Sports Prediction Markets Remain Under Fire
As impressive as Kalshi’s March Madness handle was, its future remains uncertain. The operator has begun receiving cease-and-desist letters from several states, including Nevada, Maryland, Montana, New Jersey, and Ohio. Massachusetts has also begun investigating the market but has not issued an order to shut down the platform.
While the ever-growing opposition seems too much to overcome, Kalshi has gotten a massive win in the Silver State. A Nevada judge ruled that the state did not have the authority to order Kalshi to exit the market. The judge stated that it is clear only the Commodity Futures Trading Commission has the power to regulate the operator and its controversial markets.
How Will March Madness Success Affect Future Markets?
With Kalshi and Robinhood enjoying success with sports prediction markets, their rivals can expect to follow suit soon. While the industry's legal status remains uncertain, Nevada's legal win shows that resistance from the states might not have much power to stop them.
With more trading platforms looking at adding prediction markets for sports, don’t count on the sports betting industry to remain silent. The growing industry won’t like losing a significant chunk of revenue to Robinhood and Kalshi. Since the trading platform isn’t considered gambling, they don’t have to adhere to the regulations and taxes from gambling laws. This makes it hard for regulated operators to compete.
We have seen industry proponents already go after sweepstakes sportsbooks, which are putting far less of a dent into their revenue than prediction markets. That will motivate the industry to use its deep pockets and political capital to push out predictions markets.
Kalshi Adds Sports Betting Industry Insider
While Kalshi continues to assert that its prediction markets don’t qualify as gambling, its hiring practices don’t show that. The company just hired Sara Slane this week. The long-time industry leader was a Senior vice president with the American Gaming Association and brings almost two decades of sports betting experience to Kalshi.
Slane was hired to work on sports league and government relations and some public affairs. The company hopes her experience will help it continue to offer competitive prediction markets with support for the government and sports leagues.
