CFTC abruptly cancels prediction markets roundtable: Unraveling the chaos
Union State Address: CFTC Aborts Roundtable; MGM Confesses to Misdeeds in Illicit Bookmaking Scandal,Plus More
The gaming world has been thrown into disarray as the US Commodity Futures Trading Commission (CFTC) abruptly calls off a highly-anticipated April 30th forum on balanced regulations for sports event contracts in prediction markets.
In recent months, platforms like Kalshi, Robinhood, and Crypto.com have stormed the industry with the rollout of event contracts on sports. The trickle-down effect has been significant - Kalshi's trading volume during March Madness eclipsed $500 million (£375.1 million/€439.5 million), and the growing website has managed to nibble away at traditional sportsbooks' market share.
However, on April 24th, the CFTC dropped a bomb, cancelling the event without setting a new date. A CFTC attorney merely hinted that "more details will be provided when available."
Legal limbo for prediction markets
The reasoning behind the sudden postponement remains unclear, with the CFTC sending stakeholders into a frenzy as they dig for answers in the chaotic final days of the week. Over the past month, sports event contract platforms have been at the receiving end of numerous cease-and-desist orders, as the controversy over federalism versus states' rights continues to smolder.
Kalshi has fired back by filing lawsuits in several key jurisdictions, such as Nevada, where a district court granted the company a preliminary injunction enabling it to keep operating within the state. Kalshi has also taken legal action in New Jersey and Maryland. On the other hand, a handful of states have issued cease-and-desist orders since the onset of March Madness.
Originally scheduled to untangle a complex web of issues related to the derivatives market on sports-related securities, the roundtable was slated to serve as a "necessary first step" to establish a "holistic regulatory framework" for thriving prediction markets, as per CFTC Interim Chair Caroline Pham's remarks in February.
Industry players express their disappointment
In light of the February memo, the CFTC has identified several other challenges to achieving balanced regulation, including but not limited to the Commerce Clause, state regulatory schemes, preemption doctrines, tribal sovereignty, and other federal laws applicable to sports betting. Since then, the Trump administration has nominated former CFTC Commissioner Brian Quintenz to lead the agency. As of now, Quintenz serves as a director on Kalshi's board.
Industry insiders describe the sudden delay as "disappointing," expressing hope that it's not a "permanent one." "A forum like this was an opportunity for stakeholders to share their views openly and for CFTC commissioners to gather essential information so they can make informed and balanced decisions," a leading industry lobbyist told our platform on Friday.
Colorado targets free bet deductions
Over the past few months, numerous states have been mulling over proposed legislation aiming to increase tax rates on operator revenues from sports wagering. Now, as the NBA Playoffs gain momentum, Colorado is introducing a twist: HB 25-311 seeks to eliminate a deduction used by commercial sportsbooks to lower their tax liability. In calculating net sports betting proceeds, operators can currently deduct all payments to players, all federal excise taxes, and a percentage of free wagers made by customers. The new bill would eradicate the deduction for all free bets.
Under Colorado law, operators are allowed to deduct up to 2% of free bets in fiscal year 2025-26. The deduction is set to drop to 1.75% in the following fiscal year. But if the bill is signed into law, the deduction will be done away with by September 1, 2025.
RWLV appoints compliance chief amid legal challenges
Resorts World Las Vegas (RWLV) has tapped Jennifer Roberts as Chief Compliance Officer, enriching its executive team as the embattled casino tackles a major turnaround. An adjunct professor at the UNLV William S. Boyd School of Law, Roberts' responsibilities will encompass anti-money laundering (AML), responsible gaming, and technical compliance, among other duties[1].
The hire comes weeks after the Nevada Gaming Commission (NGC) authorized a $10.5 million settlement against the casino for several AML deficiencies. RWLV admitted no wrongdoing at the March hearing. As a seasoned gaming attorney, Roberts has held a series of prestigious positions since the 2018 PASPA decision. Most recently, she served as Vice President and General Counsel at WynnBet, overseeing compliance operations and developing reporting systems across various jurisdictions. Prior to joining WynnBet, she served as Director of Sports Gaming Regulation for the Tennessee Education Lottery Corporation.
"I want to thank the leadership team for this opportunity and look forward to working closely with them as we build on the significant progress already made," Roberts stated in a release.
