Perhaps no disruptor is bigger in the gaming industry right now than predictive markets.
Online platforms—where users wager on everything from football games to election outcomes—have stirred controversy for how they skirt state regulations that traditional gaming companies must follow. Companies like Kalshi and Polymarket dominated the conversation at last month's Global Gaming Expo — they'll have their own dedicated conference on November 3-5 in Las Vegas -- and now they're tying up multiple circuits of the U.S. Court of Appeals.
The Nevada Gaming Control Board initiated the state's ban on those companies, which have appealed the move. Forty-three other states also have ongoing litigation against them. The issue is expected to reach the U.S. Supreme Court, where gaming reporter David McKee says anything can happen.
"The Supreme Court is gets to play "Let's Make a Deal" because behind door number one you have the Third Circuit, which says prediction markets are strictly the province of federal government regulation," McKee said. "You have the Ninth Circuit, which takes the opposite view and ruled in Nevada's favor, for instance, and in between them, you have the Sixth Circuit, which says, 'Well, yes, these swaps are federal level contracts, but they're also subject to state regulation.' So the Supreme Court has to find a way to split that baby — further complicated by their own 2018 ruling that sports betting is the province and regulatory ambit of the states. Plus, [the Court] may have to define what is and isn't sports betting. So it's not easy to say where they're going to come down."
And sports betting is where the established gaming companies feel most threatened by prediction markets, though a few, such as Wynn Resorts, have taken a neutral stance. For many of them, it's not just potential cannibalization of their online business — despite the notion that the customer bases for prediction markets and brick-and-mortar casinos have minor overlap — but also regulatory concerns.
"This raises their biggest fear, which is that of the federal government poking its nose into gambling regulation, where it has — aside from the Federal Wire Act, which forbids the transition of bets across state lines — never gone there,' McKee said. "So there's a possible precedent being set."
Guest: David McKee, gaming reporter
