Regulating Prediction Markets: A Nationwide Challenge

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Transcript

00:00there's got to be some sort of regulation, I would think nationwide with these prediction

00:04markets, but it's just like sports betting. It's like state by state, make the decision to move

00:08forward. Yeah, it wouldn't be a show if we didn't talk about prediction markets. And beyond that,

00:14the craziness of the unregulated space you just mentioned, where you have these companies like

00:18Kalshi partnering with Robinhood, Crypto.com, just kind of deciding one day that, hey, we want to

00:24offer a sports product. We're going to hire all these people who used to work in sports betting,

00:29we're going to use some of the same engines that some sports betting platforms use, but we're going

00:34to make a lot of money on it, because we're not going to call it sports betting, we're going to

00:39call it trading. And we're going to say we're regulated by the commodities and futures trading

00:43commission. So once that happened in January with Super Bowl, there was huge blowback, everyone was

00:48like, okay, where's the regulation going to come from, you just mentioned, multiple states have

00:52sent cease and desist and sued, and really waiting on the CFTC of the new regime to weigh in here.

00:59And, you know, say, yes, we can regulate these, these are not sports betting, or no, you actually

01:04have to get licensed in the states. And they were meant to address this issue in this roundtable,

01:08they're actually supposed to host in March, which was going to have input from stakeholders from

01:14actual gaming companies from these prediction markets, tribes who are concerned about their

01:19gaming rights, Major League Baseball and the NBA have weighed in saying, hey, these have no

01:23gambling protections. And it's essentially gambling. But that roundtable was pushed back to April. And

01:29then this week, it was canceled indefinitely with really no explanation from the CFTC, which just

01:35creates even more uncertainty over an already really uncertain space. And it allows it's a big win for

01:41these companies, which meanwhile, continue to ramp up the action. I mean, call she did $500 million on

01:47March madness, which is about 16% of what the entire legal sports betting market was projected to take

01:55over the weekend, 78% of all trades on call she and Robinhood were essentially sports bets. You know,

02:03these are businesses that have made their bones, doing prediction markets on the election, on the

02:09weather, Oscar winners, and people are now looking at them as actual sports betting platforms.

02:15These companies are going to only invest more and more while the silence continues. We'll see if the

02:21CFTC will be waiting if they do or say anything. Meanwhile, you have these lawsuits in a bunch of

02:26states, which so far have gone in their favor, with a lot of judges ruling, hey, we need the CFTC to

02:32weigh in here before we really can enforce a state kind of enforcing action against a group that says

02:38it's federally regulated. So that's another win for them. They're going to keep operating until the CFTC

02:42really does something. And it has a lot of ties to the current administration of these companies. So

02:48you have to wonder if something comes, will it be good news for the sports betting industry?