A Trumpian “Mother of all iGaming Battles” is looming over the status and legality of the coming–but wildly controversial–prediction markets business.
At heart lies the very definition of what constitutes legal regulated gambling in the United States, amid moves that could revolutionise iGaming in the nation.
And President Trump, perhaps unsurprisingly, given his long experience in the gambling industry as a casino tycoon and avowed proponent of de-regulation, is at the centre of the action.
Last month his son–and some would argue presumptive political heir–Donald Trump Jr. joined prediction market platform Kalshi, also known as Kalshi.ex, as a “strategic adviser”.
And Kalshi has further strengthened its influence with the powers-that-be by President Trump appointing Brian Quintenz, another of their former special advisers and ex-Board member, as the next Chair of the federal Commodity Futures Trading Commission (CFTC) — the regulatory body that oversees prediction markets and other futures trading.
Insider Back-slapping
Quintenz previously served as a commissioner at the agency for four years, during Trump’s first presidential term, 2016-2020.
But it’s not all insider back-slapping and good news for Kalshi, and its prediction market peers and competitors.
The powerful Nevada Gaming Control Board (NGCB), which, along with the Nevada Gaming Commission (NGC) oversees regulation in the home of traditional bricks and mortar gambling has now issued a cease-and-desist letter to Kalshi, demanding that it “cease all unlawful activity within Nevada” by this week Friday, March 14.
Unlawful
In its legal move the NGCB asserts, categorically, that offering event-based contracts on election and sporting results is unlawful in Nevada — unless licensed by the commission.
Kalshi.Ex, founded in 2018 by Lebanon-born Tarek Mansour and Luana Lopes Lara, graduates of the elite Massachusetts Institute of Technology, is one of several prediction market sites, among them Robinhood and off-shore Polymarket, which have lately come to prominence.
Initially they ran afoul of the CFTC, who argued that the allowance of prediction markets in politics was undermining and detrimentally influencing the democratic process.
That argument has since been dropped and now, emboldened by the ruling, prediction market sites are surging and beginning to encroach on traditional sports betting models.
To date, Kalshi has yet to respond to the Nevada legal slapdown.
War Cry
Gambling industry watchers contend that the nascence of prediction markets platforms and rapid evolution of crypto currency–another latter-day wagering concept embraced by President Trump–effectively heralds a whole new world of iGaming and broader betting.
Despite claiming he doesn’t “know much” about the market, the U.S. leader launched his own TRUMP meme coin soon after his inauguration in January this year and now stands to make an estimated US$350 million from the crypto coin.
Previously Mr Trump has also created NFTs of himself in the guise of various superheroes, from which he also pocketed several millions of dollars.
Meantime, Native American Tribes have also joined the fevered debate over whether prediction markets, with their growing focus on sports betting, constitute legal gambling in the nation.
“Allowing ‘sports contracts’ to be listed and traded will interfere with the sovereign right of tribes and states to exercise their police power to regulate gaming within their respective territories — a right long recognized by courts throughout the United States,” the Indian Gaming Association attested in a recent statement.
“Additionally, listing and trading ‘sports contracts’ would decimate the value of the bargained-for-exchange made between tribes and states in their gaming compacts when tribes agree to share their gaming revenues–contributing billions to state governments–in exchange for substantial exclusivity over sports betting in their state.”
Sounds like a war cry.
Watch this space!
