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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Fernando Noodt (00:00.814)
Prediction markets continue taking the spotlight as one of the biggest battlegrounds in US gambling and financial markets, and the CFTC's latest advisory committee meeting, that battle spilled into the open. With accusations of market manipulation, clashes over federal versus state authority, and traditional sports books watching from the sidelines, what happened next, what happens next actually, could reshape the market for years to come. Welcome to iGaming Daily, brought to you by Optimub.
The creator of positionless marketing and number one player engagement solution for iGaming and Sports Betting Operators. I'm Fernando Nott, Media Manager for SBC and your host for today's episode, where we will talk about prediction markets with the great Tom Nightingale. Tom, how are you today?
Tom Nightingale (01:11.611)
I think the great Tom Nightingale might be slightly over billing me, but thank you very much for yeah, it's I'm very well. back talking prediction markets. We've managed to go I think a couple of weeks actually without talking prediction markets on here, but it's never too far from the conversation, is it?
Fernando Noodt (01:27.178)
No, absolutely. And we've learned at SBC Summit Americas that people are eager to listen about to listen to the conversations and to hear about the latest developments around prediction markets, what's happening, what's going to happen, and what's happened of course in the past as well. And that's what we will cover today because there's been some developments in the United States, as they continue to be the main discussion point in the country, prediction markets I mean.
So why don't we start by breaking down what happened at the latest CFTC committee meeting and what it was all about?
Tom Nightingale (02:04.176)
Yeah, I mean, so, you know, big picture stuff in the US, this prediction markets conversation, as you say, continues. Like lawsuits in courts all over the country. meanwhile, like you've got Calci Polymarket and platforms like that continually adding more and more sports to their platforms. You've got traditional sports books, DraftKings, FanJuel, fanatics, people like that, kind of like particularly particularly DraftKings and FanJuel pouring more and more money into their prediction markets platform because obviously
They can offer that in states where they can't offer sports but state regulated sports betting. That's an extremely brief overview of where we stand in general. And then what was interesting last week is that so the CFTC announced in the CFTC, the federal regulator of sort of derivatives that production markets for now at least fall under, you know, in the US. they announced back in February what's called an Innovation Advisory Committee, which is basically they have do it has dozens of members, but it's
It's sort of a who's who of the prediction markets landscape, right? They have the CEOs of Calci, of Polymarket, of Crypto.com, of these kind of these kind of financial markets that have extended into sports. And then interestingly, it also includes the CEOs of DraftKings and FanJuel and Fanatics as three of the biggest gaming companies that have that have gone into prediction markets.
and basically they gathered for the f it was their first meeting of this committee and it was it was it was nearly four hours long. I had the privilege of sitting through it. The first two and a half hours were not really relevant at all because they talked about like crypto and they talked about general financial markets and that sort of stuff. But the last sort of hour or so of this discussion was entirely focused on prediction markets. and it brought up a few things, right? There was a lot we'll get into it. There was a lot of talk about market integrity.
There was a lot of talk about charting a sort of path forward. We know that the CFTC has released sort of proposed rulemaking for prediction markets where they're outlining sort of the stance that they're gonna take currently moving forward. I say they, the CFTC is currently at the leadership level, just one dude who's been appointed by President Trump. so they is probably the wrong the wrong word to use.
Tom Nightingale (04:20.134)
But it was interesting 'cause it threw up some divides between the old guard and the sort of the new kids on the block, if you will in like Calci Polymarket and that kind of stuff. So it was just a bit of insight really into how the CFTC is viewing things and how individual operators, I think, in some cases, like where they stand on, you know, this explosion of sports prediction markets and more like the integrity concerns outside of sports and that sort of stuff.
Fernando Noodt (04:44.97)
And from what I read in SBC Summit F SBC Summit Note, sorry. SBC Americas, where everyone should be subscribed by now. But subscribe to the newsletter if you haven't yet. Go to SVC Americas.com and find the newsletter tab. So click there and subscribe so you can be up to date with all these stories as as they break. but from what I read on the site, it was a pretty heated debate there at the CFTC committee meeting. So
what does that tell us about how contentious this sector has become?
