Predictions markets, and their role as unlicensed sportsbooks, are the flash point for many a hot argument in the regulated gaming world. That conflict stepped out into the open last week at a panel discussion at the National Council of Legislators from Gaming States (NCLGS) summer meeting in Louisville, Kentucky. At the heart of the conflict was Kalshi lawyer Josh Sterling whose views on predictions markets were, predictably, not what anyone from the regulated gaming industry really agreed with much.
Sterling, who once worked at the Commodity Futures Trading Commission (CFTC) and is now representing Kalshi, the prediction market’s biggest player, was upfront on his view that Kalshi’s business model is perfectly legal. He also was very sure about who should regulate prediction markets. “The line is drawn in Section 2(a)(1), Title Seven in the United States Code. It basically says any swap or futures contract or an option that’s traded on a CFTC-licensed marketplace is subject to the exclusive jurisdiction of the CFTC,” he said in comments reported on by SBC Americas.
That hard line continued as Sterling channeled MAGA America saying adding, “I don’t think that this courts decide there is no economic line drawing around these contracts at all. It’s not for courts to substitute their judgment about what is speculation or what is hedging, or what’s too much speculation.”
Moderator and NCLGS President Shawn Fluharty fought back a bit by pointing out that predictions markets upend a whole raft of legislation aimed at sports betting saying, “We have the situation now of prediction markets, which essentially unwinds all that work, and to a legislator when you’re not seeing the revenue numbers that you expected…what’s the message to lawmakers?”
Sterling’s response was an ice cold slap in the gaming industry’s face. “No one outlawed the horse and buggy. Ford just made a better product.”