- Prediction market regulation was discussed for over two hours in Wednesday’s U.S. Senate subcommittee hearing.
- Senator John Hickenlooper and AGA President Bill Miller declared the CFTC as incompetent for regulating prediction markets.
- Prediction markets advertising to children was another point of discussion, which reminded people that Kalshi sponsored a 15-year-old streamer.
WASHINGTON – Wednesday’s U.S. Senate subcommittee hearing titled “No Sure Bets: Protecting Sports Integrity in America” was a lopsided battle between those speaking against and in favor of prediction markets. Those wanting more regulation for prediction markets included witnesses like American Gaming Association (AGA) President Bill Miller, Tennessee Sports Wagering Council Executive Director Mary Beth Thomas, and many senators that spoke in the hearing.
The action began with Senator John Hickenlooper stating that the CFTC has no experience regulating sports betting and only serve as a way to get around legal sports betting regulations at the tribal and state level. Bill Miller added on by stating that prediction market operators are “not competent in handing this and they are absolutely hurting tribes and states financially.”
Patrick McHenry, who represented The Coalition for Prediction Markets, stood as a one-man army against an onslaught of criticism towards prediction markets and CFTC regulation. The conversation then shifted towards the regulation differences between sportsbooks and prediction markets despite their similarities.
Senator Baldwin asked Mr. Miller how tribal betting regulatory framework compares to prediction market platforms that offer essentially identical products. He explained that tribal gaming is one of the most highly regulated industries in the country through state and tribal governments, which “stands in quite contrast with the prediction markets that are now entering into really every state, including those that Senator Curtis mentioned, in Utah and Hawaii, who have chosen not to have gaming, either tribal or commercial.”
Then, Mr. McHenry was asked if prediction markets would be willing to follow a similar regulatory framework as tribal gaming, to which he replied “They are fundamentally different products and fundamentally different business models.” Senator Baldwin kept asking McHenry to deliver a yes or no answer, but he only said “they are willing and do submit themselves to state reviews just like everyone else that is regulated by the CFTC, including other financial products,” and then said that prediction markets are federally regulated.
Miller chimed in by saying “At the end of the day, [prediction markets] are running sportsbooks at the national level without any of the regulatory constraints or frameworks. He mentioned earlier that tribal operations go through numerous state regulation and come to an agreement with states through a tribal gaming compact, while prediction markets step in without regulation outside of the CFTC.
McHenry Denies Knowledge Of Kalshi Promotion With 15-Year-Old
One of the main topics of conversation surrounded advertising to children and protective measures to prevent underage gambling. More specifically, Chairman Marsha Blackburn addressed sports betting and prediction market advertising on social media platforms like TikTok, which would be banned under a recently introduced bill that bans betting ads targeting children.
Senators addressed the desire for more regulation during Wednesday’s hearing, including Senator Cantwell who brought up that Kalshi partnered with a minor to promote their brand. McHenry denied that prediction markets advertise to minors and claimed he had no awareness of the incident where Kalshi recruited a 15-year-old, despite it being covered by the Wall Street Journal and the partnership quickly being terminated after.
Chairman Blackburn closed the meeting by stating that “This does allow us to start to build where we should move in regulation, and also looking at the division between what should be federal and what should be state and preserve ring those state rights in order to move forward with this.”
