During the US Senate Committee on Agriculture, Nutrition, and Forestry hearing, Quintenz stated that, under the Commodity Exchange Act (CEA), events on nearly all markets are permitted. He also indicated that native American tribes could, in theory, offer event contracts.

Sports Prediction Markets and the Commodity Exchange Act

One topic on many people’s minds was Quintenz’s stance on sports event contracts. These types of contracts have grown in popularity on platforms like Kalshi. Many lawmakers and state regulators view them as an unregulated form of gambling.

Sen. Adam Schiff (D-California) expressed concerns about these types of contracts:

“Well, in my view, betting on the outcome of a sporting event looks like sports betting, looks like gaming, smells like gaming, sounds like gaming, there are winners and losers like gaming, it’s probably gaming.”

Quintenz responded by emphasizing that CEA governs such markets:

“I believe that I need to abide by the Commodity Exchange Act…I believe the Commodity Exchange Act is very clear about the purpose of derivatives markets, the purpose of risk management and price discovery, and that events can serve a function in that mandate. I believe the Commodity Exchange Act is very clear about the purpose of derivatives markets, the purpose of risk management and price discovery, and that events can serve a function in that mandate.”

He added that if a conflict arises between the CFTC’s interpretation and state gambling laws, stating: “I believe that’s best resolved through Congress.”

When asked whether states should be able to block CFTC-approved products, the nominee reaffirmed that the commission’s role is to oversee event contracts.

Quintenz did not explicitly state that sports event contracts are commodities under the CEA. Still, he suggests that he views event-based derivatives, including those tied to sports, under the CFTC’s authority.

Tribes Could Participate in Sports Prediction Markets

Sen. Schiff raised a question about sports prediction markets possibly challenging tribal sovereignty:

“I’m proud to represent more than a hundred federally recognized tribal nations in California that have the exclusive right to offer gaming in California and I am very concerned that these event contracts, which seemed pretty indistinguishable, at least from the consumer point of view, from gaming, violate tribal sovereignty, undermine state and tribal gaming compacts, and conflict with the Indian Gaming Regulation (sic) Act.”

Schiff added that, under Federal law, Native tribes have the authority to police gambling within their territories. He questioned whether Quintenz would consider that when reviewing sports event contracts.

The CFTC Chair nominee acknowledged the Senator’s concerns and said he would engage with tribal stakeholders: “Nothing in the CEA that I’m aware of prohibits or affects the opportunity of tribes to offer those products and those markets and those services.”

The nominee stopped short of directly approving tribal-ran sports event contracts. However, his comments point in that direction.

While in Schiff’s home state of California, many tribes oppose sports betting, those in other states have pursued the idea.

In Alabama, the Poarch Band of Creek Indians has advocated for the expansion of gambling, including sports betting.

In Oklahoma, the Native American tribes have been attempting to renegotiate the gaming compacts to include sports betting. However, their tense relationship with Gov. Kevin Stitt has been an issue. Earlier this year, two bills were introduced to give the tribes exclusivity over sports betting. They passed the House but ran out of time in the Senate.

Meanwhile, in Florida, the Seminole Tribe holds a monopoly over sports betting after prevailing in legal battles. However, sports prediction events could open a way for other tribes in the state to offer “sports betting.”

Conflict of Interest Questions over Kalshi

Quintenz currently sits on the board of Kalshi, a position he has stated he will resign from if confirmed as Chair of the CFTC. In his ethics agreement, he pledged to recuse himself from matters related to the company for one year.

However, Sen. Cory Booker (D-NJ) expressed concerns about Quintenz’s relationship with Kalshi and the company’s addition of Donald Trump Jr. The president’s son was hired as a strategic advisor just a week before his father was sworn into office and days before Kalshi started offering sports event contracts:

He commented: “And so I’m worried that you’re going to be in a position where, if chairman, are you going to feel empowered to prosecute a company or push back on a company that’s being advised by the president’s son?”

