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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Fernando Noodt (00:01.5)
Prediction markets is all people can talk about right now, as they are the hot topic not only in the US, but all across Latin America and the world in general. We were just off SVC Summit America's a few days ago, where they were, of course, the diva of the event, with people wanting to hear about prediction markets and wanting to get involved with people working in prediction markets and of course to know, wanting to know what's going to happen regulation-wise.
With this segment. 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 SVC, and your host for today's episode, where we will discuss the future for regulation, or we will try to look into the future of regulation for prediction markets with a very special guest, already a veteran.
of iGaming Daily, you we've had you before, Tomas Garcia Garcia Botta, attorney and partner at MF Studio Avogados and member of IMGL, home of the world's top gaming lawyers. Tomas, how are you today?
Tomas (01:08.334)
I'm very well, thank you. Thanks for thank you for having me again. It's a real pleasure to to be on this what would be I think the fourth or or the fifth episode dealing with prediction markets. So we've we've come a long way. You've had IMGL president discussing this matter. You dealt with it during during SBC. So I'm I'm actually very excited that I am considered to to give my two cents here.
Fernando Noodt (01:35.879)
Yeah, absolutely, absolutely and glad to have you because we want to discuss prediction markets in Latin America, more specifically in Argentina, where you are probably the the first expert in gaming law I can think of anytime someone brings up Argentinian law. So Tomas first what how how how many questions do you get daily about prediction markets in your daily work?
Tomas (02:05.548)
Not so not so many, but this has to do with the fact that I am established within the gambling sector and the whole strategy of prediction markets companies to position themselves themselves as outside of the gambling regulations. So naturally they won't go to any gambling law expert but a financial markets expert. What I do what I do receive in turn is queries from clients with the gambling sector on whether
Fernando Noodt (02:07.226)
Okay.
Tomas (02:35.328)
this is an offering that could be made within the existing regulatory framework and the existing licensings and authorizations they they have, which is quite interesting because that gives us to that leads to a debate to a debate on on whether this is possible or not and and and and there are some different positions within the within the ecosystem on this matter.
Fernando Noodt (02:58.65)
And of course, like I mentioned before, we were just at SBC Summit America's a few days ago. And on iGaming Daily, like you mentioned, we've talked tirelessly about prediction markets, but not so much about their presence in Latin America. We had some episode with Lucia Ganda, the editor for SBC Noticias, talking about it, but I want to hear about prediction markets from you. Do prediction markets look the same?
and pose the same issues in jurisdictions like the US where they are pro probably the most present right now.
Tomas (03:34.208)
I think I think they do and and in fact you said it during that episode. I mean Argentina takes the model, follows the model of the US and mirrors the constitution of the US in in some aspects. In gaming it the the mirror is co is complete. Argentina, unlike the US, has twenty four provinces, each with the power to regulate gambling the best way they see fit. Now
federal activities or inter jurisdictional activities, activities related to the payment system, banks financial financial activities, stock exchange, those are regulated at a national at a federal basis with a with a national reach. Other other matters as subject to national regulation is AML for instance or
a a and and this makes that the situation, the discussion in the US on prediction markets and fr federal preemption over this matter is especially re espe especially relevant in Argentina. I mean whatever happens in the US will definitely have an impact here in Argentina.
Fernando Noodt (04:44.858)
And why do you think they are not straight up consider sports betting? Most people most people engage with them do during sports predictions. A lot of people during SBC Summit Americas were mad because they said, Hey, this is sports betting. Why don't why do you think these are not being considered sports betting and and and how does it behave for for in Argentina?
