The issue of prediction market platforms offering event contracts on sports already stretches from gaming regulators to the courts. Now, it’s also up for discussion in the legislature of the biggest sports betting state in the U.S.
A new bill filed by a New York Assemblymember would amend the state’s general business law to significantly curtail what prediction market platforms can do in the Empire State. Most notably, Assembly Bill 9251 would prohibit such operators from offering markets on “catastrophic events, politics, deaths, securities and athletic events.”
Known as the Oversight and Regulation of Activity for Contracts Linked to Events Act (ORACLE Act), Asm. Clyde Vanel’s A9251 has been referred to the Assembly Committee on Consumer Affairs and Protection.
Tournament futures would still be allowed
The legislation addresses all forms of prediction markets, regardless of the mechanisms or structures they use to offer trading on future events. By “athletic event market,” the bill means not only trading on the outcome of specific athletic events, but also of “events within an athletic event.” It specifically name-checks prop betting as a market that would not be allowed.
However, it would not ban every single sports event contract.
Markets on the final outcome of an athletic tournament or a combination of all outcomes of each event within an athletic tournament would not be included in the definition of prohibited athletic markets. So, trading on which team will win the next NBA championship or bracket-style markets on March Madness ostensibly would still be allowed.
Gamble Trade responsibly
More generally, the bill would also impose stringent rules on any prediction market platforms allowed in the state of New York, similar to the requirements asked of licensed sportsbooks in many jurisdictions, including the implementation of:
- A minimum user age of 21 years old
- A way for people to self-exclude
- The ability for users to set their own deposit, spending and time limits
- A ban on the use of credit cards or other credit-based payments
- A ban on push notifications that encourage gambling
- Clear display of New York’s problem gambling helpline
- Advertising restrictions such as a prohibition on phrases like “risk-free”
Shots fired at sportsbooks?
In some states such as Ohio, Nevada and Michigan, the gaming regulatory body has sent a memo to its licensed sportsbooks to warn them about launching sports event contracts. The New York State Gaming Commission (NYSGC) has not said it has sent such a notice, but it did issue a cease-and-desist order to Kalshi. The prediction market platform sued the commission in response, claiming the NYSGC intruded upon the federal government’s exclusivity authority to regulate prediction markets.
Meanwhile, major licensed sportsbooks such as DraftKings and FanDuel are taking steps toward potentially offering sports contracts. It seems that is also something that Vanel’s A9251 is seeking to clamp down on.
“A prediction market provider shall not offer a prediction market in the state if the market includes, as a liquidity provider or market maker, any person or entity who knowingly engages in gaming activities in the ordinary course of business, whether within or outside the state,” reads the bill. That provision would apply to any affiliates, subsidiaries or joint ventures of such entities.
The bill would also empower the New York Attorney General Letitia James’ office to seek court-ordered injunctions against prediction market operators. If such a platform continued offering prohibited contracts in New York after being issued an order to cease by a court judge, it would be fined $1 million for every day it remained operational. The New York AG’s Office offered no comment on this bill when asked by SBC Americas.
How far can states go?
Prediction market platforms such as Kalshi continue to maintain that states cannot stop them offering event contracts, even in sports, because they claim that the Commodity Futures Trading Commission’s (CFTC) federal right to regulate such offerings supersedes state-level gaming laws.
Given how proactive the likes of Kalshi have been in challenging regulators in some states, the viability of a state legislative ban on sports event contracts would likely be contested fiercely by prediction market platforms.
