Top US trade groups argue against prediction markets

The Commodity Futures Trading Commission (CFTC) has recently opened a public comment period regarding prediction markets for sports contracts, culminating in a scheduled roundtable discussion on April 30. This initiative reflects the industry’s growing concern, particularly from leading gaming states in the U.S.

To date, the CFTC has made 29 public submissions available for review, predominantly from tribal gaming interests cautious about sovereignty and exclusivity issues. However, notable responses from influential trade organizations in Nevada and New Jersey—two of America’s foremost gaming jurisdictions—indicate a strong collective discontent with the current trajectory of regulation.

The discourse surrounding prediction markets has intensified, especially after the New York-based exchange Kalshi won a federal court ruling in October allowing it to offer election betting, despite initial resistance from the CFTC. This legal victory has paved the way for Kalshi and other platforms, including Robinhood and Crypto.com, to venture into sports betting contracts. Following this shift, billions of dollars were wagered on election contracts in November, and the introduction of sports contracts has further fueled industry debates.

This emergence of prediction markets has sparked significant controversy among various stakeholders, including gaming operators, state regulators, financial organizations, and responsible gaming advocates. As federally sanctioned exchanges, prediction markets operate in all 50 states and, notably, are not classified as traditional sports betting, thereby allowing them to bypass state betting taxes.

Concerns surrounding consumer protection and the legality of these new market offerings remain central to the opposition’s arguments. In light of these issues, the CFTC convened the upcoming roundtable, although its regulatory stance appears uncertain following shifts in presidential administration. Notably, Donald Trump Jr. has taken on a role as adviser to Kalshi, and Brian Quintenz, Trump’s nominee for the CFTC chair, serves on Kalshi’s board.

Nevada’s Assertion of Gaming Authority

As the cornerstone of legalized gaming in the U.S., Nevada often asserts its dominance in industry discussions, celebrating its long-standing heritage since gaming legalization in 1931. However, on April 3, the Nevada Resort Association (NRA) adopted a more assertive tone in its response to prediction markets, expressing the state’s frustrations. Rarely do Nevada stakeholders display such forthright displeasure.

“Nevada stands as the nation’s home for legal gaming, and we have spent decades offering safe legal sports betting to Americans,” stated NRA President and CEO Virginia Valentine in their submission. “Allowing sports wagering outside of state-regulated channels jeopardizes public safety and undermines the economic benefits that the gaming industry provides.”

Valentine noted that the rebuke against the Professional and Amateur Sports Protection Act (PASPA) in 2018 led many states to seek Nevada’s guidance in legalizing sports betting. She emphasized, “Many states are now reaping the rewards of a regulated sports betting market that Nevada pioneered.”

Despite the strong sentiments expressed, Nevada has faced its challenges in the legal arena. On March 4, the Nevada Gaming Control Board issued a cease-and-desist order to Kalshi, which countered with a lawsuit and subsequently obtained a preliminary injunction against the Board’s enforcement. Gaming attorney Andrew Kim remarked in Dustin Gouker’s Closing Line newsletter that Nevada’s legal battle remains ongoing and is far from resolved.

New Jersey’s Legacy of Legalization

If Nevada exemplifies the historical paradigm of gaming, New Jersey embodies its contemporary essence. With casinos legalized in 1977 and online gaming introduced in 2013, New Jersey championed the repeal of PASPA, significantly shaping today’s sports betting landscape.

This aspect was a pivotal focus for the Casino Association of New Jersey (CANJ), whose submission dated April 2 underscored the state’s extensive efforts to establish a legal sports betting framework. If the NRA portrayed a decisive personality, the CANJ’s stance resembled a call for acknowledgment of their pioneering role.

CANJ President Mark Giannantonio stated, “New Jersey fought for nearly a decade to legalize sports betting, understanding that while people were betting illegally, they were devoid of consumer protections, costing our state invaluable tax revenue for public services.”

Giannantonio emphasized that New Jersey’s regulatory framework was deliberately designed to ensure that legalized sports betting operates safely and responsibly while benefiting the state economically. He argued that federally endorsed prediction markets threaten to undermine these significant achievements.

On March 27, Kalshi received a cease-and-desist order from the New Jersey Division of Gaming Enforcement. The platform has subsequently pursued legal recourse there as well, with a hearing set for April 30—concurrent with the much-anticipated CFTC roundtable.