The Bulletin Board
THE LEDE: CFTC issues prediction market guidance; begins rulemaking process.
ROUNDUP: A look at the stories you may have missed.
PREDICTION MARKET ROUNDUP: PM-focused news.
AROUND the WATERCOOLER: Prediction markets have gone from 0 to 100.
STRAY THOUGHTS: The poker player’s mindset.
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The Lede: CFTC Issues PM Guidance and Begins Rulemaking Process
While court cases are bogged down in legal procedure (and becoming nearly impossible to keep up with given Kalshi is involved in legal battles with 13 states), things are moving at a breakneck speed on the prediction markets front.
The biggest news last week was the U.S. Commodity Futures Trading Commission (CFTC) issuing an advisory from its Division of Market Oversight (DMO) addressing the regulation of prediction markets, including sports-related event contracts.
Chairman Michael Selig has been hinting at new guidance and rules, and as Lydia Beyoud noted, the speed this process is happening is unprecedented:
The guidance affirms that the CFTC has sole authority over these contracts under the Commodity Exchange Act (CEA). However, the advisory emphasizes that prediction markets need to abide by existing CFTC rules including Core Principle 3, which prohibits listing contracts readily susceptible to manipulation.
That said, the guidance, and subsequent comments by Chairman Selig, stress that exchanges serve as the “first line of defense” against manipulation and insider trading. “I think it’s more of a free-market approach than the Biden administration but we’re certainly going to have our exchanges as the first line of defense as our statute requires,” Selig told CNBC.
Here are the key points on sports contracts from the guidance:
“Sports-related event contracts and event contracts more generally have often been shown to be consistent with DCM Core Principle 3 where the settlement outcome depends on the aggregate performance of multiple participants over an extended period of play.”
“DCMs are encouraged to consider whether certain categories of event contracts create a heightened potential for manipulation or price distortion. For example, in the context of sports-related event contracts, such contracts could involve those that resolve or settle based on injuries to individual sports participants, unsportsmanlike conduct, or physical altercations between sports participants, as well as contracts that resolve or settle based on the action of a single individual or a small group of individuals, such as officiating actions occurring during a sporting event.”
In essence, most traditional sports bets are acceptable, but the CFTC has questions about props, particularly niche ones.
Recommendations from the CFTC include:
More detailed self-certification submissions, that avoid vague or overly broad statements.
Before self-certifying markets, exchanges are encouraged to engage with sports leagues, governing bodies, and integrity monitoring organizations for information sharing and oversight.
Reliance on official league data for contract settlement.
Cooperation with leagues on investigations into potential manipulation or insider trading.
The CFTC rulemaking process includes a 45-day window for public comments on the CFTC’s Advanced Notice of Proposed Rulemaking (ANPRM), which includes over 150 questions. STTP Thoughts: I expect the number of comments submitted to break some kind of record, too.
Here are the ones I find the most interesting (edited down for length).
DEFINING GAMING: What factors should the Commission consider in determining the scope and public interest implications of this activity?
a. What sources should inform the Commission’s determination of the scope of the term “gaming”? For example, is gaming synonymous with, or more or less extensive than, the scope of activities covered by State and Federal gambling statutes? Are there characteristics – such as an entertainment purpose, or an element of chance – that distinguish gaming from other activities?
b. In this regard, how should the Commission distinguish between various types of contests? For example, should a sports competition be treated differently than an award competition, and if so, what factors support this distinction? What other types of contests should or should not be considered to be gaming?
c. What aspects of event contracts involving gaming should the Commission consider in a public interest determination?
e. What aspects of responsible gaming standards, such as self-exclusion programs, monetary or time limits, or advertising limits, disclaimers, or warnings, should the Commission consider in its public interest determination?
INSIDER TRADING: Is there some public interest utility if people with an asymmetric information advantage on a particular event contract are able to trade on prediction markets? Does the public interest utility depend on the type of event in question? What factors should the Commission consider in evaluating and balancing the public interest in this scenario?
MARKET MANIPULATION: Some events underlying event contracts are under the control of a single individual or small group of individuals. What role should this aspect of event contracts play in the Commission’s consideration of how prediction markets should be regulated? Do the considerations change depending on the type of event in question? Are there particular challenges related to cross-market manipulation – for example, where an individual or small group of individuals seeks to move the prediction market to influence another market, or vice versa? Are prediction markets more likely than other DCMs or SEFs to be susceptible to manipulation? Why or why not?
