CFTC cancels roundtable; RWLV hires CCO, more

Welcome to iGB’s State of the Union, an in-depth analysis of the most significant developments in North American sports betting this week, along with intriguing insights from the industry.

CFTC Cancels Anticipated Prediction Markets Roundtable

The gaming industry eagerly anticipated a roundtable on balanced regulations for prediction markets scheduled for April 30. Leading platforms such as Kalshi, Robinhood, and Crypto.com are revolutionizing the event contracts market, particularly in sports. Kalshi reported trading volumes surpassing $500 million during the March Madness event, showcasing its growing influence over traditional sportsbooks.

However, on April 24, the U.S. Commodity Futures Trading Commission (CFTC) unexpectedly canceled the roundtable just days before it was scheduled to occur. As of now, no new date has been set, with a CFTC attorney stating, “more details will be provided when available.” A spokesperson confirmed this cancellation to iGB, offering no updates on rescheduling plans.

The abrupt cancellation is underscored by a CFTC official sharing with Sportico that the roundtable is being reformulated to become “more of a forum or hearing” that will encompass various stakeholder perspectives.

Increasing Legal Challenges: Cease-and-Desist Orders and Lawsuits

The rationale behind the sudden delay remains ambiguous, leaving stakeholders scrambling for clarity as the week draws to a close. Many prediction market platforms, particularly Kalshi, have faced a surge of cease-and-desist orders as the federalism vs. states’ rights debate intensifies.

In response, Kalshi has initiated lawsuits in key jurisdictions, including Nevada, where a district court granted the company a preliminary injunction allowing it to continue operations in the state. Legal actions have also been filed in New Jersey and Maryland, while other states have ramped up cease-and-desist orders since the onset of March Madness.

The CFTC initially planned the roundtable to navigate intricate regulatory issues surrounding the derivatives market for sports-related securities. As CFTC interim chair Caroline Pham articulated in February, the event was a “necessary first step” for constructing a “holistic regulatory framework” to encourage healthy prediction markets.

The postponement leaves unresolved the crucial question of who is responsible for overseeing event contracts, creating market uncertainty.

Cancellation Seen as Disappointing for Industry Stakeholders

In its February memo, the CFTC highlighted numerous challenges in establishing fair regulations, including the Commerce Clause, state regulatory systems, and tribal sovereignty. The recent nomination of former CFTC commissioner Brian Quintenz, now serving on Kalshi’s board, adds a layer of complexity to this ongoing discourse.

The abrupt delay has left industry leaders expressing disappointment at the missed opportunity for collaboration. A prominent lobbyist noted that the forum would have been key for stakeholders to exchange viewpoints and for CFTC commissioners to gather essential information for making informed decisions.

Colorado Legislation Targets Free Bets Deduction

As the NBA Playoffs gain momentum, legislative activity has surged in several states aiming to elevate the tax rate on sports wagering operator revenues. Notably, Colorado has introduced bill HB 25-311, seeking to eliminate a deduction that allows commercial sportsbooks to mitigate their tax liability.

This bill proposes the removal of a deduction for free bets, which currently allows operators to deduct up to 2% in fiscal year 2025-26, with plans to reduce this to 1.75% in the following year. If passed, the bill would entirely eliminate this deduction by September 1, 2025.

Based on fiscal projections, this legislative change could generate an additional $11.8 million in revenue for Colorado’s sports betting fund for FY2025-26, with a potential increase to $10.6 million for FY2026-27. However, industry experts caution that such changes may also lead operators to reduce the number of free wagers offered.

RWLV Names Jennifer Roberts as Chief Compliance Officer

Resorts World Las Vegas (RWLV) has appointed industry expert Jennifer Roberts as Chief Compliance Officer, further strengthening its executive team amid a comprehensive turnaround strategy. Roberts, an esteemed adjunct professor at UNLV’s Boyd School of Law, will oversee critical compliance matters including anti-money laundering (AML), responsible gaming practices, and technical compliance.

This appointment follows a $10.5 million settlement approved by the Nevada Gaming Commission (NGC) due to AML deficiencies at RWLV. Notably, the casino did not admit to any misconduct during the March hearing.

Roberts brings a wealth of experience, having previously served as vice president and general counsel at WynnBET, where she directed compliance operations across multiple jurisdictions. Her expertise will be key in reinforcing RWLV’s compliance infrastructure.

RWLV Assembles a ‘Dream Team’ of Advisors

The regulatory issues facing RWLV stem from its interactions with illegal bookmakers, with significant financial implications. The NGC highlighted an incredible “dream team” of RWLV executives attending the March hearing, including former Nevada governor Brian Sandoval and ex-MGM Resorts CEO Jim Murren, all committed to enhancing the casino’s regulatory standing.

As stated by CEO Alex Dixon, Roberts is positioned to significantly advance the compliance program, ensuring it meets the highest standards. The $10.5 million fine represents one of the most substantial penalties in Nevada’s gaming history, emphasizing the necessity for robust compliance measures.

South Carolina Committee Discusses Sports Betting Legislation

A recent hearing by the South Carolina House Ways and Means Revenue Policy Subcommittee on April 22 examined three gambling-related bills, including H. 3625, or the South Carolina Sports Wagering Act. This legislation proposes a 12.5% privilege tax on sports betting revenues, projected to yield about $31.3 million for the state in fiscal year 2025-26.

However, opposition exists; several religious organizations have campaigned against the bills, citing an increase in problem gambling and offering statistics from UCLA indicating a 25% to 30% rise in bankruptcy rates among households engaging in legal sports betting.

Despite South Carolina’s lackluster traction on legal sports betting, similar initiatives in nearby states such as Georgia and Mississippi have also faced setbacks. Governor Henry McMaster has publicly stated his intention to veto any sports betting legalization efforts, further complicating the legislative landscape.

UN Office Raises Concerns over Criminal Activities Linked to Online Gaming

A comprehensive report from the United Nations Office on Drugs and Crime (UNODC) sheds light on the relationship between online gaming and transnational organized crime. The 81-page document underscores the escalating influence of illegal syndicates, particularly in Southeast Asia, which have exploited the online gaming landscape to generate staggering financial losses, estimated in the billions.

Criminal enterprises often leverage white-label online gambling platforms to facilitate money laundering through deceptive practices such as fake tournaments and illegal in-game transfers. This alarming trend calls for increased scrutiny and regulatory measures.

Regulatory Measures Needed Ahead of the 2026 World Cup

In light of the UNODC findings, U.S. lawmakers, including Senators Marsha Blackburn and Catherine Cortez-Masto, have urged the Justice Department to investigate the connection between organized crime and illegal sports betting, especially as preparations ramp up for the 2026 FIFA World Cup.

UNODC research reveals that in 2014 alone, approximately $140 billion was laundered through illegal sports betting, a figure likely to have increased significantly. The organization calls for enhanced regulatory frameworks addressing money laundering, virtual assets, and online gaming oversight.

Recent Highlights from iGB

Notable updates include:

• Genius Sports announces an extended partnership with the NCAA through 2032.
• Ontario igaming revenue reaches C$3.20 billion for 2024-25.
• Las Vegas Sands withdraws from the New York casino bid.
• MGM Resorts acknowledges culpability in an illegal bookie case, leading to an $8.5 million settlement sanctioned by Nevada regulators.

As the industry continues to evolve, watch for further developments as U.S. sports betting expands and regulations adapt to meet emerging challenges and opportunities.