Episode 30: Is Prediction Markets Vs. States Coming To SCOTUS?

The Ninth Circuit delivered bad news to Kalshi on Friday, as the prediction market company lost its appeal to Nevada. Where does the legal battle for prediction markets go from here? The US Supreme Court is definitely in play.

Daniel O’Boyle of InGame and I break down that news and everything else that happened last week in prediction markets.

Show notes and more reporting/context on the decision:

-Event Horizon

-InGame

-Nevada reacts: ““We are pleased with the Ninth Circuit’s ruling today in favor of Nevada. This completely vindicates what we have been saying all along. This is sports betting and needs to be properly regulated by the state. The Nevada Gaming Control Board has been regulating gaming in the state of Nevada for more than 70 years in accordance with the highest standards and best practices. We will continue to vigorously enforce Nevada law to safeguard gaming in our state,” stated Nevada Gaming Control Board Chairman Mike Dreitzer.“Prediction markets offering sports-event contracts constitute gambling and must comply with Nevada’s gaming laws and regulatory framework. I commend Chairman Dreitzer and the Nevada Gaming Control Board for their diligent work to uphold Nevada’s longstanding regulatory standards, safeguard the integrity of our gaming industry, and ensure the public can continue to have confidence in its oversight,” said Nevada Governor Joe Lombardo.

The rest:

-Clash Between Prediction Markets and States Sets Off a Furious Political Battle (New York Times): “In early March, Donald Trump Jr. made a pitch to a crowd of Republican state attorneys general who had gathered for a three-day retreat at the Ritz-Carlton hotel in New Orleans. …”“Sitting onstage for a question-and-answer session with Montana’s attorney general, Mr. Trump suggested that state leaders were being led astray by a ‘vested interest’ — gambling firms that wanted to protect their ‘monopolies’ by attacking prediction markets, four people familiar with his remarks said. In reality, he said, the markets already had robust oversight, describing them as a sophisticated financial tool overseen by federal officials, not state attorneys general.”

-CFTC Orders Gabriel Perez to Pay $172,000 for Insider Trading of Mention Market Event Contracts (press release): The Commodity Futures Trading Commission today announced an order filing and settling charges against Gabriel Perez for misappropriating material, nonpublic information obtained through his federal government employment in order to trade event contracts (i.e., swaps) on a prediction market platform for his personal benefit.Under the order, Perez must disgorge the profits he made from his unlawful trading totaling $107,539.02 and pay a civil monetary penalty of $65,000, representing a substantial discount under the Division of Enforcement’s new cooperation advisory because of Perez’s exemplary cooperation with the CFTC.

-LSU Football Coach Kiffin’s Bonuses Hedged Using $3 Million Kalshi Trades Placed By Outside Firm (InGame): “A third party helping Louisiana State University hedge against potential bonus payments to football coach Lane Kiffin used bets on the team’s performance on Kalshi to offset exposure. Similar trades were placed last month on South Carolina’s football team, again from a third party rather than the university, though the exact risk being hedged for those trades is less clear. Two weeks ago, five ‘block’ trades — trades negotiated off exchange — were placed on LSU to have a successful college football season, worth a combined $3 million.”

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