrity, responsible games and other key policy to consider,” she said.
Titus weighs in
Titus noted that states regulate sports games in new jurisdictions and asked the Commission to consider it on sports contracts.
“Event contracts at sporting events give this relatively new industry directly in conflict with state -regulated gaming operators,” Titus said in his submission.
“To allow prediction contracts on sporting events has several worrying effects that the Commission should deal with before issuing any decision,” she said. “Prediction contacts at Sport create a back door way of legalizing sports games in states that have not approved it.”
In a submission from the American Gaming Association, concerns were also noted from main casinos.
“Over the past seven years, states have moved to legalize and regulate sports games,” said AGA’s Christopher Cylke, senior vice president of government relationships. “Today, there are 40 jurisdictions that allow this activity to take place through licensed operators who are the subject of strict regulations designed to protect customers, maintain gaming integrity and promote responsibility, while receiving financial and tax benefits for each respective jurisdiction.
“In addition to being an unfair economic threat to sports on-sports book operators who have invested in conducting licenses and the compliance of legislation of a jurisdiction-by-law diction, the introduction of a” national “sports game product is serious at the Tribel Authority, while at the same time compromising state tax revenue. Tax revenue. Jurisdictions.
While most of the submission came from pedigree operators, supervisory authorities from New Jersey and Tennessee also weighed in, as well as player lawyers and responsible game advocates.
This is a developing story. Come back for updates.
Contact Richard N. Velotta at rvelotta@ theplayerlounge.com or 702-477-3893. Follow @rickvelotta at X.
