Amid the continued rise in popularity of event contracts, several state regulators have issued words of warning to prediction market operators.
Key Takeaways
- Washington said it does not authorize prediction markets.
- Louisiana classified sports event contracts as an illegal form of gambling.
- Arizona said it is closely monitoring and may take legal action against platforms that violate state gaming laws.
Washington was the latest to reveal its stance on prediction platforms, which are growing more prevalent and powerful with each passing day.
The Washington State Gambling Commission announced Tuesday that offering event contracts or supporting these markets “is not authorized” and that it will provide an update in due course.
“While prediction markets are an unauthorized activity in Washington State, we acknowledge that the future of prediction markets, including those for sports, political events, etc., remains a subject of ongoing litigation both federally and in other states,” the announcement reads. “We will continue to monitor the ongoing cases as they progress through the court system and will provide updates once the courts provide further guidance.”
The announcement concluded by reminding consumers they are legally allowed to bet on sports at approved tribal casinos.
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Louisiana hits out at prediction markets
Sentiments in Washington mirror those of Louisiana's gaming regulator.
A letter from Louisiana Gaming Control Board (LGCB) chairman Christopher B. Hebert, dated last Friday, defined sports event contracts as an illicit form of sports betting.
“It is the Board’s position that such activities constitute sports wagering activity under Louisiana law and are not being conducted in compliance with Louisiana Gaming Control Law or under a valid Louisiana issued license or permit,” the letter reads.
Regulatory ambiguity is the cause of the strife in which prediction markets have found themselves engulfed. State regulators who share Louisiana's opinion believe operators offer sports betting services and therefore require licensing and state-level regulations.
Prediction platforms licensed by the Commodities Futures Trading Commission (CFTC) argue federal law supersedes state law, and as long as they comply with their federal regulations, they are not in violation of any operational requirements.
“Not only do these ‘contracts’ related to sports wagers, and, possibly, other contracts fit the definitions of gambling ... but (state law) includes ‘exchange wagering’ as a ‘sports wager’ under the Louisiana Gaming Control Boards’ jurisdiction and licensing,” the LGCB’s letter reads. “The Board considers purported sporting event contracts and certain other event contracts as illegal gambling in violation of the Louisiana Criminal Code and Louisiana Gaming Control Law.”
Arizona closely monitoring
Arizona didn't express quite the same opposition as Louisiana and Washington, but its regulators are paying attention to all developments related to prediction markets, and the government will act in the people's best interests.
“Attorney General (Kris) Mayes is aware of the rapid growth of so-called ‘prediction markets’ and the concerns they raised around compliance with Arizona laws,” the AG’s office said in a statement obtained by AZ Family. “While we can’t comment on any specific company or the potential for litigation, the Attorney General’s Office is closely monitoring how these products are being offered to the public and any efforts to sidestep existing regulatory safeguards.
“Our office takes very seriously any business model that may expose Arizonans to hidden risks or attempt to evade state law.”
Despite the cynicism of regulators, Kalshi, the leading prediction platform, announced earlier this month partnerships with CNBC and CNN. NBA champion Tristan Thompson recently said he believes prediction markets are an inevitable component of future sports broadcasts.