Tom Nightingale (05:19.142)
You know, it's interesting 'cause it was. You know, it was a bit it was a bit contentious. I'd say the main the main sort of instigators were a guy called Terry Duffy, who is CEO and chairman of CME Group, with the Chicago Mercantile Exchange. They are like a r pretty well, you know, comparatively, compared to like Calcium people, they're a pretty old fashioned financial markets trading exchange. they also interestingly were the or are still
The joint venture partner of FanJul on or Flutter on FanJul Predicts. Like Fanfan were the first major US gaming operator to announce that they would be launching a prediction markets product. They selected CME Group as their partner. And it's been interesting because in recent weeks, you know, the CME Group's CEO, Terry Duffy, has made some public comments suggesting that he's not entirely pleased with the the direction things are moving in in general in the prediction markets industry.
and he called out he called out Calci by name actually in this meeting. And he in particular he raised concerns over market integrity. and I think to answer the question of what does it tell us about how contentious the sector has become, I mean it's interesting because like Calci Polymarket in some ways, as two examples, are sort of bitter rivals.
But when it comes to the federal versus state debate that is in courts everywhere, you know, they are kind of on the same side. So I guess the party lines and the contentiousness d depends on sort of which angle you're looking at it from. You know, if you're looking at it in terms of the rush to be the best sports prediction market out there, then like Calcian Polymarket and everybody are in fierce competition with one one one another. But if you're talking about the CFTC's, you know, in quotation marks, exclusive jurisdiction.
over event contracts and you're talking about a debate between federal regulation and state gaming regulators and everything that's in the court right now. it's very much prediction market platforms and the CFTC versus the world at the moment, it feels like. but yeah, I mean I talked about the the the manipul the the the integrity side of things. Like Terry Duffy from CME Group, he he sort of called out Calci because one of the big topics we've seen here is
Tom Nightingale (07:39.087)
there's been a l there's a lot of concern in the US right now about what you are and what you what you are allowed to trade on, what you shouldn't be allowed to trade on. And you know, Terry Duffy made the comment that I think he said about two about two and a half thousand event contracts have been self-certified since January 2025. The way that it works is an operator says we want to list this contract, they submit it to the CFTC, and unless the CFTC objects in a certain amount of time, the operator is free to
then go ahead and list that contract. And it has caused some, you know, while there's a big debate going on in the US about prop betting, you know, should you be allowed to bet via a state regulated sportsbook on an athlete's performance, there are similar conversations going on about prediction markets, but sort of on a much on a bigger scale, I would say. so yeah, I think it's just that it's like, you know, it's a really multifaceted issue. And once you
Once you dig beyond the kind of bare bones federal versus state issue that's in the courts, you find that the industry itself in some places act is actually quite fractured, I think, because of how people like Calci Polymarket have just rushed into the gap to pump sports as much as possible.
Fernando Noodt (08:49.771)
Right. And of course we are I feel like every time we have conversations about prediction markets, we kind of focus around the the the element of the jurisdiction, whether it's federal jurisdiction and it should be controlled by the CFTC or it's if it's should be state regulated as as gambling. But this Terra Duffy point about integrity, about manipulation sports and individual based contracts.
how serious is that debate for the United States right now and how serious is it, not only for for regulators, but maybe the public opinion, in terms of how how predics are viewed, especially as they expand into into increasingly increasingly granular sports markets?
Tom Nightingale (09:37.681)
I would say it's interesting because like you you and I obviously fur and I guess a lot of our audience are very much in the sort of get gambling industry bubble, you know, where the focus is on gambling style products and that sort of stuff. And so in the US, within the gambling industry, the big and and the big debate to be honest, that's underpinning the court battle about federal versus state regulation is can these platforms offer sports markets or is that just sports betting that should be sports regulated?
