Prediction Markets To Unite With Trade Group
Prediction market operators are going to band together and form a trade group to help protect their interests. This trade group will see brands like Kalshi, Crypto.com, and Robinhood share resources to defend their industry from regulators.
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Coalition For Prediction Markets
According to Axios, prediction market operators Kalshi, Crypto.com, Robinhood, and Underdog will create a coalition for prediction markets to promote federal regulation. It will also have the shared goal of staving off efforts by state regulators to remove prediction market operators from their jurisdictions, such as cease-and-desist letters.
Prediction market operators have received cease-and-desist letters from several states to date.
| Connecticut | Maryland |
| Nevada | New Jersey |
| New York | Arizona |
| Illinois |
Sara Sloan, the head of this new coalition, who is also the Head of Corporate Development for Kalshi, said a "unified industry voice was needed to advocate for access and consistency nationwide."
There is no word if Polymarket, the second-largest prediction market platform on the globe, will join this trade group.
Legal issues for prediction markets
Prediction markets have sought to fight these cease-and-desist letters one company at a time. While there were some early wins, the tide has swung, handing prediction market operators some legal losses lately.
In Nevada, Crypto.com and Robinhood lost their request to receive an injunction against the cease-and-desist letter they received from the state's gaming control board. Kalshi, who initially received a preliminary injunction in Nevada, has seen the decision reversed.
Most prediction market lawsuits are brought forward by operators, but Massachusetts AG Andrea Joy Campbell flipped the script, suing Kalshi for operating an illegal sportsbook.
Kalshi is now involved in six different lawsuits against six different state regulators:
- Connecticut
- Maryland
- Massachusetts
- Nevada
- New Jersey
- New York
How Are Prediction Markets Legal?
Prediction markets operate legally across the US thanks to the Commodity Exchange Act (CEA), which says event contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
Of course, state gaming regulators contest this, arguing Congress never intended for the CEA to cover gambling. This stance is especially relevant since prediction markets started offering sports event contracts. These event contracts are nearly identical to traditional sportsbook bets such as moneyline, spread, totals, and player props.
They All Do It
Prediction markets aren't the only ones banding together to protect similar interests. Sportsbooks have their own trade group: the Sports Betting Alliance (SBA). The SBA consists of bet365, BetMGM, DraftKings, Fanatics Sportsbook, and FanDuel.
Sweepstakes casinos have a trade group as well in the Social Games Leadership Alliance (SGLA). The SGLA is an amalgamation of the Social & Promotional Games Association (SPGA) and the SGLA.
