Michigan Taking More Cautious Approach
Many states have begun to push back against sports prediction markets over the last few weeks. The opposition has grown since trading platform Robinhood partnered with Kalshi to launch a March Madness prediction market. The platform wasn’t live for long before states began ordering the market to be shut down.
One common tactic has been sending out cease-and-desist letters. Robinhood has complied with these letters, but Kalshi is fighting back. The company has filed lawsuits against regulators in New Jersey and Nevada so far, and more are likely to come.
The pushback from Kalshi is likely why the MGCB has decided to open an investigation before taking action against these markets. This could help avoid a costly legal battle that could end with the state losing control over the new industry.
Questions Over Regulation of the Industry Remain?
While several states are arguing the sports prediction markets should qualify as sports betting, Kalshi is claiming they don’t have the authority to decide. Crypto trading platforms are regulated by the Commodity Futures Trading Commission (CFTC). As a result, the states should not have the authority to take any action against these operators.
One reason Kalshi is fighting pushback from the states is support from the CFTC. The regulator worked alongside Robinhood to launch its March Madness markets, leading the partners to believe they were clear to launch.
The lawsuits between Kalshi and the states should give us a clearer idea of who is in charge of regulating these markets.
Will Fears of Recession Affect Lawsuits?
The future of the US economy appears bleak, leading to fears of a recession as inflation continues to rise. This will lead many responsible bettors to limit their wagering as they look to save money. However, those struggling with problem gambling could be in even greater danger.
Lawmakers have been sounding the alarm over the spike in problem gambling. That could lead them to join the fight against prediction markets as they look to protect those struggling with gambling addiction. With trading platforms allowing customers to wager using investment accounts, the damage could be devastating for a significant part of the population.
