It’s a short week, but it doesn’t feel like it when it comes to prediction markets news.
From Robinhood suing Washington State to Iowa senators approving a plan to regulate the industry to Kentucky lawmakers changing their proposed ban on prediction market partnerships, we covered a lot at SBC Americas in the last few days. Oh, and the small matter of the Commodity Futures Trading Commission (CFTC) suing three states in federal court on Thursday.
But there’s so much more. Each Friday (or Thursday, this week), we do our best to sum it up.
NFL says it’s time to sharpen up
As first reported by ESPN’s David Purdum, the NFL wrote to leading prediction market platforms including Kalshi and Polymarket to urge them not to offer any sports event contracts that could be easily manipulated. The league also wants to ensure that markets are not available on anything that could be pre-determined, such as draft picks, player signings, what broadcasters may say or who may attend league events, or anything “inherently objectionable” like player injuries.
“Some people are going to have that information … that they can then share,” NFL Executive Vice President Jeff Miller told ESPN. “We’re trying to stay as far as we can from some of those sorts of inside information wagers that could exist in this space.” Commodity Futures Trading Commission (CFTC) Chair Michael Selig told ESPN that the regulator would “evaluate the risks” and would be willing to hear out the league on its suggestions.
The NFL has so far steered clear of direct affiliation with prediction market platforms, unlike other sports leagues and organizations including the NHL, Major League Soccer, UFC, and most recently MLB.
Prominent senator slams ‘complicit’ MLB
Speaking of MLB, prominent U.S. Senator Richard Blumenthal had some choice words for the league’s recently announced partnership with Polymarket.
“It is astonishing and appalling that Major League Baseball would, in effect, be complicit in this,” Blumenthal told Front Office Sports. The co-sponsor of the notorious SAFE Bet Act, which proposed numerous tight restrictions on state-regulated sports betting, recently introduced the Prediction Markets Security and Integrity Act, which would explicitly define sports contracts as sports betting, and also seeks to tackle insider trading.
“It’s a concentrated and purposeful effort to circumvent state rules and laws that provide guardrails on sports betting,” Blumenthal said of the bill. He also made it plain that he does not believe the CFTC should be regulating the new-age form of prediction markets. “What does the CFTC know about sports betting? What they’ve done is taken the format of sports betting and just put it in a new app where there are less rules, and it’s allowing younger people in. It’s a form of what I have begun calling an ‘addiction conspiracy.’”
Is Kalshi a gambling site? Pretty much, says Kalshi
Reporting from Sportico’s Dan Berstein noted that when the company rather ambitiously petitioned the U.S. Patent and Trademark Office to try to trademark the term “prediction market”, it stated in black and white that it should be considered to encompass gambling.
Bernstein wrote that Kalshi described itself as offering things like financial trading and communications services, but also “bookmaking services, namely, providing of information related to sports betting; organizing, arranging, conducting sports betting and gambling tournaments, competitions and contests.”
Kalshi has had a confused sense of identity for a while. Chief Executive Officer Tarek Mansour has continually insisted publicly that his company is not a gambling site, but the firm has been seen to advertise itself in the past as offering “legal sports betting” across the U.S. Director of Communications Elisabeth Diana told Bernstein that the trademark filing’s mention of gambling was “designed to cast a wide net, not to define our business.”
More California action coming?
In last week’s Prediction Markets Weekly, we noted the news that California Gov. Gavin Newsom announced an executive order that bans all state officials from using insider knowledge to profit or assist another person in profiting from prediction market trading.
Could the Golden State follow other states in suing certain prediction market companies in court?
“I think each state will determine what they want to do, what they think is appropriate, what kind of risk they want to take, what kind of resources they want to deploy,” California Attorney General Rob Bonta told Business Insider this week. “The fact that we haven’t sued, I think you should not read too much into it.” Another potential course of action could be an official opinion from Bonta, similar to the one he issued last year that said that all paid daily fantasy sports should be deemed illegal.
US banking giants licking their lips?
It seems that everyone wants a slice of the prediction markets pie while it’s still hot, and you can include JPMorgan Chase in that.
The CEO of the world’s largest bank by market capitalization, Jamie Dimon, said in an interview with CBS Evening News that the company may step into the realm. “It’s possible one day we’ll do something like that,” he said, although he ruled out the idea of offering sports or politics markets. “There’s a bunch of stuff we won’t do.”
That came after Goldman Sachs CEO David Solomon said on a January earnings call that the firm is actively exploring the space, revealing that he had recently met leaders from “the two big prediction companies”. We’ll give you two guesses which ones he means.
Also of note from Dimon’s new interview was that, when pressed to offer an opinion on whether predictions are more like gambling or investing, he suggested that, “for the most part, it’s more like gambling. “But there are areas where you could say, ‘No, it’s investing.’ You are deeply knowledgeable. You’re taking the other side of a bet.”
Good Friday? Maybe not for prediction markets
While most people will be out of office on Friday, numerous prediction market platforms will be in court.
InCarson City state court in Nevada, a hearing is scheduled in the Nevada Gaming Control Board’s case against Kalshi. The NGCB was granted a two-week temporary restraining order on March 20, which expires on the day of the hearing. If the gaming regulator’s request for a preliminary injunction is also granted, Kalshi would be officially banned from offering sports, elections, and entertainment event contracts while the remainder of the lawsuit plays out.
Meanwhile, in Arizona, a federal judge is scheduled to hear arguments on Kalshi’s motion for a preliminary injunction against the state on Friday.
Happy Easter.
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