New Bill Seeks to Define Prediction Markets as Gambling

A new bill has been filed in the United States Senate that is looking to outright define prediction markets as gambling, potentially ending an ongoing legal debate over the status of these markets.

Utah Senator Wants to Designate Prediction Markets as Gambling

Specifically, the bill, backed by Utah Republican Sen. John Curtis, seeks to muster the support necessary to push through the issue. If he succeeds, this would be a major coup for anti-prediction market advocates who have specifically criticized sports event contracts.

New York Attorney General Letitia James has called the sector “quintessentially gambling,” and her office filed on Tuesday two complaints against Gemini and Coinbase’s prediction market affiliates.

Sen. Curtis’ bill is called “The Prediction Markets are Gambling Act,” launching a challenge to any alternative definition of the sector and attempting to pursue the financial instruments angle. 

“This is an issue that’s just kind of coming into consciousness for people. My other co-sponsors and I were not really trying to solve all of the problems with predictive markets. We’re narrowing in on a slice of it with this bill,” Sen. Curtis explained. 
The bill specifically wants to prohibit any “sporting and casino-style event contracts,” as per the official filing, and it goes further to define those. 

Sen. Curtis has acknowledged the recent heightened interest in trying to regulate the sector in various forms, with some lawmakers opposing the market’s right to exist less, but arguing that it needs stricter regulation around it. 

Lawmakers Are Aware They Need to Do Something about These Companies

Giving prediction markets a status of gambling could be difficult, though, as the Commodity Futures Trading Commission has already objected to gaming regulators from various states trying to preempt its right to regulate trading products. 

In fact, the CFTC has pursued a legal course of action of its own against Arizona, Illinois, and Connecticut, and may further expand this list. 

On the other hand, Sen. Curtis’ bill stands to reason, if it is carefully implemented to only target sports event contracts, which have come to resemble traditional sports betting markets (which the platforms themselves vehemently deny). 

The case grows even more confusing when you consider the fact that sports betting giants themselves are now openly engaging with the sector, and some of America’s largest sports betting companies have already launched prediction market platforms themselves, running in parallel with their mainstay mobile wagering platforms. 

Sen. Curtis’ bill is unlikely to succeed, however, as it offers too extreme a solution, but as the senator himself notes, there is a noticeable scrutiny of the sector.