Boom Or Bust
Is the threat posed by prediction markets over- or understated? That depends on the answer to one specific question.
Prediction markets spark debate: existential threat or niche product? Canada eyes British Columbia. Texas, NJ, others target sweepstakes bans. CFTC oversight in flux.
The Bulletin Board
THE LEDE: Sizing Up the Prediction Market
OpportunityThreat.VIEWS: Who will be the next Canadian province to look at regulated gaming?
NEWS: Texas is the latest state to go after sweepstakes (maybe?).
BEYOND the HEADLINE: Checking in on sweepstakes bills across the country.
WAY BEYOND the HEADLINE: Texas Lottery gets a slight reprieve.
AROUND the WATERCOOLER: Support Straight to the Point.
STRAY THOUGHTS: “For useless twisting of our new technology…”
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The Lede: How Big Is the Prediction Market Threat?
Now that the legal wranglings have quieted down, there’s an opportunity to take a more nuanced look at what Kalshi is offering and contrast that with the existing regulated market.
The flood of news on the prediction market front didn’t leave much room for in-depth discussion, let alone speculation. Like Sammael in Hellboy, before you could hit publish on the latest development, two more developments had spawned in its place.
The biggest question everyone is trying to wrap their head around is: How big is the threat? I’ve been touching on the opportunity of prediction markets for several weeks, highlighting the bearish views of some in the gaming industry.
Peter Jackson, Flutter CEO:
“The Betfair Exchange has, for many years, given us very good insights in terms of how this stuff can play out. I think, it tells us that you've got to be quite thoughtful about how exciting the exchange product can be when you have a fully-fledged sports betting product available to you.”
Jay Snowden, PENN CEO:
“There's a lot going on right now in prediction markets as to federal regulations versus state-level regulations. It is interesting. It does exist, as you guys know, and has for a long time over in Europe. I think it is definitely more of a niche market for a variety of reasons.”
Others see a bigger threat.
Bryan Newland, former President of Bay Mills Indian Community, recently warned in Native News Online and on the Indian Gaming Association New Normal Webinar series this week that being able to offer sports markets to 18+ year-olds in 50 states is a huge competitive advantage and an existential threat.
Newland also said in his Native News Online guest column:
“The prospect of Wall Street companies reaping billions of dollars in profits from nationwide internet gaming without any licensing, regulation, or taxes poses an enormous challenge to the tribal gaming industry. The size of this challenge depends on whether these contracts are deemed to be “gaming” by the CFTC, and whether the NIGC weighs in.”
But that intervention may be irrelevant — Recall that STTP has also questioned the CFTC’s ability and desire to wade into oversight of 50-state, unfettered sports betting..
As Citizens Chris Lynch said on X, “Don't worry, there aren’t billions of dollars of profits from a 2.5% margin product.” And as I said in response on X, people are way overshooting this opportunity, at least at present.
The opportunity comes down to one all-important question, which was perfectly stated by Barry Jonas of Truist Securities (h/t Front Office Sports):
“There’s no question that Kalshi’s sports offerings look like sports betting, but ultimately, the question is whether the difference between Kalshi and regular sportsbooks is meaningful or just technical, according to Barry Jonas, senior gaming analyst at Truist Securities.”
This is the question.
If the difference is technical (a legal technicality), and Kalshi can offer parlays and SGP products, then Kalshi et al. are an existential threat to the current sports betting model and the entrenched sportsbooks.
If the difference is meaningful (sports contracts offered through prediction markets are sports betting-lite), then the threat is significantly reduced, and more along the lines of DFS 2.0 — a threat to revenues for sure, but not an existential one.
And because that possibility exists, tribes, commercial sportsbooks, and states should consider prediction markets an existential threat, even if the “are prediction markets an existential threat to licensed sportsbooks” market on Kalshi would trade in the single digits.
A little bonus content: During the introduction of yesterday’s new normal webinar, Jason Giles noted that while he was up on Capitol Hill, he asked Sen. Chuck Grassley about the CFTC situation surrounding Kalshi (Grassley is a member of the Senate Agriculture, Nutrition, and Forestry Committee, which has congressional oversight of the CFTC). According to Giles, neither Grassley nor his staff were aware of what was going on.
Giles also noted he was previously pessimistic about Congress moving on this issue, but added that the more they (congressional members) hear about it, the more eyebrows get raised.
And speaking of the CFTC, the makeup of the five-member commission is in a state of flux and down to just three Commissioners, with Trump nominee Brian Quintenz yet to be confirmed:
Views: Is British Columbia Next?
Alberta is on the verge of joining Ontario as a regulated online gambling market, and now operators have turned their attention to British Columbia, another Canadian province that has a thriving gray market competing with its lottery-run monopoly on online gambling.
Per Geoff Zochodne at Covers, COGA is a non-profit trade group that, according to the B.C. lobbyist registry, “the alliance's affiliates include companies connected to Entain PLC (a joint owner of BetMGM), bet365, and online gambling technology company Apricot (which has ties to Betway-owner Super Group).”
As Zochodne notes:
“B.C. lobbying records suggest conversations about adding some private-sector competition to the mix have happened this year. Those records also highlight the industry's interest in opening up Canada’s third-most populous province.”
“Our objective is to engage British Columbia policymakers in a discussion about benefits of a proper regulatory regime that channels the vast majority of online play through a regulated model rather than the sliver of activity captured by the monopoly-only system,” said Troy Ross, president of TRM Public Affairs, on behalf of the Canadian Online Gaming Alliance (COGA).
