Fighting a Straw Man
Polling results from Kalshi highlight the broad appeal of prediction markets, but gloss over the billion-dollar question about sports contracts.
The Bulletin Board
THE LEDE: Kalshi polling glosses over sports contracts.
ROUNDUP: MA awards $2.5M gambling study to BU; NH casino gets the go-ahead; Kalshi wins in CA court in tribal lawsuit.
NEWS: MLB and sportsbooks agree to limit certain props; are more coming?
AROUND the WATERCOOLER: Why so serious?
STRAY THOUGHTS: That wouldn’t work “in the street.”
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The Lede: Kalshi Polling Glosses Over the Sports Question
Kalshi commissioned Axis Research to conduct a poll on prediction markets, with the results painting prediction markets in a very positive light, which, as STTP has previously noted, highlights the many (non-sports) use cases for prediction markets.
Per the press release: “Axis Research surveyed 1,219 voters nationwide from September 18-23, 2025, with a proportionate distribution across gender, age, ethnicity, and political affiliation variables.”
“Americans want access to prediction markets reliably regulated by financial experts in the federal government, not 50 different ill-equipped state gaming commissions,” said Sara Slane, Kalshi’s Head of Corporate Development. “American voters want the freedom to choose how to invest their own money without state-level bureaucrats interfering. The current federal regulatory structure is best equipped to oversee this financial activity, not an unpredictable state regulatory patchwork. Kalshi supports this vision — every American, no matter where they live, should be able to make financial decisions for themselves without state casino regulators getting in the way.”
Let’s take a look at the questions Kalshi promoted in the press release:
Freedom to Invest: An overwhelming majority of voters (70%) believe Americans should be able to invest in specific outcomes, such as the outcome of an election or agricultural futures.
Financial Tool, Not Gambling: 89% of voters view the purchase of stocks, mutual funds, and participation in commodities markets as a “financial investment,” rather than as “gambling.”
Federal, Not State Jurisdiction: Voters overwhelmingly say that “Federal Government Regulators” (79%) should have jurisdiction over these activities rather than “State Gaming Commissions” (21%).
Voters Reject Gaming Commission Meddling in Futures: 80% of respondents agree with the statement that “Buying a stock or investing in the future price of wheat is not gambling and should not be regulated by a state gaming commission.”
Notice there is no mention of sports contracts in the highlighted questions, nor any questions asking if the respondents are familiar with prediction markets or explanations of state-level gambling regulations vs. CFTC regulations of sports contracts.
As I said on X, the framing of the questions creates a strawman argument, as they make it seem like state gambling regulators are trying to “meddle” (as Kalshi put it) in stocks and wheat futures:
However, the Kalshi poll did ask about sports contracts (they just didn’t highlight the results in the press release):
“Prediction markets are aggregating information from thousands of individuals to produce a real-time probability of a sports outcome and should be considered analysis more than gambling” (63%).
First, the question doesn’t make it clear that Kalshi is offering sports bets contracts, and “should be considered analysis more than gambling” doesn’t tell us anything about the respondents’ views of the product as gambling, because it can be both things — is more than 51-49 or 90-10?
“Participating in a sports prediction market requires knowledge and analysis similar to financial investing, rather than chance-based gambling” (60%).
Yes, there are skill-based forms of gambling, and sports betting falls into that bucket. Again, this doesn’t tell us anything about the respondents’ views on sports contracts vs. sports betting.
“Sports prediction markets create a public good by producing forecasts useful to the media, leagues, and owners” (59%).
As I mentioned above, this doesn’t tell us much about people’s views.
The bigger issue is that the assumption the polling questions make is a rather large one. Essentially, respondents are informed through the questions themselves that state regulation is messy and federal regulation is tidy, even though we have no idea what, if anything, the CFTC is doing to oversee sports contracts compared to state-level regulations.
But sports betting is different. As Slane herself noted in 2018:
As the Pennsylvania Gaming Control Board told the CFTC in a letter:
“With all due respect to this body, it would take years for the CFTC to create the regulatory system and oversight that state gaming authorities have in place, and, were you to do that, it would create a redundancy to something that already exists and works exceptionally well.”
As I outlined in the newsletter back in May, the CFTC and its 600-something employees haven’t demonstrated anything approaching the oversight needed to regulate nationwide sports betting via prediction markets.
“No matter how on board the CFTC is with sports contracts, one has to wonder if it’s equipped or has the appetite to handle it. Is hiring hundreds of experts to oversee sports contracts, which at the top-end might account for $100 billion of the $300 trillion in trades you oversee, worth it?”
“I asked AI to estimate the total number of regulators and support staff needed to oversee sports betting across the country:
Low-end: 1,000 staff, assuming smaller agencies and minimal tribal/federal involvement.
Mid-range: 1,400–1,600 staff, accounting for 1,200 state staff, 150 tribal, and 50–100 federal.
High-end: 2,000 staff, if larger states have bigger teams, and outsourcing is limited.
“There is obviously redundancy at the state level, but notice that the low-end estimate exceeds the entire CFTC workforce, which is already overburdened in its oversight of the multitrillion-dollar swaps market (the US swaps market’s notional value is likely $250–350 trillion, compared to sports betting’s $200–300 billion in handle).”
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Roundup: A $2.5 Million Gambling Study; NH Casino Gets the Go-Ahead; Kalshi Wins in Court
MGC awards $2.5 million grant to BU to study gambling [Boston University]: “The Massachusetts Gaming Commission has awarded researchers from the Boston University School of Public Health a $2.5 million contract for a far-reaching, three-year study of the social and economic effects of legalized sports and casino gambling in the state.”
