Subscribe
Share
Share
Embed
A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Fernando Noodt (00:02.017)
Prediction markets were once viewed as a niche financial product, sitting somewhere between investing and forecasting. Today, they become one of the most contentious issues in US gambling regulation. States are calling them illegal betting. Federal regulators insist they fall under financial law. Sports leagues are even beginning to work with them, and increasingly, are being asked to decide where they belong.
In this episode of iGamingDaily we break down the growing legal battle between states and the Commodity Futures Trading Commission, why regulators are pushing back against platforms like prediction markets and whether these products are becoming a real competitive threat to licensed sportsbooks. We'll also discuss what league partnerships and mounting political scrutiny could mean for the future of betting in the United States.
This is no longer just a debate about prediction markets. It's a debate about who gets to regulate the next generation of gambling. Welcome to iGaming Daily brought to you by OptiMove, 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 where I'm joined by the great Justin Byers, journalist for SBC Americas. Justin, how are you today?
Justin Byers (01:26.094)
I can't complain one bit. The prediction market sector is the gift that keeps on giving. So we got some things to talk about today, that's for sure.
Fernando Noodt (01:34.763)
Yeah, absolutely. There's a lot going on around prediction markets. Of course, there's even a prediction markets roundup from from SBC Americas every week. that speaks about how how how much is going on in the United States around prediction markets. There's a lot going on. And that's why we will talk about this today, as we have many times in the past on iGamingDaily.
Today we have a couple of stories that were pretty interesting and to begin with the information, Minnesota became the first state to explicitly ban prediction markets, but the CFTC, the Commodity Futures Trading Commission, from now on the CFTC, sued almost immediately after this ban was approved. So let's break down the general story first and explain to the audience what happened.
Justin Byers (02:31.744)
Yeah, so this is some real movement that we've got here. And when it comes to prediction markets, and of course, like you mentioned, this is their first explicit ban that we've seen legislatively from a state. And this is what makes this situation a little bit different from the other legal battles we've seen throughout this whole process the past two years or so. And so this.
This prediction market ban was part of a broader bill that included a different number of changes when it comes to Minnesota's government. There are some...
instances of fraud and criminal policies that are changed within this bill. But within it, the most important and most notable provision that we've seen in the gaming space is the prediction market ban. Now, it breaks it down into two ways, the operation of the products and the advertising. Now, when it comes to operating prediction markets and evict contracts, this piece of legislation
bans war, sports, political, cultural, event contracts. So that pretty much takes the meat of what PolyMarket and Kalsi and other platforms are delivering to Americans every single day. And when it comes to advertising, that makes it a felony. So it's an interesting place for these prediction markets to navigate when it comes to Minnesota. Now, as expected,
The CFTC got themselves involved in the situation and the way they did that is by immediately suing Minnesota and some of the key leaders in that government. And what we're seeing here is them trying to reassert and reaffirm their authority as the regulator of these products. And they're pointing to, like you mentioned earlier, the CFTC and the Commodity Exchange Act. once again, this is at the root of the issue. But now the issue has gotten to another step.
Justin Byers (04:30.992)
where we've got actual legislation that's been signed by governor in place and it's impacting how these businesses operate from a locality standpoint.
Fernando Noodt (04:44.725)
And of course this has been in the public debate for some time, has been a battle in the media or anytime we would cover this...
these type of stories, this clash between who gets to oversee prediction markets, who needs to be regulating them and seeing they comply with US law and with state law. This has been, of course, an ongoing battle for some time. But what I find interesting about this story is that there is a lawsuit in place. So could we see
through this lawsuit that this could be the beginning of a constitutional battle over who controls gambling adjacent products in America, whether it's states or federal regulators.