Tomas (05:11.95)
I mean, fr from the point of view of the companies offering prediction markets at this at this time, the the thinking I think has to do with
an economy of compliance to put it in a way. So if if you frame a product as something that's different from sports betting, you are able to get away from local licensing. I I've said before and and and you've said it too, Argentina is a fragmented market. I mean twenty-four different countries in one, each which with their own approach. You have markets like the City of Buenos Aires, which is
Or was fully open to international companies willing to apply for online gaming licenses. And opposed to that, you had other markets such as, I don't know, province of Santa Fe, for province of Buenos Aires, for instance, where you have a limited amount of licenses according to the law. And then you have the obligation to partner up with local gaming companies, you know, if you were a foreign entity willing to apply for a license. In this landscape,
And and going back to the initial question, I do get a lot of queries on how to apply for B2C licenses in Argentina. And the answer is always the same. There is no general rule and there are no jurisdictions which have licensing opportunities. The only path forward is MA. So within this landscape, and from the point of view of a company offering just prediction markets, pr the the this explanation that they are not gambling, they are not sports betting.
makes total sense because it's al it allows you to one say this is not subject to state regulation, two, this would be subject to federal regulation if there's it if it could be subject to any any regulation whatsoever. The fact that prediction markets in Argentina are not presented as gambling makes allows you to shift away from the application of section three, one bits of the criminal code, which
Tomas (07:17.72)
prohibits the performance or the offering of any gambling products without having the proper approval from the relevant authorities, in the case each of the twenty four lotteries here in Argentina.
Fernando Noodt (07:31.707)
And of course, the debate around prediction markets stems mostly from the issues that come of the US. So it's it's really interesting to see how similar Argentina and the US are with the state regulation in the case of the United States and the provincial regulation in the case of Argentina. So it's definitely an issue that that
We can mirror or or actually the issue mirrors between the countries. But if these two countries are so similar, we should definitely be looking into how regulations turn up in the US to see what happens or what will happen in Argentina. so once the US decides whether
prediction markets are a financial instrument, betting or whatever they are. will that have an impact, a direct impact on Argentinian regulation? And of course the Supreme Court is always lingering, the concept of them intervening. How long will it take for the Supreme Court of the United States to get involved and rule on this?
Tomas (08:39.66)
I kinda really say on the time frame of the Supreme Court, I've heard experts say that this could happen any anytime between twenty twenty-seven and twenty twenty-eight. The
Then let's let me try to frame the answer in a way which is understandable but read by reader by listeners who are not lawyers. This is a complex question. You are saying, will there be an im a direct impact in the regulation? The answer is no. But having a precedent on of the Supreme Court either way will definitely have an impact on the strategy that prediction markets company will follow in in Argentina.
Fernando Noodt (09:13.082)
Yeah.
Tomas (09:24.554)
If the answer is in favor of federal preemption, well normally or ideally prediction markets company would try to seek a ruling by a federal court in Argentina asserting the federal preemption in this country. If the decision is against federal preemption, then the cases will most likely be resolved in favor of the lotteries.
So far the only lottery that has taken an and and when I say lotteries I mean state regulators in Argentina for the audience that's not Latin America. So we do we do use the word lottery in Argentina as a synonym of gaming regulator because lotteries with some exceptions are are a state monopoly. So assuming there is I was saying the only lottery that took an active role here.
was the lottery of the city of Buenos Aires, which filed a criminal complaint and in and in the understanding that the offering of prediction markets implied gambling, and therefore it was falling under the provision the provisions of section three one B of the Argentine Criminal Code, which I which I mentioned earlier. In this understanding the there was a court order blocking poly market.
This is the this is the I how to say the orthodox way forward. If there is a decision of the US Supreme Court favoring state regulation and state sovereign sovereignty, then what will what what will happen is that prediction market company will will lose will lose that argument here in Argentina. I mean the the the courts in Argentina historically and the Supreme Court in particular
look at the US and look at the US presidents for guidance. This was more the sling was was stronger in the past when we did not have so so many years of local case law and it's somehow dimmer now. I mean the the Supreme the Argentine Supreme Court has their own authority, they have their own precedents and they could look at Scotus as as a source of reference. But their case law at this
Tomas (11:46.444)
At this time has always been consistent in the in the sense that anything that falls within gambling falls under the competence of state regulators. And this has to do with the history of gambling before online and before everything. State regulators needed to have the capacity to control the offering of gambling on site. And the only way they could do that is with
there police having power to conduct raids, search and and and and and and and enforce the law.