I know what I think, but I won't I won't bother the audience with my with my personal opinion on this. but what I what's interesting is that cal it's really seeped into the mainstream media and the mainstream awareness, I think, in a way that's not really related to sports, because the big issue that's being the big issue that's being called out in mainstream non you know, non-gambling industry media and the main issue that is being
pulled up by sort of legislators in the US and in Congress is the integrity issue as it relates to mostly things like sort of election trading or trading on government actions or insider information in about things that frankly are a lot more serious than kind of just the result of a sports game, you know. you think about some just some examples off the top of my head, like a big incident was
on on Polymarket's global platform, so in f not not the US platform, I don't think, but the global platform. there was a big instant where somebody was found to have traded with insider information on the capture of Venezuelan president Nicolas Maduro. There's also another instant rec recently, kind of farcical, to be honest, in my opinion, that like Donald Trump's teleprompter operator was found to have been trading on speeches that Trump would make, when obviously as the teleprompter operator, like you know what you know what he's
scheduled to say. So like that is just a fundamental clear as day integrity issue that in my opinion at least like those markets just simply shouldn't be allowed because they're so easy to manipulate. you know what are we doing here? so I would say it's interesting because within the gambling industry bubble it's like, yeah, okay, sports integrity is a big thing. That's why you're seeing the whole I'm I referenced it earlier. It's why you're seeing the whole push to ban or limit like prop betting.
Fernando Noodt (11:36.843)
Right. Yeah.
Tom Nightingale (12:04.208)
Because we've seen instance in the NBA, in college sports, in Major League Baseball, of players affecting their own performances for the purposes of betting. That is also a concern on the prediction market side of things. But I would say that frankly, everyone's bigger concern should be this bigger picture stuff, election, you know, insider information on elections or insider information on government actions and that sort of stuff. Because that's not only sort of an integrity risk, like I would argue that it's it's pretty dangerous, right?
a a a at a sort of general level, if you're able to bet on things with ins insider information about serious issues like war or you know death or whatever. These are things that quite clearly are spelt out in the Commodity Exchange Act like shouldn't be allowed. But we seem to be doing this dance anyway, where with some of this stuff it's defin it has been going on, you know. And my my Michael Selleck, the CFTC chairman, said in the meeting
He had a bit of a back and forth with Terry Duffy as well that got a bit got a bit feisty. Because Terry Duffy mentioned the the the Venezuelan president Maduro markets, he mentioned the Trump teleprompter markets. Michael Selic, the CFTC chair, came back and said, Well, actually, those markets weren't listed in the US, so that's fake news. That's not actually entirely true, because according to Calci, they self reported teleprompter rel the the teleprompter incident.
Fernando Noodt (13:20.203)
Right.
Tom Nightingale (13:30.373)
So at least some of those trades happened on CalCHI CalChi gave gave a public statement where they said they self-reported that to the CFTC. So, you know, actually this stuff is happening, or at least some of this stuff is happening on US trading exchanges that are supposed to be regulated by the CFTC. So, you know, the big question is, how do you sort of how does the CFTC and the industry sort of step up and get a real firm hold of this and and and and
implement the kind of integrity safeguards that we see like sports betting regulators and stuff really hot on, you know, market min avoiding market manipulation and stuff. I think there's a general concern that that's not necessarily as strong with prediction markets as it should be, at least right now.
Fernando Noodt (14:15.168)
Yeah, absolutely. And and I feel like while the line may be not so clear at some at some markets, especially sports related markets, there are some others that are pretty pretty pretty clear that you should draw the line and like the capture of Preston Maduro or or the teleprompter thing like
Tom Nightingale (14:35.184)
The tele yeah, like is the teleprompter thing like this is a big thing like me they call they call them mention markets. You know, we saw it at I think the Oscars maybe. I can't remember who was hosting, but like will will the host of the Oscars say a certain celebrity's name or whatever? Like you can you can bet on that on certain platforms. it'd be very, very, very easy in theory and I guess in practice for somebody who is, you know, familiar with that situation to just go on one of these platforms, bet a bunch of money on it.
Fernando Noodt (14:40.971)
Yeah.
