Growing Legal Challenges in Prediction Betting Markets

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Transcript

00:00start off, man, this year is the story, thus far, quarter one prediction market. It's all we do here

00:06is, with whatever we're talking about as far as sports betting is concerned, these prediction

00:12companies that have jumped on the scene over the last, let's say, year or so, trying to find a way

00:17to skirt around different laws. The state of Michigan thus far not really having it, and you

00:23got to wonder, Pat, are these prediction market companies all going to be under serious fire at

00:28this point? Because it certainly feels like no state is shy about trying to kick them out.

00:32Yeah, and I think I'll give a little plug to the Legal Sports Report podcast, because we do break

00:36down this, and this past week we actually talked about how, kind of the last couple of years,

00:40we've had these industries coming in and trying to take part in sports betting, or at least

00:45garner some of the flash that we've gotten with this market. First, it was DFS 2.0, then last

00:51year it started being the sweepstakes, now it's these prediction markets, which started with

00:55Crypto and Calshi. Calshi really came on last year with the election betting that they started

01:01to offer in October, and then we've gotten some okays for the Super Bowl, and now March Madness,

01:08and now they're just open season on sports, and we'll see more and more. And it's really,

01:14it's seen on Robinhood, and it's just basically that trading. You get to pick something in the

01:19future and see if it pays off. The CFTC says it's okay, that's the federal regulator of these

01:26trading markets, and so far they say it's okay, and now we're seeing states coming out and saying,

01:33no, this isn't okay, this isn't something we want. First, last month it was Nevada, who of course has

01:38been the strongest regulator of gaming because of Las Vegas, and how important the gambling industry

01:44is to them, and they said, this is unlicensed gambling. If you're offering this stuff that our

01:50licensed regulated operators can't, then you can't do it either. Then we've seen New Jersey, Ohio,

01:57and Illinois all say, hey, you can't do this. Now we're seeing a bunch of other states, including

02:02Connecticut, Kansas, Louisiana, Massachusetts, and we confirmed last week, Michigan, all saying,

02:07we're investigating it, we're looking into this, if this is okay, if it's unlicensed gambling,

02:12we're going to have to take issue with it as well. Then just today, we've seen reports come

02:18out that the CEO of Cal-She is saying, you know what, we don't really care what these states say,

02:22the CFTC says it's okay, we're going to keep offering it until the CFTC says no, and so we'll

02:29see what happens there. There's some lawsuits against Nevada and New Jersey going by Cal-She

02:34after they sent the season to CIS, so this is going to get really kind of spicy, I think,

02:38coming up and seeing what happens to this industry. In Nevada, we've seen Rep. Dena Titus,

02:44who of course takes a lot of gambling issues to Washington, and she's asked the CFTC to halt this

02:51trading. The CFTC, in at least a couple weeks' time, will be holding a roundtable on this,

02:57on the sports prediction trading markets, to see kind of why this is or isn't okay.

03:03So yeah, it's definitely kind of the story of the year in the gambling world, even though

03:08they're claiming it's not really gambling, it's like the stock market, which my dad always told

03:14me is a legal form of gambling. So it's going to be fun to watch, but Michigan, as we've talked

03:22about ad nauseum the last couple of months, including last week, they sent 13 season to CIS

03:27letters to offshore operators. On top of confirming this investigation in prediction trading markets,

03:35Michigan is very, very active in regulating and making sure

03:40the gambling industry is well regulated up here in the Michigans.