Booker framed the issue within broader concerns about corruption and transparency. He also mentioned President Trump’s association with financial ventures, including a meme coin.

As the hearing’s time expired, Quintenz gave a short response: “I would pledge to have that conversation with you and to have that relationship.”

Kalshi’s Ongoing Legal Battles Could Shift the Landscape

While the CFTC chair confirmation is ongoing, Kalshi is fighting legal battles on many fronts. Several state gambling regulators have ordered the platform to stop offering sports contracts, to which Kalshi has filed lawsuits.

Sen. Booker’s state of New Jersey is among those, but in April, a federal court backed Kalshi and blocked the New Jersey Division of Gaming Enforcement from enforcing its cease-and-desist order. Recently, Nevada regulators suffered a similar fate.

However, the ongoing case in Maryland could provide clarity on sports event contracts. The federal judge scrutinized Kalshi for presenting conflicting positions in court compared to a previous case against the CFTC.

In that case, Kalshi claimed that sports event contracts have no economic value and are therefore not subject to CFTC regulations. However, in the Maryland case, it says the opposite.

This change of positions could result in the court applying judicial estoppel. Judicial estoppel is a legal principle that prevents a party from contradicting earlier statements in court, ensuring fairness and consistency.

If the judge rules against Kalshi, it could represent a breakthrough for state regulators. It could also reshape the regulation of sports event contracts nationwide.

The post CFTC Chair Nominee Quintenz Signals Openness to Expanding Sports Prediction Markets appeared first on CasinoBeats.

Through an X thread, US gaming and sports betting attorney Daniel Wallach shared key exchanges between the court and Kalshi lawyers.

Judge Abelson specifically challenged the platform on why it has changed its stance on sports event contracts compared to its arguments in its case against the Commodity Futures Trading Commission (CFTC).

The judge also stressed a key issue, whether Congress intended to preempt state regulations for sports event contracts.

To gain further clarity, Judge Abelson requested supplemental briefings from both sides to clarify how Kalshi’s statements in previous cases should inform the court’s view.

Court Challenges Kalshi’s Conflicting Legal Positions

Kalshi has launched a series of lawsuits against several state regulators, including MLGCC. The lawsuits are a result of cease-and-desist letters from MLGCC and the others, who argue that the platform is conducting illegal gambling through its sports prediction event contracts.

Kalshi argues that the contracts, essentially wagers, are legitimate derivative contracts. Those contracts are overseen and regulated by the CFTC, not state gambling regulators. However, that position contradicts what Kalshi argued in a separate federal case against CFTC over political event contracts.

In this case, Kalshi argued that outcomes of sporting events have no real economic significance. They serve only for amusement and do not qualify as “excluded commodities” under the Commodity Exchange Act (CEA).

Under CEA, to be an “excluded commodity”, an event’s outcome must be beyond the parties’ control and “associated with a financial, economic, or commercial consequence.” Previously, Kalshi has even argued that contracts involving games are not something the platform would want to list, as they don’t have any economic value.

Now, Kalshi claims its sports event contracts qualify as “event contracts” under CEA. The platform claims that sporting events do have financial implications, such as increased TV viewership and advertising revenue.

As Wallach points out in another X post, a significant flaw in that argument is that the financial consequences related to advertising or broadcasting do not mean the event’s outcome is economically significant. A key question is whether the result of the sports event has financial or commercial consequences.

Kalshi’s prior narrow interpretation of “gaming” conflicts with its current broad claims about economic consequences, creating a critical legal inconsistency.

Court Questions CFTC’s Exclusive Jurisdiction Over States

A potentially key question raised by Judge Abelson is what the language of CEA intends. The judge questioned if the “exclusive jurisdiction” language in Section 2(a)(1)(A) means that CFTC jurisdiction is “exclusive” only regarding federal agencies, and not state agencies (including MLGCC).

Abelson also highlights the phrase “except as hereinabove provided” in Section 2(a)(1)(a), which he interprets as “unless otherwise stated.”