Tom Nightingale (15:03.122)
pretty much safe in the knowledge it's gonna happen. Like it's the same thing with like match fixing in sports in that like you would be a fool to pretend that it's not happening. Like it's definitely happening, you know. there was one that was cited in the meet just because we're talking about this meeting, there was one that was cited in the meeting as well by by the CEO of another trading, like sort of more traditional trading exchange who's a bit concerned about these prediction markets. a former congressman I think George Santos a group
Fernando Noodt (15:12.34)
Yeah, yeah.
Tom Nightingale (15:32.765)
paid a something like a $35,000 settlement fee, I think, because he acknowledged that he had traded on market. I believe I'm getting the details right here. He traded on markets about whether or not he would appear at the State of the Union address. As I how how can you possibly be allowed to trade on your whether or not you yourself or a family member or a friend or just somebody that you know well or you know, how can you be allowed to trade on something that is as easily controllable
as whether or not they will appear at, you know, a political event. It's just, you know, it's there is stuff that is clearly an issue that needs resolving, I think. And I would argue that that sort of pushes the while the sports betting stuff is what is underpinning the court battles, in the mainstream discussion of prediction markets at least, that that this bigger picture stuff kind of pushes the sports into the background, I would say.
Fernando Noodt (16:26.288)
Yeah, absolutely. And s some of this some of this kind of starts feeling like a Black Mirror episode, you know. but anyway, we're gonna do a very quick outbreak right now, but we will continue discussing what happened at this C F D C committee meeting right after. We'll be right back.
Tom Nightingale (16:32.58)
It does a little bit, yeah.
Fernando Noodt (16:45.864)
Okay. Do you feel like we can skip question number five? Because we cannot already discuss Michael Seely, Duffy, fake news.
Tom Nightingale (16:53.97)
yeah, I think probably. All I was gonna say about the political and public nature of the debate is like that Michael Selig, the the C FTC is just one guy currently, but I sort of mentioned that earlier as well. So yeah.
Fernando Noodt (17:02.614)
Yeah, yeah, let's go straight with six. Alright. And we're back with more iGaming Daily to continue discussing prediction markets in the US, of course. sort of legal battle that will eventually affect the rest of the world, I'm sure, because prediction markets have been expanding outside the US as well. But right now everyone is looking at the US to see where the
Different lines are drawn, what type of framework do they get? but right now it's all very it's quite soon, I would say, to see some some definitions about this market. And we were discussing that in the first half, and we have discussed that in previous episodes of iGaming Daily. So make sure you s follow iGaming Daily both on social media and you are subscribed to iGaming Daily on your preferred podcasting platform. But Tom,
You we were mentioning how the sports side of things is a bit of the in the in the background in terms of or at least when comparing it to the to the speech trading and and and the major events in in politics and and geopolitics. but there were some sports books there, some sports books that that have already also launched their prediction market suffering in in the US. But but the traditional sports books
seem to have had a a more quiet stance or and or approach to the to the meeting. So why do you think traditional sportsbook might be more cautious about taking a public position on the federal versus state battle, as they were as they were not as active as other leaders from the crypto segment, for example.
Tom Nightingale (18:50.01)
I mean, yeah, I would say that there is a pretty obvious reason as far you know, at least in my opinion, why they're you know and that is that well, it's twofold really. One it's that, you know, obviously these these like Calcium Polymarket and others like Coinbase and whoever you know, whoever it is these prediction market platforms that don't have state regulated gaming interests, frankly don't really have to care what
state regulators think about them or what, you know, because every time as we've seen happen so often, like every time a every time a state tries to shut down Calci, either Cal either Calchy sues the state or the state sues Calchi. Because there's no existing kind of relationship between them there. There's no, you know, the Cal Calci will argue till it's blue in the face and and and continues to do so that the CFTC has exclusive federal jurisdiction over event contracts.
