Casino industry trade groups in Nevada, New Jersey vent frustration with prediction markets
The CFTC has so far released for public view a total of 29 submissions that it received. Most have come from tribal gaming interests, as tribes are always wary of infringements on sovereignty and exclusivity.
But two submissions from prominent trade groups in Nevada and New Jersey, America’s top gaming states, indicate that the commercial industry is just as unhappy with how things have unfolded.
Prediction markets have operated for years but have come to the forefront in the last six months. In October, the New York-based exchange Kalshi prevailed in federal court to offer election betting despite objections from the CFTC. That opened the floodgates for Kalshi and others such as Robinhood and Crypto.com. Billions of dollars worth of election contracts were traded in November, and the platforms have since begun offering sports contracts.
This latest development has caused an uproar from several sectors, including gaming operators, state regulators, financial groups and responsible gaming advocates. As federally legal exchanges, prediction markets are permitted in all 50 states. They also are not currently considered sports betting and therefore do not pay state betting taxes.
Those issues, as well as consumer protection concerns, have dominated opponents’ arguments. In response, the CFTC has arranged the upcoming roundtable, but the commission’s stance on the issue is unclear following the change in presidential administrations.
Donald Trump Jr., son of US President Donald Trump, was named as an adviser to Kalshi in January. Additionally, Trump’s nominee as the next CFTC chair, Brian Quintenz, is a Kalshi board member.
Nevada group touts state’s gaming influence
In gaming debates, Nevada likes to throw its weight around as the preeminent market in the US. Most of the time this is done in a celebratory fashion that honors the state’s gaming heritage dating back to legalisation in 1931.
But on 3 April, the Nevada Resort Association (NRA), the most powerful trade group in the state, took a different approach. The response to prediction markets was more authoritative, more “Who do you think you are? I AM!”, a la bowler Peter Weber. Rarely do Nevada stakeholders appear so angered.
“Nevada stands as the nation’s home for legal gaming, and we have spent decades offering safe legal sports betting to Americans,” NRA President and CEO Virginia Valentine asserted in the group’s submission. “Allowing for sports wagering to happen outside of state regulated channels puts citizens at risk and endangers the critical economic support gaming provides.”
Valentine added that when PASPA was overturned in 2018, “other states began legalizing sports betting and the first place they came to was Nevada for guidance”. Dozens of other states, Valentine wrote, “are now experiencing the benefits of a legal regulated sports betting market that Nevada has long known”.
Despite the association’s pronouncements, the Silver State is already down 1-0 in its legal fight against Kalshi. The Nevada Gaming Control Board issued a cease-and-desist to the platform 4 March. Kalshi sued in response and was granted a preliminary injunction earlier this month. Gaming attorney Andrew Kim wrote in Dustin Gouker’s Closing Line newsletter this week that the war is far from over, but Nevada certainly has its work cut out if it hopes to rid the state of the platforms.
New Jersey group points to years of PASPA work
If Nevada is the historical “gold standard” for gaming, New Jersey is certainly the modern equivalent. The Garden State legalised casinos in 1977, igaming in 2013 and was the driving force behind PASPA’s repeal, which effectively created the sports betting industry as we know it today.
This latter point was the key argument from the Casino Association of New Jersey (CANJ), whose submission is dated 2 April. If the NRA was channelling Peter Weber, the CANJ seemed more like Rodney Dangerfield, asking for respect.
“New Jersey fought for almost a decade to bring legalized sports betting to our state and the rest of the country,” wrote CANJ President Mark Giannantonio. “Our state policymakers knew people were betting on sports, but they were doing so illegally and with no consumer protections. Our state, like all states, was also losing billions in tax revenue that could be used to better fund education, infrastructure projects, and any other initiative our legislature determined.”
Those years of legal work in turn helped other states launch their markets. But as Giannantonio wrote, those choices “were made intentionally to ensure that the legal sports betting industry in New Jersey provides a safe and responsible way to bet on sports and provide economic value to our state”. Federally sanctioned prediction markets, he argued, undermine those efforts.
Kalshi was also served a cease-and-desist from the New Jersey Division of Gaming Enforcement 27 March. The platform has countersued there as well, but a hearing scheduled for earlier this month has been moved to 30 April, the same day as the CFTC roundtable.