The Prediction Markets Strike Back… and They Brought a Friend
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Even those with short memories may recollect a post I wrote this last weekend about Kentucky’s effort to regulate prediction markets. The Trump administration has weighed in:
The Commodity Futures Trading Commission filed the lawsuit against Kentucky in federal court Tuesday. Republican Attorney General Russell Coleman, along with Democratic Gov. Andy Beshear, Department of Revenue Commissioner Thomas Miller and the Kentucky Horse Racing and Gaming Corporation are named as parties in the lawsuit.
The CFTC argues the state laws are an effort to block CFTC-registered contract markets.
“Kentucky is the latest state attempting to shut down federally-regulated event contracts,” said CFTC Chairman Michael S. Selig in a statement. “Prediction markets provide Kentuckians with valuable information about the likelihood of future events and offer risk management products relied on by Kentucky businesses and individuals. As I’ve consistently pledged, the CFTC is firmly committed to maintaining its exclusive jurisdiction over prediction markets, and today’s lawsuit against Kentucky is yet another example of the Commission protecting its federal interests.”
Filed in the Eastern Kentucky U.S. District Court, the CFTC’s lawsuit is seeking that the state law be declared unconstitutional. The CFTC has filed similar lawsuits against Minnesota, Illinois, and Rhode Island.
So if I’m reading this right the Trump administration’s policy is that gambling is not simply legal nationwide, it’s in fact mandatory. “Prediction markets provide Kentuckians with valuable information about the likelihood of future events,” is particularly rich given that the only thing Kentucky has tried to do is tax the markets, which does not in any way prevent anyone from accessing the information provided by those markets. It’s like arguing that before online betting became available there was no way for anyone outside Nevada and Atlantic City to access game lines. Anyway, money:
Public records show Kalshi and its peers are spending millions to try to influence the CFTC, Congress and state lawmakers to reject policies that would limit which bets they can facilitate and where they can offer them. They have already gained the full backing of the CFTC and White House.
“We believe these groups have the balance sheets to sustain prolonged political influence and lobbying efforts,” Citizens analyst Jordan Bender told Sportico, adding that he thinks only courts, not Capitol Hill or statehouses, can ultimately slow the growth of prediction markets.
Chris Grove, analyst and partner at Eilers & Krejcik Gaming, agreed that prediction markets have an edge. “When it comes to Congress,” he wrote in an email, “the safest bet is always that the status quo will persist.”
Kalshi shelled out at least $1 million on lobbying last year—a record for the eight-year-old company. Just two casino and gambling organizations, the American Gaming Association and Gila River Indian Community, hit that threshold on the most recent casino and gambling industry lobbying expense list available on OpenSecrets, from the 2024 election cycle.
Meanwhile, Mansour and Kalshi have sharply increased donations to local and national lawmakers over the past year, records show.
This administration is actively opposed to Virtue. Kentucky’s position here is obviously a bit more interesting than Minnesota, Rhode Island, and Illinois because it’s deep red, pitting local Republicans against the administration. Should be interesting to watch…