DEFINING SWAPS: What aspects of prediction markets are relevant to whether event contracts should, or should not, appropriately be classified as swaps? What aspects, if any, distinguish event contracts from other types of swaps? The definition in CEA section 1a(47)(A)(ii) includes an event contract that “is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.” What potential financial, economic, or commercial consequences underlie event contracts?
MARGIN TRADING: Currently, event contracts are fully collateralized. What factors should the Commission consider in determining whether prediction markets should be permitted to offer trading on margin, and should such factors be different for retail as opposed to institutional customers?
Final Thoughts: Yes, the CFTC is pro-prediction markets, but the guidance and questions point to the CFTC having some serious reservations about the current, (nearly) anything goes, environment. This is a good first step, but until I see real changes, I’ll remain a little skeptical.
Roundup: So Much News; So Little Newsletter Space
Virginia online casino bills officially dead for 2026 [NAAiG Press Release]: As STTP reported last week, the writing was on the wall for Virginia’s online casino bills when a separate bill to create a single gambling regulatory body failed, and now its official, as the legislative session has come to an end. National Association Against iGaming spokesman Oliver Barie (Podcast episode #76) said in a statement: “Virginia lawmakers made the right decision today by rejecting the expansion of online casino gambling… We thank the legislators who chose to protect Virginia and rejected the expansion of this harmful policy.” For supporters, it will be back to the drawing board in 2027, as they try to build off this year’s momentum.
Next.io speakers tease online casino efforts in New York [Covers.com]: “Multiple speakers at a gaming industry conference this week expressed cautious optimism that legal real-money digital slots and table games could be coming to the Empire State.” Covers.com’s Ryan Butler referenced statements from Seneca Niagara Casino COO Kimberlee Dunlop, who said “her property was preparing for legal iGaming within the next five years,” and “Caesars Digital president Eric Hession said he believes potential tax revenues could spur iGaming growth.” STTP Thoughts: New York still feels like it’s several years away from a serious online casino effort.
Tilman Fertitta puts in $7 billion offer for Caesars [Reuters]: As reported earlier this month in E+M, “Caesars Entertainment could be the subject of a bidding battle, with Tilman Fertitta among those considering an approach to the Las Vegas and regional casino giant.” Now from Reuters, “Billionaire Tilman Fertitta has been in exclusive talks to buy Caesars Entertainment for roughly $7 billion after he topped a competing offer from Carl Icahn’s firm, the Wall Street Journal reported on Wednesday, citing people familiar with the matter. Fertitta’s company, Fertitta Entertainment, has been discussing paying around $34 a share for the gaming company, the report said.”
MGC moves on from GameSense with PlayWell rebrand [Presentation]: As STTP noted in November, when the first kernels appeared, the Massachusetts Gaming Commission has decided to move on from GameSense. The MGC announced a complete rebrand on Thursday, PlayWell, which will debut on March 27. It appears the Massachusetts Council on Gaming and Health won the bid. According to the presentation, PlayWell allows the MGC to 1) Develop our own voice for player health & responsible gaming. 2) Adapt and evolve messaging quickly. 3) Retain 100% control of how the brand is used across gaming platforms.
Indiana Governor signs sweepstakes ban bill [Casino Reports]: “Indiana became the latest state to ban sweepstakes casinos Thursday after Gov. Mike Braun signed HB 1052 into law.” Despite the passage of the bill, the Social Gaming Leadership Alliance (SGLA) said it would continue to work on a bill regulating sweepstakes sites next year: “Despite the outcome, the legislative record shows meaningful bipartisan support for a smarter approach that embraces innovation and economic growth,” SGLA Executive Director Sean Ostrow said in a statement. “We look forward to continuing to work with Indiana lawmakers on a regulatory framework for digital entertainment that protects the hundreds of thousands of Hoosiers that enjoy Social Plus games, while generating tens-of-millions in annual tax revenue.”
Brazil’s President is not a fan of online gambling [Gaming&Co]: Brazil President Luiz Inácio Lula da Silva said that he will “work with the Congress and put an end to virtual casinos” and ban online betting in a recent speech where he criticized the legalization of online sports betting and gaming in January 2025. “Let’s work together, uniting the government, Congress and the judiciary, so that these digital casinos don’t continue to indebt families and destroy homes,” Lula said. Recall that before the industry launched, Lula issued a warning to online gambling operators: “If regulation doesn’t work, I won’t hesitate in putting an end to (betting) definitively.”