He further questioned whether the following savings clause indicates that Congress did not intend to override or restrict state laws. The clause states that nothing in the law should override regulatory authority granted to federal and state agencies.

The legislative history indicates that in 2010, Senator Lincoln expressed concerns that the CFTC should prevent contracts contrary to the public interest. He warned that sports event contracts had no commercial value and could only be tools for gambling purposes.

Kalshi acknowledged that Lincoln’s statements likely indicated Congress’s intent at the time. However, it argued that the status of sports betting “has changed dramatically since 2010.” Today, it is lawful in most states, including Maryland. Kalshi continued to say that the country’s opinion on whether sports betting is contrary to the public interest has changed since 2010.

In response, Ableson pointed out that the likely reason is that sportsbooks are heavily regulated. They must also ensure that people don’t get addicted. The court emphasized that state gambling laws are carefully created with strict regulatory oversight.

Could Judicial Estoppel Apply?

The court points out that Kalshi previously stated that sports event contracts do not qualify as “swaps” (commodities) when it suited their position in the CFTC case. However, now it says they are.

If the court determines that Kalshi is attempting to change its position to gain an unfair advantage, it may apply the doctrine of judicial estoppel. That is a legal principle that prevents a party from contradicting earlier statements in court, ensuring fairness and consistency.

Therefore, if the court applies the judicial estoppel, Kalshi won’t be able to claim that the contracts are permitted under federal law, as they’ve already argued they aren’t in the CFTC case.

That could be a pivotal development as it could seriously weaken Kalshi’s defense that federal law protects it against state gambling laws. As a result, Maryland (and other states) could receive more power to shut down or regulate Kalshi’s sports-event betting contracts.

Potential Ripple Effects of a Favorable Ruling for Kalshi

The results of this case could have significant implications for Kalshi elsewhere. The platform has already secured some legal victories. Federal courts in New Jersey and Nevada have granted it temporary injunctions against the state’s gambling regulators. These injunctions could become permanent if there is a favorable outcome in the Maryland case.

If Abelson rules that Kalshi’s sports events are explicitly under CFTC regulations, it would represent a significant victory for the platform.
It would exempt Kalshi from state-level gambling regulations and solidify its regulatory framework at the federal level.

Furthermore, upcoming leadership changes at the CFTC could further help Kalshi.

Donald Trump’s nominee for CFTC Chairperson, Brian D. Quintentz, currently sits on the Kalshi board. If elected, he has indicated that he will resign from Kalshi. He will also recuse himself from any matters surrounding the company for a year.

While Quintentz has recused himself, his familiarity with the event predictions could influence the agency’s approach to oversight of Kalshi.

Notably, the CFTC has so far remained inactive in the legal battles between Kalshi and state regulators. Despite requests to intervene from some states, including Tennessee and Arizona, the agency has yet to act.

The post Maryland Federal Court Challenges Kalshi’s Inconsistent Sports Events Contract Claims appeared first on CasinoBeats.

The pledge is part of Quinentz’s ethics agreement, which he submitted to the US Office of Government Ethics on May 21 as part of the nomination process. The next step in the process is a Senate confirmation hearing, which has not yet been scheduled.

Quintenz served as the Chair of the CFTC between 2017 and 2021 during President Trump’s first term. Unsurprisingly, the president has nominated him again.

If confirmed as CFTC Chair, he will lead a federal agency with policy initiatives directly tied to his current interests, including event contracts (Kalshi) and digital assets (AH Capital Management).

Quintenz to Resign from Current Roles and Divest Stock

Quintenz has pledged to resign from all positions that could pose a conflict of interest, including KalshiEx (Kalshi), AH Capital Management (commonly known as Andreessen Horowitz), and Next Level Derivatives.

In the letter, the nominee states that he has already resigned from the Crypto Council for Innovation and will also resign from Remember Those in Prison, both nonprofit entities.