Fernando Noodt (12:25.68)
Right. We have a few things more to discuss around prediction markets in Argentina and what will come for them in the future. But right now we're gonna do a very quick commercial break and we will be right back with more about prediction markets with Tomás García Botta. Okay, pausa.
Fernando Noodt (13:31.023)
And we're back with more iGaming Daily to discuss prediction markets and how they are looking right now in Argentina with Tomas Garcia Botta, attorney and partner at MF Studio Avogados and member of IMGL, home of the world's top gaming lawyers. Tomas, you were mentioning how similar or how how the US and Argentina have pretty much twin systems because of how the the Argentinian constitution
Mimics the the US constitution. So of course, whatever happens in the US will have an impact in Argentina, not directly, but they will for sure get some inspiration from it. And the thing here is that the Supreme Court may not rule on prediction markets in the US for some time now, and Argentina has presidential elections coming up next year in 2027. So how how how could the outcome?
of the presidential election, whether President Millet or whoever runs for president I right now it looks like it's President Milet who's going to go for the reelection, but maybe it's his political force, whether he wins or they win, whether the opposition gets back in power, how could the outcome of the presidential election affect the approach of Argentina to regulation markets, to prediction markets, sorry.
Tomas (14:58.712)
That's a that's a really interesting question. One year in Argentina would be fifteen years anywhere else in the world. So we we are I I am clueless on what will happen. I mean so far based on facts, we we don't have any figure within the opposition that could potentially run for the election. Argentina's macroeconomy is
Fernando Noodt (15:07.446)
Exactly.
Tomas (15:25.93)
is getting stabilized after so many years, but the microeconomy is not showing true signs on recovery. So this this provides a quite a an explicit combination before presidential election. So Miley so far has taken no stance with gambling. The the
the only thing he his government did so far was to say that they would veto the law that was approved by the House of Representatives and is pending decision by the Senate.
d on the grounds that it was a communist initiative and he said this in in early December twenty twenty four. Nothing else has been has been said on this matter. Later on this year, let me rectify, later on this year they submitted a a bill on addressing gambling and addressing the same matters that were treated by the House of Representatives and are pending decision by the Senate, but with a different approach, an approach that will or not will.
An approach that is much more conscious on how the gambling ecosystem works and what measures are sustainable for the gambling ecosystem. And this law this bill is pending the pending treatment by the by the Senate. Based on and this is purely personal opinion, ba based on the statements that
that the government has made, I I would say they they should be prone to validating prediction markets. Again, it's not for the president to validate the offering of a product that should be authorized by by provincial authorities under the grounds that it's gambling. I mean from the
Tomas (17:32.876)
And and from the point of view of the of the product, I mean I I I do think it resembles gambling a lot. It's frame it's framed in a way that it's not gambling, but I mean if it has four legs, it it barks and it has a tail, it should be a dog or it it has all the signs of being a dog.
So we can say the dog is not a dog, the dog is a cat, but I mean at at at one point we we need to come clean and and treat this with intellectual honesty. And with that, I I will get into trouble for saying this, but it's gambling. To me it's gambling and it falls within the the realm of the of the provinces. That being said, I mean the constitution of Argentina is clear on the fact that the regulate regulatory competence lies with the provinces. And
Although Millet has done plenty of things, I mean disruptive things, he has not stepped into the distribution of competences between the federal state and the provinces. And he has not done it because
i it makes no sense to do it. I mean, the from the point of view of a president trying to stabilize the national budget, the more power and the more competence that is given to the twenty-four provinces, the better, because this would lead to a strong institutional system, which is what allegedly the we we all want and the federal government wants. So I mean
Assuming that Miley is really going back to the question, assuming Miley is related, I mean, although although he could be in favor of prediction markets, I don't see a change in in in in the in the current landscape. This is different from the US where you have some you have another political dimension going on and and and and and and and flying around the the the debate on prediction markets. This this element is not present here, at least yet.