South Carolina deliberates sports betting legislation
On April 22nd, a committee in the South Carolina House of Representatives convened for two hours to discuss several gambling-related bills, including H3625, otherwise known as the South Carolina Sports Wagering Act. This bill imposes a 12.5% privilege tax on sports betting revenues, with the potential to generate up to $31.3 million in revenue for the state in fiscal year 2025-26, according to the South Carolina Revenue and Fiscal Affairs Office. Despite the hearing, the committee adjourned without taking a vote.
A group of religious organizations, including the South Carolina Baptist Convention and the Roman Catholic Diocese of Charleston, submitted a joint letter to the South Carolina General Assembly, urging lawmakers to reject all three bills. The authors cited a study from UCLA which suggested that the legalization of sports betting increases the likelihood of a household declaring bankruptcy by 25-30%.
While sports betting has experienced robust growth in Tennessee, it has largely floundered in the Southeast and Gulf Coast regions. Already this year, an eleventh-hour attempt to legalize sports betting in Georgia has once again failed, while a Mississippi bill on mobile sports wagering has died in committee. Sports betting remains a distant possibility in Alabama.
South Carolina Governor Henry McMaster has pledged to veto any bills that aim to legalize sports wagering across the state.
UN report sheds light on organized crime ties to online gaming
A United Nations Office on Drugs and Crime (UNODC) report with a 81-page length highlights the expanding influence of criminal syndicates in southeast Asia and their connection to the world of online gaming[4]. The report discusses the myriad ways these enterprises, supported by underground banking and cryptocurrency laundering, have fueled financial losses in recent years.
White-label online gambling websites, for instance, employ sophisticated methods like fake tournaments, in-game transfers, and illegal wagers to camouflage funds. In the US alone, law enforcement attributed more than $5.6 billion in financial losses to crypto schemes in 2023. Although this is a fraction of the estimated $37 billion in losses in east and southeast Asia, it's a significant number nonetheless.
Preparations underway for 2026 World Cup
Following a Federal hearing on Capitol Hill in December, US Senators Marsha Blackburn of Tennessee and Catherine Cortez-Masto have called on the Justice Department to examine the relationship between organized crime and illegal sports betting ahead of the 2022 FIFA World Cup tournament. A UNODC study revealed that in 2014, criminal syndicates laundered about $140 billion through illicit and unregulated sport betting. The senators believe that this figure has likely increased by now.
Moving forward, the UNODC recommends regulatory enhancements focused on money laundering, virtual assets, and online gaming oversight, with regular reviews and reforms. It also calls for stronger international collaboration and tightened oversight of investments in high-risk areas like special economic zones.
In other news
- Genius Sports announces expanded partnership with the NCAA through 2032.[6]
- Ontario igaming revenue reaches C$3.20 billion in 2024-25.[7]
- Las Vegas Sands abandons bid for New York casino.[8]
- MGM admits to wrongdoing in illegal bookie case as Nevada regulators approve $8.5M settlement.[9]
- Caesars CEO Reeg: Relationship with Icahn on solid footing as company considers digital spin-off.[10]
- Waterhouse VC: The difference between average punters and sports betting experts.[11]
- Michigan igaming revenue hits record $260.5 million in March.[12]
- Massachusetts sports betting revenue falls to a six-month low in March.[13]
- Bally's files prospectus for new Chicago IPO program geared towards city and state residents.[14]
- Tennessee sports betting handle rises to $548.6 million in March.[15]
- The sudden cancellation of the CFTC's roundtable, scheduled for April 30th, has left stakeholders in the sports event contract platforms industry in a state of uncertainty, resulting in a frantic search for answers to unravel the chaos that ensued.
- The Colorado legislature, with HB 25-311, aims to eliminate a deduction used by commercial sportsbooks to lower their tax liability, potentially altering the financial landscape of this sector.
- As Resorts World Las Vegas (RWLV) navigates regulatory challenges, it has appointed Jennifer Roberts as its Chief Compliance Officer, tasking her with responsibilities including anti-money laundering, responsible gaming, and technical compliance.
- Offering a stark contrast to the chaotic climate in the United States, the sports betting market remains a distant possibility in states like Alabama, while South Carolina deliberates on proposed legislation, such as the South Carolina Sports Wagering Act, aiming to legalize and regulate this sector.