Quintentz will also divest all equity holdings, carried interest, and stock options within 90 days of confirmation. He adds that where applicable, he may seek a Certificate of Divestiture.

He also commits to recusing himself from matters involving those entities until divestiture is complete. 

After completion, the CFTC Chair nominee will recuse himself on matters involving former employers, including Kalshi, for one year. In the AH Capital case, that period will be two years.

Furthermore, Quintenz will remain a trustee without compensation of family trusts, but will recuse himself from decisions that could raise conflicts.

He will also undergo ethics training within 15 days of taking office and certify compliance within 90 days.

Quintentz’ Recusal Could Benefit Kalshi

The CFTC Chair nominee’s ethics disclosure should alleviate concerns about potential conflicts of interest.

However, his recusal for one year from matters related to Kalshi could also help the prediction market platform. Kalshi lets users bet on various event outcomes, such as whether egg prices will rise or how much it will rain in New York next month.

However, the platform has been involved in legal conflicts over allowing betting on political matters, such as election results. It also provides sports-related events, which have raised questions about whether that constitutes unregulated sports betting.

In July 2023, Kalshi filed a request with the CFTC to offer election market predictions. The agency, which regulates the US derivatives market, including futures, swaps, and options, denied that request. What followed was a nearly two-year legal battle.

In September 2024, the District Court of Columbia sided with Kalshi, and an appellate court denied CFTC’s appeal. However, it allowed the relitigation if the agency found new arguments. Coincidentally or not, after Pres. Trump came into office and nominated Quintentz, CFTC dropped its appeal, clearing the way for Kalshi to offer political contracts.

Kalshi has been involved in legal battles with several states, such as Maryland, regarding sports predictions. However, as Kalshi’s business falls under the CFTC’s jurisdiction, the agency has the authority to decide on the matter. 

So far, the agency hasn’t acted, even after urging from Tennessee. That has enabled Kalshi to grow the segment, which now accounts for the majority of its business.

A confirmation for Quintentz and his recusal for a year could mean that the agency’s inaction will likely continue. For context, all current CFTC commissioners have either left or are planning to resign, paving the way for Kalshi to continue offering sports contracts without regulatory oversight.

The post Trump’s CFTC Nomination Quintenz to Resign From Kalshi, Recuse Himself on Related Matters appeared first on CasinoBeats.

The league sent a letter to the CFTC asking for greater oversight of platforms like Kalshi, which let users buy and sell contracts for real-world events.

Unlike traditional sports betting, which is regulated state-by-state, prediction markets such as Kalshi are available in all 50 states. Because these platforms are not bound to the same regulations, they lack anti-money laundering enforcement and other safeguards.    

“Without oversight and regulation tailored to the specific circumstances of sports wagering, the integrity risk posed by sports prediction markets are more significant and more difficult to manage than those presented by legal, regulated sports gambling,” wrote Alexandra Roth, the NBA’s vice president and assistant general counsel for league governance and policy.

“While exchanges and brokers operate under the general auspices of the CFTC, that broad-based financial oversight does not include the kind of sports-specific controls and protections that are the hallmark of state sports gambling regulations,” she continued.  

States Challenge the Legitimacy of Prediction Markets

Several states have issued cease-and-desist orders to companies offering prediction markets, prompting Kalshi to file countersuits. This led to the company winning preliminary injunctions in New Jersey and Nevada.

The CFTC had planned to hold a roundtable last month to address the issue, but it was cancelled and has yet to be rescheduled. 

Roth stated that if sports-event contracts are allowed to continue, the CFTC must create a regulatory and oversight system analogous to what’s in place for state-regulated sports betting. She also stressed the importance of “continued expansion” as markets evolve and increase visibility and popularity.

“The NBA’s support for legalized sports betting has long been underwritten by our view that sports betting is made safer — both for our fans and for our fans and our league — when it is legal and subject to robust, sports-specific regulation,” Roth wrote. “In contrast to the many states that have dedicated sports betting regulatory personnel, there is no CFTC division dedicated to overarching, sports-specific oversight of these new betting markets.”