Justin Byers (05:37.135)
I think that's exactly what we're gonna start seeing. This is a tough point to be in because we've got some real movement and some support when it comes to combating the delivery of sports events contracts and in political and pop culture related contracts. And now that we've actually got legislation that says, we can't do that. But we have the CFTC.
in the Commodity Exchange Act saying the exact opposite. This is where we really get some middle ground. And I think this is a turning point in this whole debate, because now that we've got governors backing bans on the products and now we've got.
one of the biggest agencies in the government saying the exact opposite. So this is a landmark moment in my opinion when it comes to this whole legality regulatory fight. And so we'll see if this is a trend if other states kind of get motivated lawmakers around the country take note of Minnesota and their ability to pass some legislation that's related to this. And this could be a trend we see moving forward, not just in 2026,
but when we get to 2027 even, we'll have new legislative sessions.
Fernando Noodt (06:58.081)
We'll have to wait and see what else this brings to the table for the United States. of course, we were talking about the CFTC, which keeps arguing for exclusive federal authority over under the Commodity Exchange Act. While states argue the opposite, they insist that the sports contract actually look like gambling. So which side, if any, currently has a stronger position or how does it look like, at least in the United States right now?
Justin Byers (07:29.046)
With Minnesota taking that action, you would think that the prediction markets kind of are taking a step back to their authority over the situation. But the fact that the CFTC, as expected, immediately stepped in by filing a lawsuit and saying, hey, this is this is real. What we have to back our arguments is legit. Now, I think when it comes to the bigger
broader industry as a whole. This is definitely a moment where we say, OK, whatever the reaction is after this Minnesota situation, you can set a precedent for for how things are going to unfold elsewhere now.
with the CFTC's arguments in the past, and we've seen them have success in some courts and other jurisdictions, I think they may have the upper hand here when it comes to the state versus federal regulatory kind of battle, just because they do have the backing of a government agency, and we're seeing them not put the sword down when it comes to this fight.
Fernando Noodt (08:47.777)
Yeah, absolutely. going back to the legal side of things, of course, that brings an extra layer. And actually, I think it's the first stone in a road to definition about what the situation with predictions markets is going to be. But also, maybe it's going to balance out what
power do federal and state gambling regulators have? But do you see this going all the way to the Supreme Court of the United States and a decision that could reshape that, those definitions on prediction markets and on federal and state gambling oversight?
Justin Byers (09:37.783)
It's only a matter of time before we see the Supreme Court get really involved in this. We've already seen a preview of that coming to fruition when it comes to New Jersey and Kashi's legal debate there. It's interesting. Kashi had received...
and couple other prediction markets that received some ceases and assist orders in New Jersey. And they immediately responded by taking legal action against state leaders in that market. And now that...
legal proceeding is gravitating towards the Supreme Court. And if we're getting that kind of action in New Jersey, one of the earliest of marquee gaming markets in America, New Jersey's issues can reach the Supreme Court, I expect this issue to continue and to even build to that point where we're having discussions about how the Supreme Court is going to approach this issue moving forward.
Fernando Noodt (10:36.235)
And of course, if courts ultimately decide to side with the CFTC, what do you think that would mean for state gambling regulators and of course licensed sportsbook frameworks that were built over the last decade? Could that be jeopardized in some way? Could those be questioned? Should a ruling from the Supreme Court come and say, hey,
you are not supposed to oversee these. then of course, with that come a lot of other actors that will say, hey, if this ruling is in place, maybe I should not be complying to this law. Could that be the scenario, a possible scenario in the US? Could a ruling mean that the regulation is questioned?
Justin Byers (11:27.158)
without question. I think an issue like this, if things were to turn.
particularly with the Supreme Court, it would put regulators on notice nationwide that they may have the authority that they have over specific gaming products. But when it comes to emerging verticals, they're going to have to wait their turn when it comes to to attack these kinds of things. And that's I know that's a daunting moment, because if you look at the US gaming industry, it's.
It's still when it comes to sports betting and these emerging verticals, it's still so early on into what's really what really makes a mature market. And so I think what we're seeing here is if there is a movement state.
regulators are going to have to really, really look back and see if what they have as a framework is really attacking comprehensively the entire industry of gaming. So there might be some instances where regulators and even lawmakers are going have to go back and rework some things to see where they went wrong and where they're missing.
