The modern sports betting industry emerged after the states won a legal battle with the federal government. The burgeoning prediction markets industry, which is basically sports betting on steroids, has spawned another state vs. federal fight.
Via Alex Harring of CNBC, the Commodity Futures Trading Commission has sued Arizona, Connecticut, and Illinois over efforts to regulate prediction markets. The CFTC’s position is that the federal government has exclusive jurisdiction over prediction markets, and that the states can’t interfere.
“This is not the first time states have tried to impose inconsistent and contrary obligations on market participants,” CFTC Chairman Michael S. Selig said in a statement. “But Congress specifically rejected such a fragmented patchwork of state regulations because it resulted in poorer consumer protection and increased risk of fraud and manipulation.”
The move comes at a time when some members of Congress are trying to limit the activities of prediction markets, by banning trades (a fancy word for bets) on elections, war, and sports.
As it relates to sports, the prediction markets provide a vehicle for making wagers in the states that have yet to embrace wagering.
Regardless, the Wild West era of sports betting continues to become even wilder, with the limits and contours of FanDuel and DraftKings on one hand and Kalshi and Polymarket on the other to be determined through one or more of the branches of the U.S. government.
Through it all, those four companies and the sports they are and will be sponsoring will continue to cram as much money in their pockets as they can, until the Wild West settles inevitably into a new normal.
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