The CFTC has also recently dropped its appeal against Kalshi, effectively green-lighting its ability to offer nationwide election markets. 

Maintaining Integrity a Priority

Roth raised particular concern over player proposition markets, citing integrity issues.

In April 2024, the NBA banned Toronto Raptors forward Jontay Porter for life for violating the league’s gambling rules. An investigation found at least one instance where Porter removed himself from a game, claiming illness, so his proposition bet would hit.

Another player, guard Terry Rozier, is also under investigation for possible ties to alleged illegal betting activities during a 2023 game.

Roth didn’t cite either player in her letter but emphasized that without proper safeguards, “leagues have little ability to monitor and understand integrity risks and issues if and when they arise.”

She added: “And as sports prediction markets become more popular, and more money flows through these channels — which exist outside of existing sports betting regulatory structures — we anticipate that the risks arising from this limited visibility will grow.”

MLB and NBA Share Similar Concerns With CFTC

The NBA is not the first major professional sports league to take a stand against sports prediction markets.

Major League Baseball sent a letter to the CFTC last month to share similar concerns.

“MLB has supported legal sports betting at the state level based on robust regulation and relationships in which sports leagues are viewed as partners and integrity of competition is considered paramount,” MLB Executive Vice President of Legal and Operations Bryan Seeley said. “If the CFTC decides to permit sports event contracts, this same integrity framework should be applied.”

The post NBA Warns CFTC of Sports Event Prediction Markets Integrity Risks appeared first on CasinoBeats.

The letter, dated 29 April, was addressed to Acting Chair Caroline Pham. The MGCB stressed that the contracts are no different from internet sports betting wagers that are subject to the Lawful Sports Betting Act (LSBA).

As such, the regulator argues that they must fully comply with the LSBA to ensure a legal, fair, and responsible framework for sports betting. Entities offering sports betting opportunities in Michigan must obtain an operator license from the MGCB to be compliant.

CFTC Approved Entities Still Bound by State Rules, Says MGCB

The regulator argues that those who offer sporting event contracts without such a license violate Michigan law. 

The MGCB executive director, Henry Williams, stated: “The offering of sporting event contracts by CFTC-regulated entities, without adherence to Michigan’s licensing requirements and in a manner that may not meet prescribed consumer protections, exposes Michigan residents to unnecessary risk and undermines public trust.”

Williams added: “We are particularly concerned that such contracts are being promoted as investment opportunities, a message that directly contradicts Michigan’s responsible gaming principles.”

Apart from endangering players, the regulator also raised concerns that diverting sports betting activity from licensed operators could reduce state, local, and tribal government revenues.

The document argues that in 2024, legal sports betting operators in Michigan contributed over $20 million in taxes and fees, resources used to support public services and responsible gambling programs.

Call for Federal-State Regulatory Alignment

If unlicensed providers can operate in the state, they would do so without paying taxes and fees, which could harm consumers and government programs financially. 

Williams argued that the threat is real: “Any erosion of the legal, regulated sports betting market undermines the very safeguards we have in place to protect Michiganders.”

The MGCB urged the federal regulator to consider these concerns and evaluate whether sporting event contracts serve the public interest. 

The MGCB has been cracking down on unlicensed operators in its state for some time now, recently issuing cease-and-desist orders to eleven online casinos.

The post MGCB Letter to CFTC: Event Contracts Undermine Legal Betting appeared first on CasinoBeats.

The result effectively paves the way for Kalshi and others to offer lawfully sanctioned election-based event contracts in the United States.

The dispute arose when Kalshi sued the CFTC in 2023 following the regulator’s decision to block the firm from offering event contracts before the congressional elections. However, with the complaint now retracted, it could signal the beginning of the end of the long-running debate surrounding the legitimacy of prediction markets.