Fernando Noodt (12:39.211)
And of course this is going to bring more news coming the next few weeks, months and potentially the next year. But you can be up to date with all happening in prediction markets in the US and everything happening gaming related in the US if you subscribe to SBC America's newsletter. And of course this will be a major conversation topic in the next SBC Summit Americas next June 9th.
through the 11th, so if you haven't made plans to go...
to Florida yet in Fort Lauderdale, you better start planning because we're two weeks from the event. So it's definitely gonna be the scenario of a lot of interesting conversation, maybe even decisive conversations and discussions at the SVC Summit Americas event next June. But right now we're gonna do a very quick ad break and we will be right back to continue discussing the prediction market situation in the United States.
Fernando Noodt (13:58.611)
And we're back with more iGaming Daily to continue discussing prediction markets here with Justin Byers, journalist for SPC Americas. And Justin, we were talking about sports leagues siding with different actors and making partnerships and...
making partnerships with prediction market companies. But right now we have a sports league, a major sports league in the United States, actually siding with the CFTC to some extent at least, because the NHL, the National Hockey League, which is ice hockey for those of you who live under a rock, which has signed an information sharing agreement with the CFTC. So do you think sports leagues are beginning to accept prediction markets as permanent fixtures or even before legality is
is settled.
Justin Byers (14:48.002)
Without question, what the NHL is doing here is they're kind of setting the trend and they did this even beforehand. They're one of the first major sports leagues here in the U.S. to to partner with the prediction market. And they did so in October 2025. The NHL signed two partnerships with cash and polymarket separate deals. And what they had there is sort of a
a monitoring agreement sort, sort of where the NHL can make markets is I think what Bateman, Gary Berman, the NFL commissioner kind of was quoted saying that that those deals allow them to to kind of set the tone to what they want to see delivered when it comes to contract. Now, when it comes to the NHL and the CFTC getting this agreement forged.
This is a little bit different because instead of working directly with the platforms, the NHL is working with what we think is the regulator of prediction markets and event contracts. Now we don't have exact details because the two-way agreement does have a lot of confidentiality to it.
But what we do understand is this is an information sharing, but we don't know exactly what information will be shared. So this will be interesting to see how things kind of unfold. But with the NHL getting in bed directly with the CFTC that places them right in the middle of the whole prediction market sector. And so it's interesting to see that the NHL is going to be the lead to kind of set the tone here and the safe to
to see how they're going to attack this whole space.
Fernando Noodt (16:40.159)
And now let's go back to the legal ground, to the legal battle, because it's not only Minnesota. Of course, Minnesota maybe was the most resounding lawsuit that happened with the CFTC lawsuit, actually was the most resounding story there. But also Rhode Island filed a lawsuit there. Actually, it was the state attorney general, Neronia, who filed a lawsuit against Kalchi and Polymarket.
Rhode Island is openly arguing prediction markets are hurting tax revenues and regulated sportsbooks. So are prediction markets now being viewed as direct competitors rather than just adjacent products to gambling?
Justin Byers (17:26.86)
When it comes to the popularity right now with prediction markets, I think sports books are sweating a little bit because prediction markets are able to pull some of their customers.
and some of the betting handle that's turning into trading volume. And so that's pretty daunting, in my opinion, for any licensed operator that's even looking to solidify our footprint in a market where they're already pretty much established. The fact that you've got new players coming in into this space and they're able to take away customers without having the same stipulations.
as the sports books themselves have to adhere to. I think that's an interesting point of contention. And like you mentioned, I think when it comes to state regulators and state bodies, the issue that's really at the core of the prediction market issue is.
the tax revenue that some of these states are missing out on because they're not having to adhere to the same tax obligations as license operators. And also, Cauchy, Polymarket, other prediction markets offer consumer protection standards that aren't necessarily the same as sportsbooks. And so that's a moment of contention too. But I think when it comes to sportsbooks having to worry about
their customer acquisition and retention numbers changing. I think that's a real threat when it comes to prediction markets.