The state regulator says, well, this is similar to sport, you know, this is similar to sports betting. If it's on sports, you can't do that. And then they fight in court, it'll go to the Supreme Court, etc., etc. Whereas, you know, DraftKings, FanJul, and Fanatics are in a different spot, aren't they? Because they have sports betting live in you know, fan FanJul and DraftKings have sports betting live in what, 25, 30 states? They now offer sports
Trading. There's been a big there's been big discussion this week in recent days about DraftKings is DraftKings is ramping up its marketing in states that don't have legal sports betting like California, Texas, Georgia, those kind of big, big population states where they can't offer sports betting, they're really pushing the prediction markets product. But they undeniably have a foot in both camps, right? So when it comes to the issue of federal versus state oversight, you get the understandable impression that.
DraftKings CEO Jason Robbins, you know, FanJul CEO Christian Janetsky are are willing to sort of, you know, let the bolder brasher companies like Calchi fight it out, let the CFTC fight it out. In the meantime, DraftKings Fanatics and FanJuel can suddenly offer sports nationwide, having been shut out of half of the US or whatever for for all these years. So while the money is there to be made and the cash cow is
Tom Nightingale (21:03.344)
the cash cow is producing, you know, kind of the less said the better, I think, for sports books. why wade more into a fight about it when in the meantime you're making money, you're signing up customers in these states you couldn't really access before, you know? and then the other side of it is just that, you know, this is, let's not forget like this is new for people like DraftKings and FanJol. Like this is
Okay, prediction market's explosion into sports is kind of net new in general in the last couple of years, but you know, Calci Polymarket have existed particularly like, you know, have existed before this whole sports event contracts thing blew up. Okay, they weren't as prominent by a long way and maybe their business model was pretty different, but then you know, they've existed before. and then some of the people at this meeting who were talking about, you know, I mentioned they took there's a lot of discussion about crypto and stuff before we got into prediction markets, like
DraftKings and FanJuel and people don't really have anything to offer on that. Do you know what I mean? Like they're they're they're they will have sat through that thinking this is barely relevant to us. But the reason they're on this committee is because prediction markets now is the topic de jour. It's something that inev like un like undeniably needs more regulation and more rules around it. And it's also the thing in either financial trading, if you want to call it that, or in gaming, that is evolving at the fastest rate.
in front of our eyes, right? So I think you factor in all of these things and you know, Jason Robbins from DraftKings, his main contribution to this meeting was to interject to ask everybody to stop squabbling after the after the after Terry Duffy and Calci's Luana Lopez Lara sort of went at each other a little bit and after the fake news comment from Celic and stuff, Dra Robin's main comment, you know, in this meeting was like basically, can't we all just get along? Which I think again speaks more to
Fernando Noodt (22:40.757)
Mm-hmm.
Tom Nightingale (22:57.52)
The idea that they don't really want a huge amount of division and controversy because that brings more eyeballs and more scrutiny and everything. What they want, what DraftKings and Fans you all want is until a Supreme Court decision comes and says, you know, potentially you can't offer sports event contracts, so shut it down. there until then there's money to be made. So they're probably happy to keep quiet and keep making the money, I would say, frankly.
Fernando Noodt (23:26.687)
Yeah, I guess it's it's their version of of company call where you say you just unmute yourself to say nothing from my end. So I guess a a little bit of that from from them. But speaking of the federal versus state debate and all that, how much pressure is actually Michael Sealig, the the chair of the CFTC under to establish a clear federal precedent in in terms of this this whole court battle.
Tom Nightingale (23:53.927)
I mean he made a what I thought was a fairly telling comment right at the end of the meeting, which was that I think I'm quoting him correctly, he said, We've got to make sure we win in court because his concern is that, you know, if if if judges overturn some of the stuff by which he means, you know, let's frank let's be frank, everyone means sports when they say this. Cause like Calchi data that I saw
Pretty reliable data that I saw the last couple of days suggests that about 98% of Polymarket's US trading volume is currently on sports. Calci a bit lower, something like 85%, but like there's an argument to say now that people like CalShi and Polymarket have become sports books that also offer novelty trading rather than financial trading things that also often also offer sports.