This follows an earlier court ruling in Kalshi’s favor in September, yet Monday’s dismissal requested by the CFTC ultimately finalizes the 2024 judgment. As part of the mutually agreed resolution, both sides have since agreed to pay their own legal costs.

Kalshi Describes CFTC Election Victory as “Historic”

“Today is historic. We have always believed that doing things the right way, no matter how hard, no matter how painful, pays off,” Kalshi CEO Tarek Mansour said in a statement after the announcement.

Kalshi’s rise to prominence parallels a broader policy shift in Washington. Particularly given that one of the Trump administration’s earliest directives actively rolled back regulatory scrutiny on tech-driven financial firms, devised to allow start-ups like Kalshi to operate under fewer constraints.

The most telling example is President Trump’s appointment of Brian Quintenz as chair of the CFTC. Quintenz is a former commissioner best known for his outspoken support for digital innovation in the derivative marketplace.

Incidentally, Quintenz has also previously served on Kalshi’s board and has long advocated deregulating event-based trading.

Kalshi’s event contracts—which include covering Senate races, state governor primaries, and presidential nominations—have drawn political scrutiny and extensive consumer buy-in. While federal approval now offers Kalshi et al. substantial operating safeguards, state-level opposition persists.

Crypto and Sports Contracts Push the Boundaries

In a more recent venture, Kalshi has also begun accepting crypto payments—including USDC stablecoin deposits—in a bid to court more tech-savvy traders. They have also quietly expanded into offering sports contracts, including events such as the Super Bowl, to test the legislative limits as to what qualifies as a federally regulated derivative.

State-based regulators have labeled the practice as unlicensed sports betting. Kalshi’s retort to these claims argues that its latest offerings comply with the approved CFTC frameworks.

Mansour has continuously taken this position, claiming, “The CFTC is our regulator. If the CFTC tells us to stop, we will absolutely stop. If they don’t, then we won’t.”

Following the CFTC’s decision earlier this week, Mansour wrote in a celebratory post, “Prediction markets have been banned, censored, limited, and pushed out for decades. This win solidifies their right to exist and thrive.”

The CFTC’s Kalshi case revelation came the same week the agency announced it had placed several employees on administrative leave for alleged ethical and legal violations. However, it remains unclear if these are connected or a consequence of the Kalshi case announcement.

The Commission’s decision to abandon its appeal also follows the cancellation of a roundtable summit on prediction and sports markets, which had been scheduled for April 30. With a new date still to be rescheduled, Kalshi and its board of directors will be reveling in what appears to be a shift in favor of regulatory restrictions. Several letters of opinion have been filed by industry stakeholders, ranging from tribes to operators and professional sports leagues.

The post CFTC Drops Appeal, Clearing Path for Kalshi’s Election Markets appeared first on CasinoBeats.

In a clear statement of intent, Sporttrade – which already holds stage gaming licenses in five states – argues that the existing regulatory divide places it at a competitive disadvantage in the complex marketplace.

Founded in 2018, Sporttrade already operates openly in Arizona, Colorado, Iowa, New Jersey, and Virginia. Unlike conventional sportsbooks, Sporttrade is an exchange-style platform that allows users to buy and sell contracts against each other based on sporting event outcomes, mimicking how stocks and bonds are traded.

However, while DraftKings and FanDuel offer cash-out options in-play, Sporttrade lets users exit positions at an accurate market value throughout the event to minimize losses or lock in profits.

CEO Alex Kane backs his firm’s trading format, saying this model “looks much more like futures trading than online casino regulation.”

Why Sporttrade Believes State Licenses Alone Aren’t Enough

Sporttrade officially submitted a formal request to the CFTC on April 25 for no-action relief to legally offer its product platform across the US. In doing so, it aims to become the first sports-only derivatives platform regulated at the state and federal levels.