Lodge Card Club raid update [Poker.org]: Poker.org managed to get a statement from the Texas Alcoholic Beverage Commission on its recent raid of the Lodge Card Club STTP reported on last week: “Agents of the Texas Alcoholic Beverage Commission’s Financial Crimes Unit, along with members of the Special Investigations Unit and Operations Bureau, executed a search and seizure warrant at Lodge Card Club in Round Rock on March 10 in conjunction with an ongoing investigation into suspected money laundering and illegal gambling… Approximately 20 TABC agents were involved with the operation along with officers from the Williamson County Sheriff’s Office and the IRS. No arrests were made as part of Tuesday’s operation, and the investigation remains ongoing. No charges have yet been filed against the business.”
Prediction Market News Roundup
CME CEO calls for clearer rules on prediction markets [Reuters]: “CME Group Chief Executive Terry Duffy said in an interview that the ‘lines have become blurred’ between swaps, which let investors hedge risk, and products that are essentially bets.” Duffy said “clearer laws [are] needed to distinguish outcome-based contracts and gambling,” and “If you would have said that the outcome of a game has an economic impact to the vendor who sells beer because he’s going to sell more beer if it’s a good game, or less if it’s a bad game, you could actually make an economic cause for putting a swap on their contract. But to say that a player is going to get four rebounds and not five, I’d have to ask, what’s the economic sense in that?”
PGA Tour in holding pattern on prediction markets [Front Office Sports]: “The PGA Tour is comfortable waiting for the dust to settle on prediction markets before getting formally involved with the companies that have thrown the sports betting industry into a tailspin. “‘Sports betting was going to happen either way. I don’t think we necessarily believe prediction markets are going to happen either way—yet,’ PGA Tour VP of gaming Scott Warfield said when asked by Front Office Sports during a roundtable decision at the Players Championship. ‘I think that’s being figured out in the courts as we speak.’” Previous STTP Reporting: here is where the other leagues stand on prediction markets, Are sports leagues cozying up to prediction markets?
Bill bans prediction markets on war, death, and assassination [Press Release]: US Rep. Mike Levin and Sen. Adam Schiff introduced the Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems Act, (DEATH BETS Act) last week. “Betting on war and death should be illegal. While federal law prohibits prediction market contracts on terrorism, war, and assassination, there are still gaping holes that allow traders to profit off death. The result is a system with nothing standing between a prediction market and a contract that lets someone make money off the outbreak of war or the deaths of American service members. We already saw what that looks like: over half a billion dollars was wagered on the timing of U.S. military strikes on Iran alone. That is unacceptable, and this legislation puts a stop to it,” said Rep. Levin.
Blumenthal reveals prediction market bill [Press Release]: After teasing it several weeks ago, Connecticut Sen. Richard Blumenthal has introduced a bill titled, The Prediction Markets Security and Integrity Act of 2026. The bill, per its summary, would “provide national safeguards to prevent manipulation and insider trading, stop underage use, set standards on the use of A.I. and other consumer protection matters, address addiction, and return oversight to states.”
Another day another lawsuit against a state from Kalshi [Yahoo Finance]: Kalshi will be fighting on yet another front after it filed suit against Iowa: “Prediction market giant Kalshi filed a federal lawsuit Wednesday in the Southern District of Iowa, seeking to bar Iowa Attorney General Brenna Bird and the state’s gaming regulators from enforcing Iowa gambling laws against the company’s federally regulated exchange.” As Daniel Wallach noted on X (and as I’ve said in the newsletter) sue first and ask questions later: “A dozen states in, and the newbies still haven’t figured out that you should just file a civil enforcement action in state court (where the states are 3-0 vs. PMs). No cease and desist letters, no meetings, no questions, no tweets. Just sue.”
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Around the Watercooler
Social media conversations, rumors, and gossip.
This is an interesting statistic; it’s almost as if prediction markets started offering a category in 2025 that required a ten-fold increase in contracts.
Stray Thoughts
As a former professional poker player I can relate to the following tweets.
I’ve discussed this in the newsletter, and on several podcasts, but it took me a long time to repress the poker player mindset that allows you to perform well at the tables, but makes everyday interactions extremely difficult (why aren’t people understanding the logical points I’m making!).