You know, when you're when the sports is sort of like eighty-five, ninety, ninety-nine percent of your business. Sorry, but you're a sports book, aren't you? You know. You are a sports book under a different name. so obviously the concern the concern for the companies, I think, is that if sports gets taken away from them, what do Calcium Polymarket do next? Okay, you've signed up a bunch of new users, so you're in a better position than you were before you started offering sports, but you then have to go back to only offering contracts on
What, the price of gold or the weather? You know. They don't want that, obviously. And then from the CFTC side of things, like the core, it's about a lot more than what's gaming and what's not gaming and what's betting and what's not betting, because it is about whether
the CFTC has does have exclusive jurisdiction over like sports event contracts or whether states are able to shut down these platforms on the sports side specifically. You know, so it's a it's a it's a it's a fundamental large scale issue of jurisdiction and authority. and so whatever the decision is, because un you know, undoubtedly, well surely
Tom Nightingale (26:03.11)
This is going end up in the Supreme Court and have a decision either way. I would say on the balance of what I'm seeing as a journalist every day covering this, the the momentum has swung in favour of the states recently. I think we're seeing a lot more injunctions against Calchi. You know, we're seeing which by the way, the CFTC is now intervening and directly telling Calci to ignore a court order to shut to geobloc states, which is just I heard a lawyer this week.
on a webinar refer to it as something like, you know, can't be the exact words he used, but basically the most remarkable thing that he's seen in terms of a federal versus state debate in like fifty years of practicing law. Cause it's the CFTC saying to Calci, like, you even though you've been ordered to do this by a court, you we think you shouldn't do this. So carry on operating as you were before and we'll fight the fight for you. Like, what was you what was it you said earlier about Black Mirror? You know, it's it's it's just it's crazy time really.
Fernando Noodt (26:58.858)
Yeah.
Tom Nightingale (27:01.69)
And so I think everyone is very aware that a potential outcome in the Supreme Court, one way or another, could pretty much change everything that we've seen happen in the last sort of eighteen months in this industry. so obviously I think as the momentum seems to be swinging in favour of states, we've seen more aggressive action from CFTC in courts. That rhetoric from Selig about we have to win in court because we stand to lose if we don't, I think shows that maybe
People are starting to feel the heat a little bit more. We've got things at federal appeals courts now. Like we are it's moving very slowly, but we are inching towards a Supreme Court decision. And in the meantime, like the states are getting more wins than than the Fed than than the federal authorities and federal platforms are.
Fernando Noodt (27:47.112)
Yeah, and I wanted to take the crystal ball, but we're a bit far past our our our our bedtime. but very briefly, what's next? What what should we expect expect to happen?
Tom Nightingale (28:01.26)
you're asking me to make a prediction about prediction markets, are you? I I mean, what's next? Congress will talk more about prediction markets on the side of integrity mostly. Tribal gaming rights as well is something we haven't mentioned, but like there'll be more hearings in Congress about it. We've seen three or four already. there will definitely be more lawsuits. probably considerably more lawsuits more lawsuits. hopefully we get a bit more clarity from the CFTC about how it
you know, the actual firm rules it intends to put in place because they put out a proposed rulemaking and apart from the integrity issue, they didn't really take a heavy stance on anything. They sort of said sports are generally allowed, but be careful. Hopefully we get a bit more, you know, a bit more clarity and a bit more firmness on that. and the news will just keep coming. That's what I can be sure of is the news will just keep coming.
Fernando Noodt (28:57.278)
Hashtag wait and see and hashtag subscribe to the newsletter. No, that's not a hashtag, but subscribe to the newsletter of SVC Americas to keep up to date with everything happening in the US with prediction markets and per and of course subscribe to all SVC media newsletters and follow iGaming Daily on social media and your preferred podcasting platform. Tom, I could listen to you talking about this for hours, but unfortunately we have to keep it under 20 minutes and we have already failed.
To do so. So this is the end of this episode. Thank you very much. Thank you very much, Nea McDonald, for producing this episode. I'm Fernando Not and to our listeners out there we'll see you in the next one.
Tom Nightingale (29:24.178)
Yeah.