Another province to watch is Nova Scotia, which has expanded gambling recently.
After legislative approval in February 2021, the Atlantic Lottery Corporation (ALC) launched Nova Scotia’s first legal online casino in July 2022. The ALC's first online platform was launched in New Brunswick in 2020.
Neither province, Nova Scotia nor New Brunswick, has had any official discussion or legislation proposed, but STTP has been told there have been some preliminary talks.
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News: Texas Bill Targets Sweepstakes
Legislation in Texas that would (seemingly) prohibit sweepstakes sites and increase penalties for violations has passed the Senate and has moved over to the House (h/t Sweepsy.com).
SB 517 doesn’t specifically mention sweepstakes (neither did Montana’s bill, see below), but seems to target these sites, as it reads in part:
"Gambling device" means any device that for consideration affords the player or user of the device an opportunity to obtain any thing of value, the award of which is determined solely or partially by chance, even though accompanied by some skill, whether or not the prize is automatically paid by the contrivance.
The term includes a gambling device version of bingo, keno, blackjack, lottery, roulette, video poker, or similar electronic, electromechanical, or mechanical games, or a facsimile of any of those or similar games, that operates solely or partially by chance. (9) "Thing of value" means any property, money, right, privilege, or other benefit, including a gift card or any other representation of value redeemable for any property, money, right, privilege, or other benefit.
Beyond the Headline: Current Status of Sweepstakes Bills
Here’s a quick rundown of other anti-sweeps efforts.
Legislation Passed
Montana: The Montana legislature passed SB 555 last week and now awaits the signature of Gov. Greg Gianforte. The bill prohibits “online casinos, by whatever name known, which constitute internet gambling and therefore are prohibited. This includes but is not limited to any platform, website, or application that knowingly transmits or receives gambling information, allows consumers to place a bet or wager using any form of currency, and makes payouts of any form of currency.” 100% free-to-play casinos are exempt.
Active Legislation
New Jersey: A 5196, filed by New Jersey Assemblyman Clinton Calabrese, a bill to legalize and regulate sweepstakes as online gambling operators has been replaced by A 5447, which would “prohibit sweepstakes model of wagering” and “establish new penalties for unlawful gambling operations and practices.” The bill passed the Assembly Tourism, Gaming, and the Arts Committee on May 8, 2025.
Connecticut: SB 1235 would ban sweepstakes, lottery courier services, and certain sports wagers. The bill has passed two committees and can now be heard on the Senate floor.
New York: New York has two sweepstakes prohibition bills. S 5935, sponsored by State Sen. and Senate Racing, Gaming and Wagering Committee Chair Joseph Addabbo Jr., and a companion bill, AB 6475, from Addabbo’s counterpart in the House, Assemblywoman Carrie Woerner. Addabbo’s bill has passed the Senate Racing, Gaming and Wagering Committee and can now be heard on the Senate floor.
Nevada: While not specifically about sweepstakes, SB 256 would forfeit all profits, gains, gross receipts, or other benefits relating to illegal gaming activities, increase criminal penalties, and extend liability outside Nevada’s borders.
Illinois: A pair of bills in Illinois would prohibit online sweepstakes. SB 1705, sponsored by Sen. Bill Cunningham, “would amend the state’s criminal code to address two key areas: making video sweepstakes machines that are routinely found in jurisdictions that opted out of offering VGT play illegal as well as banning online sweeps.” The second bill, Rep. Bob Rita’s HB 2879, also targets illegal gaming.
Louisiana: SB 181, would amend Louisiana’s laws to include: “Any game, contest, or promotion that is available on the internet or accessible on a mobile phone, computer terminal, or similar access device that utilizes a dual-currency system of payment allowing the player to exchange the currency for any prize or award or cash or cash equivalents.” The bill has passed the Senate.
Failed Bills
Mississippi: SB 2510 would prohibit sweepstakes online gambling sites. The bill passed the Senate and the House, but the House added language authorizing mobile sports betting, forcing a conference committee, where the legislation died.
Maryland: SB 860 “proposes the license denial and/or license revocation of any person or entity that supports or promotes the operation of online sweepstakes games,” including suppliers and affiliates. After unanimously passing the Senate, it died in the House.
Florida: Legislation in Florida would have extended the state’s prohibition on gambling to include online betting. The bills, SB 1404 and HB 953, broadly define internet gambling and cover operators, vendors, suppliers, payment processors, and media affiliates in what appears to be an effort to cover sweepstakes gambling sites. After passing a couple of committees, the legislation died.
Arkansas online casino bill targets sweepstakes: HB1861 sought to legalize online casinos and, at the same time, prohibit sweepstakes. The bill was eventually pulled by the sponsor.
Way Beyond the Headline: Texas Lottery Appears Safe
As reported earlier this week, Texas State Sen. Bob Hall introduced SB 1988, which would repeal the Lottery Act and end lottery operations by January 2026.
Hall has had a slight change of heart and has introduced a new bill, SB 3070, that would abolish the Texas Lottery Commission and shift oversight of the state lottery to the Texas Department of Licensing and Regulation.
“If there isn't enough of an appetite to get rid of the lottery outright, then this bill represents the next best thing,” Hall said during a Senate State Affairs hearing on Monday.
Hall has not had a change of heart on online sales, as SB 3070 prohibits couriers and online sales.
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