Tomas (19:39.444)
Going back to to the first part of the of the episode, I mean, depending on the decision on Scotus, we may see a backlash here and we may see it this turning into a political debate. So far we have not seen it. What we saw is action by one of the lotteries who sought who requested and obtained a block order which has national effects.
Fernando Noodt (19:57.043)
So is action by one of the lottery who sought
Tomas (20:04.895)
And as as far as I understand, I mean the the criminal case did not did not move forward.
Fernando Noodt (20:11.172)
Okay. And speaking of the of the the nationwide block that was triggered by this action by the lottery the city of Buenos Aires, how effective are these types of of measures in the meantime while we decide whether prediction markets are prospering, whether they need the regulation and all that? That's gonna take a l a a while. So right now we have a a specific regulation in place that says each state, each province has to regulate.
over sports betting and of course maybe there's a philosophical debate on whether prediction markets are or not sports betting or a financial instrument or whatever but how effective is it for for for the provincial regulators to go to the justice and say hey block this because this is betting and we don't want it
Tomas (21:03.63)
I mean it's a sign that enforcement is being done. Is it the the solution to to to all the problems related to enforcement? No. I mean as long as you have payment methods, as long as you have a way to materialize the offering, a block is one of the measures that can be adopted. I think it's it's important that block
orders are issued because it gives the idea to the general public that you cannot do whatever you want and that there are consequences. Now, why just one company and not all the rest? That's another question. Because there are more companies doing the same than the one what that was subject to to the court order and
And nothing happened to them and that the the the the the status quo at this point is providing a competitive advantage to other companies in detriment to one that was affected by the by the by the block order. I think block orders are are relevant and are important. And the times of the of the system to process and and implement a block order are are slow.
The thing with companies like this one is that they use a single domain. They don't have mirror sites and you don't have this
way of way of proceeding that you see a lot in in dot com offering in in gambling where you have a lot of mirror side so you block side one and they go to site two and then they they keep on moving from one side to the other very fast. Here it's not, I mean you block the main domain and that's it. The offering is is limited in Argentina, which is what we're seeing now.
Fernando Noodt (22:57.488)
Yeah, absolutely. And we're running short of time, but I wanted to I wanted to know how are you seeing prediction markets turning to be in Argentina both in the short term, in the short term without regulation and in the long term one there's once there's a clear direction for for its regulation, whether they are sports betting or not and etcetera.
Tomas (23:20.908)
I'm I'm unsure yet on on on whether this is a trend that will that that has come to to stay or or it's something that will pass. I mean we we had I I was thinking we before this this episode on on on the metaverse. I mean we were all discussing about the metaverse four years ago and no one is discussing metaverse now. So will prediction markets be the new metaverse? I I don't know. I mean I I am
I'm trying to follow all the debate around prediction markets and hearing all the opinions and what I sense here is that this is being presented as the future, the product of the future. So and this is why it's it's so relevant to to gambling law, gaming law and the gaming and gambling ecosystem, and this is why it it needs to be taken very seriously, because if it's if it's the future
Then
Someone needs to be in the past. And i if we are on the past we I I don't need to say which are the consequences of that.
Fernando Noodt (24:35.332)
Absolutely, absolutely. We will have to hashtag wait and see what happens with prediction markets, not only in Argentina but in the US. We will continue to monitor closely what happens in the US to know what we can expect in Argentina, or that's what we can take away from this conversation with Tomas Garcia Bota, attorney and partner at MF Studio Avogados and member of IMGL, home of the world's top gaming lawyers. You can reach out to Tomas to know more about
Argentinian regulation and a gaming regulation. I know I will anytime I'll I need something. So Tomas keep that those notifications on. thank you very much for joining us today Tomas.
Tomas (25:17.976)
Thank you. Have a nice day.
Fernando Noodt (25:19.79)
And thank you very much to Luke Walters for producing this episode. I'm Fernando Nott and to our listeners out there, we'll see you in the next one. Goodbye.