In his letter to Acting CFTC Director Caroline Pham, Kane warned of “irreparable harm” if the firm is prevented from competing on an equal footing. He also cited broader competitors like Kalshi, which already operates at the federal level and utilizes its CFTC ordinance to prevent the need to acquire state gaming licenses.

Having recently won two cease-and-desist reprieves in New Jersey and Nevada, Kalshi, which offers contracts for a broader range of contests, maintains that it does not require state licensing.

“The CFTC is our regulator. If the CFTC tells us to stop, we will absolutely stop. If they don’t, then we won’t,” said Kalshi founder Tarek Mansour.

At odds with several other state regulators, Kalshi has received a flurry of cease-and-desist orders from other states, including Ohio, Illinois, and, most recently, Maryland.

The CFTC has also received several letters supporting and opposing sports event contracts from various bodies, including tribes and professional sports leagues. 

Could CFTC Approval for Sporttrade Redefine Sports Betting Regulation?

Nonetheless, despite these challenges, the latest rulings have ultimately strengthened – if only temporarily – the firm’s legal standing against state gambling regulators, which will undoubtedly invigorate Sporttrade’s appeal.

Sporttrade’s argument is further strengthened by its early compliance with state regulations. “We did not see any other way of bringing our product to market, and this was confirmed by every state gaming regulator that we spoke with,” Kane wrote.

Investors—including Jump Capital, Hudson River Trading, and Tower Research Ventures—now await the CFTC’s response to determine whether Sporttrade will be at the forefront of a new potential regulatory framework.

If this were to happen, Kane maintains that the dual-regulated methodology would strengthen competition in a market dominated by just a handful of operators. He also believes their CFTC-led approach would break up the monopoly structure inherent in the current state-by-state system.

The post Sporttrade Seeks CFTC Approval to Expand Sports Betting Exchange Nationwide appeared first on CasinoBeats.

In a letter sent Monday to the Commodity Futures Trading Commission (CFTC), the Tennessee Sports Wagering Council (SWC) expressed opposition to sports event contracts offered by entities such as Kalshi and Robinhood.

“We are writing to express our concerns with the sports event contracts currently being offered in Tennessee by Commodity Futures Trading Commission regulated entities,” the letter read. “We believe that these sports event contracts are Wagers under the (Tennessee Sports Gaming Act) and are being offered in violation of Tennessee law and regulations. …

“As the Commission reviews these sports events contracts, we ask that you respect the policy decisions made by the Tennessee Legislature and not permit the offering of sports events contracts.”  

Close to a dozen states have acted against prediction market platforms, with six issuing cease-and-desist warnings: Illinois, Maryland, Montana, Nevada, New Jersey, and Ohio.

Tennessee Voices Concerns Over Sports Events Prediction Offerings

Tennessee did not go so far as to send a cease-and-desist letter. However, the council encouraged the CFTC to abide by its regulatory framework and remove prediction markets from the consumer marketplace.

Prediction markets allow users to buy and sell contracts for real-world events such as presidential elections and the Super Bowl. Last month, Kalshi introduced single-game betting markets for the NCAA men’s and women’s basketball tournaments.

These markets are available in all 50 states, while sports betting is legally operative in only 38 states plus Washington, D.C.

While they have drawn fierce objection from regulators, Kalshi claims its sports-event contracts don’t constitute gambling and thus are “valid under federal law.”

“The Tennessee Legislature has put in place many requirements of its sports betting Licensees in order to protect those who choose to wager in our state,” the council said in its letter. “The CFTC regulated entities currently offering these sports events contracts are not compliant with these protections (or many others) mandated by the Tennessee Legislature.”

The council raised concerns over several features not found at licensed sportsbooks, including markets for injuries and penalties, college player props, and the ability to make deposits using credit cards or cryptocurrency. These platforms also lack safeguards such as responsible gaming tools, anti-money laundering protocols, and self-exclusion lists.   

Kalshi Stands Firm Despite Pressure

Earlier this month, Kalshi scored a partial win in its legal battle with Nevada when a federal judge granted its request for a temporary restraining order and preliminary injunction against the Nevada Gaming Control Board (GCB).