Fernando Noodt (19:02.645)
And of course, one of the main challenges when a new product or a new paradigm like prediction markets comes up is the federal versus state regulation, like the federal nature of the...
government in the United States, the politics, how governments are structured with each state having their own regulation, that's what I'm trying to say here. That poses a challenge for this type of regulation to be enforced because of course now we have Minnesota moving forward and saying hey we're gonna ban this altogether and then you have other states that maybe are more open to prediction markets than not, some others are in the middle ground but it's
nearly impossible for all 50 states to get in the same page and regulate this in the same way, which brings us to the federal level of things because a subcommittee in the US Senate held a hearing where there were repeated
they were repeating their concerns around miners, around social media marketing, around consumer protection. And of course, this goes beyond prediction markets, but with prediction markets being unregulated, this becomes a bigger issue. Even though we have, of course, companies that are 100 % willing and committed to responsible gambling and all that. But could these issues that...
consumer protection, the minor protection, the social media marketing, could these issues become a bigger threat to prediction markets than the legality of the segment itself?
Justin Byers (20:47.918)
100%. I think if prediction markets are gonna operate in similar manners as licensed sportsbooks, I think themselves, they're gonna have to learn, they're gonna have to play by some of the rules that sportsbooks also have to play by. And even though that might hurt some of their business, if they really wanna operate and operate without...
any trouble, I think they're going to have to, in some cases, take the steps that sports books take. And I think one of those issues that was raised during the sitting hearing is the ability for kids 18 years and older to trade with event contracts.
Now in many states, almost all the states that have regulated sports betting, the legal betting age is 21 and that's a big gap. And I think that's a point of issue that we're going to see continue to be raised. But that's an issue that prediction markets can directly address themselves. Now having an 18 year old to 20 year old gap.
where you can have customers is a huge amount of customers you may miss out on, but to operate without hiccups and any threats, I can see prediction markets raising their ages to 21 just to make sure things are on a level playing field when it comes to sports books. I think we're gonna see some practices like that where...
big players like cash, you're probably market okay. Okay, this is too much of a big deal to ignore and we have to address it in some capacity. So I think when we when we see that debate, it's going to continue to evolve. We've got even more consumer protection issues being raised when it comes to insider trading and that's going to be continued to be a big issue because of the nature of the big contracts in the diversity of markets that are out there. So it's going to be
Justin Byers (22:45.988)
an evolving door of stuff, but I think what we're going to see here is prediction markets kind of react favorably to how regulators want them to operate in their spaces.
Fernando Noodt (22:59.601)
And of course, we're running out of time, but we're gonna be hashtag waiting and seeing what happens in the U.S. with prediction markets. But how will you be covering prediction markets in the coming weeks? Justin being the expert you are in covering for SBC Americas. And where should people be looking next?
Justin Byers (23:20.758)
It's gonna be a really interesting point in time here in the next two to three months. We've got football season coming up.
which we're gonna see more prediction markets try to push their products. And that's gonna even bring more attention to it. So I think while we're in this lull of the sports calendar, we're also seeing a lot of action when it comes to movement, regulatory wise and legislatively. And so I think we're gonna continue to see this. We're gonna continue to see other states.
kind of take their own pathway to combating this issue. And I think Minnesota, when it comes to implementing a band, I think they're going to set a trend here, but it's going to really decide on whether the CFT is successful in their efforts to take legal action. So it'll be interesting to see how this shapes forward, but the best place to keep tabs on everything
SBC Americas and some of the other SBC sites we're gonna have some good stuff and continue to Have a pulse on this stuff as it moves forward
Fernando Noodt (24:35.159)
Absolutely, if you want to stay up to date with prediction markets and everything going on in the United States, make sure you are subscribed to SBC America's newsletter. And of course, if you want to keep up to date with the rest of the world, make sure you are subscribed to all SBC media newsletters because we will be covering everything going on around the industry in this world and every other world in the galaxy, of course, but not much coming up from the space, from outer space. So anyway,
after all this nonsense, we'll be monitoring what happens with the CFTC lawsuit in Minnesota with regulation in the United States. So make sure you are following iGamingDaily as well and make sure you go to SBC Summit Americas next June so you can be part of the conversation right there on the spot.
This has been all for today. Thank you very much, Justin Byers for being with us today. And of course, thank you very much, Amy McDonough for producing this episode. I'm Fernando Nott and to our listeners out there, we'll see you in the next one. Goodbye.