As such, Kalshi, which had filed a lawsuit against state gaming regulators in response to a cease-and-desist order, can continue offering its sports-related event contracts in Nevada as litigation continues.

Kalshi has also sought legal action against New Jersey.

Despite scrutiny, Kalshi CEO Tarek Mansour remains a strong advocate for prediction markets. “They are the quintessential truth machines,” he wrote last month on X (formerly Twitter), adding, “With trust in traditional institutions at an all-time low, people are turning to prediction markets at an astronomical pace. The growth of the ecosystem in the last year is a testament to how important they have become to the American people.”

The post Tennessee Regulator Writes to CFTC Strongly Opposing Sports Events Prediction Markets appeared first on CasinoBeats.

Illinois joins Ohio, New Jersey, and Nevada in states that have deemed the increasing adoption of sports events contracts to be against state-specific gambling legislation.

In the letter, the Illinois regulator claims the companies are violating the Illinois Wagering Act and Illinois Criminal Code. It emphasizes that under Illinois law, sports wagering is defined as “accepting wagers on sports events or portions of sporting events, or on individual statistics of athletes in sports events or combination of sports events.” 

It continues: “by any system or method of wagering, including, but not limited to, in person or on the Internet through websites or mobile devices.” 

The IGB has said it is “aware” that the companies are engaged in sports wagering in Illinois. It adds that it has not granted a license or authorized the companies to engage in wagering, and consequently, the activity constitutes illegal gambling. 

Unlike other states, the cease and desist letters do not specify a date for cessation. 

CEO Claims States Like Illinois Misunderstand Prediction Markets

The latest blow to event contract exchanges comes less than 48 hours after Ohio took action. Matthew Schuler, an Executive Director at the Ohio Casino Control Commission, commented: “Purchasing a contract based on which team a person thinks will win a sporting event is no different than placing a bet through a traditional sportsbook.” 

Kalshi has responded to C&D orders in Nevada and New Jersey by suing the regulator. Tarek Mansour, the company’s CEO, claimed that the regulators’ orders “fundamentally misunderstand prediction markets and undermine the foundation of U.S. financial markets, which are regulated by the federal government.” 

Wallach: Prediction Markets Heading for Legal Showdown

Industry experts believe that federal intervention will have to come soon. Gaming lawyer Daniel Wallach shared on X the timeline of Kalshi, CFTC appointments, and the current CFTC Commissioner’s views on sports events contracts. 

The views support sports events contracts. Industry suspicions that the CFTC was giving them the green light without publicly saying so seem increasingly true.

In March last year, Quintenz supported contracts based on NFL game outcomes while at the CFTC. Following his resignation from the Commission in November, he joined Kalshi. Kalshi also brought Donald Trump Jr. on board as a strategic advisor in the immediate aftermath of President Trump’s election victory. 

Wallach also points out that a Kalshi lawyer has since joined Elon Musk’s DOGE, who holds a prominent position in the President’s cabal. Quintenz, CFTC Commissioner, commented in 2021: “When we think of commodities, we think of tangible things. Oil, corn, gold. But what about an event? An election? Whether the Summer Olympics will occur in Japan? A football game? Those, too, are commodities!”

Wallach bluntly suggests that the roundtables put on by the CFTC are “all for show” and the result is “preordained.” He expects this CFTC to approve event contracts based on sporting event outcomes. He concludes by asserting that “there will be lawyers.”

This dispute will rumble on for the foreseeable future. If sports betting is effectively being ‘legalized’ at a federal level, where does that leave sports betting regulators and individual state regulation that has taken years to build? How do integrity frameworks fit in with exchanges? What constitutes a breach with regards to CFTC rules on the contracts? 

It’s just getting started.  

The post Illinois Joins C&D Pile-On, Is CFTC Approval Preordained?  appeared first on CasinoBeats.