Planning Board greenlights $500M Hampton Casino [New Hampshire Public Radio]: The Hampton Planning Board gave final approval last week for a $500 million redevelopment of the Hampton Beach Casino. The current 8,000 sq. ft. property will be transformed into “99 luxury condominiums, a 208-room hotel, 38,500 sq. ft. of retail and restaurant space, a 52,000 sq. ft. charitable gaming casino, and a music and entertainment venue with a 3,500-person capacity. A parking garage with 732 spaces is also part of the plan.”
Kalshi scores a significant victory in court over tribes [SBC Americas]: “In a ruling issued Monday, Judge Jacqueline Corley denied the tribes’ request for a preliminary injunction that would require Kalshi to both geofence tribal lands out of their offerings and prevent them from continuing the ad campaign regarding nationwide sports betting.” As attorney Andrew Kim noted on X, “On the IGRA claim, she holds that the Tribes have failed to show a violation of a Tribal-State compact,” opining that IGRA only applies to what tribes can do. “Judge Corley is also persuaded by Kalshi’s argument that interstate (or in this case, state-to-Indian) gaming issues are governed by UIGEA, not IGRA, and UIGEA carves out trading activity governed by the CEA.”
News: Crackdowns on Prop Bets Intensify
Major League Baseball has reached an agreement with licensed sportsbooks to limit certain types of prop bets:
“Major League Baseball (MLB) announced today the Commissioner’s Office has worked closely with its sportsbook partners to proactively create new safeguards to limit pitch-level markets. Effective immediately, all MLB Authorized Gaming Operators will cap wagers on pitch-level markets at $200 and exclude those bets from parlays.”
Several states have been examining specific types of prop bets, with efforts gaining momentum in the wake of the NBA betting scandals and ongoing investigations in the NCAA.
Colorado was ahead of the game, with regulators rejecting nearly 100 markets that rely on negative outcomes back in 2024:
“The Colorado Department of Revenue’s Division of Gaming has rejected 147 betting markets, nearly 100 of which it says have ‘negative connotations.’
“The vast majority, 96 of the 147 denied wager requests, were removed because they were deemed to be “negative” markets that ride on gamblers betting on something undesirable happening, players failing to hit certain marks or some other negative connotation or impact.
“‘A negative wager is a wager that can be interpreted as having a negative connotation or negative result on gameplay,’ a Division spokesperson told SBC Americas. ‘For example, Over/under for Technical Fouls per player (game/season) or Will a player get ejected from the game? All decisions are made to ensure honesty and integrity in the Colorado gaming industry.’”
Michigan has already taken action following the NBA scandal, with the Michigan Gaming Control Board announcing new regulations aimed at preventing future integrity issues.
Among the new policies:
Mandatory Integrity Monitoring
Review and Approval of Events and Wager Types
Prohibition on Insider Betting
Internal Control Requirements
More importantly, the press release notes that “The MGCB is closely monitoring risks associated with player proposition wagers — bets based on individual player performance rather than game outcomes — which were reportedly exploited in the recent scandal.”
“Certain types of prop bets present a higher risk of manipulation, particularly when tied to insider knowledge or player behavior,” MGCB Executive Director Henry Williams said in the release. “As regulators, we must assess whether current safeguards are sufficient or if additional restrictions are necessary.”
Virginia is considering taking action, per Covers:
“Members of the Virginia Lottery Board met on Thursday and received an update from executive director Khalid Jones that touched on the recent NBA betting controversy and the regulator’s plans in the wake of that scandal… ‘When we feel like we have good information on it, and that’s going to happen quickly, this research, we will move to … potentially restrict certain markets from a sports betting standpoint, particularly with respect to NBA,’ Jones told the board members.”
Nevada also discussed the possibility last week during licensing requests. Per the Las Vegas Review-Journal, the “Nevada Gaming Control Board members sought advice from license applicants about how to prevent cheating resulting from athletic underperformance and how it affects proposition bets.”
“When you read in the press about outlawing prop betting, I think that that’s a negative, because that just pushes people into the black market or the unregulated market,” Joe Asher, president and CEO of Boomer’s Sportsbook, said. “But I do think there’s room for regulation around this, because what is important is that in a given jurisdiction, all of the operators are playing by the same rules, and that the same standards apply to everybody, and that the bet offerings can have some consistency. So there isn’t a fear that, ‘Well, if we don’t offer this but our competitor is, then maybe we’re going to lose business to that competitor.’”
There has also been a call for prop betting bans at the federal level, and there are ongoing efforts in Ohio and New Jersey to limit micro-bets (prop bets).
New Jersey Assemblyman Dan Hutchison introduced A5971, a bill prohibiting micro-bets, earlier this year. More recently, State Sen. Paul Moriarty introduced S4794, a bill that defines a ‘micro bet’ as a proposition bet wagered live during an athletic event and concerning the outcome of the next play or action occurring in the sport or athletic event… such as whether the next pitch in a baseball game will be a strike or whether the next play in a football game will be a pass or run.
Ohio Gov. Mike DeWine is shelving his proposed ban on player props to allow MLB and other leagues to discuss the matter with licensed sportsbooks. DeWine applauded MLB’s decision and is calling on other leagues to do the same:
“I commend Commissioner Manfred, Major League Baseball, and its partners for taking this action to address the problem of micro-prop bets. By limiting the ability to place large wagers on micro-prop bets, Major League Baseball is taking affirmative steps to protect the integrity of the game and reduce the incentives to participate in improper betting schemes. I urge other sports leagues to follow Major League Baseball’s example with similar action.”
The NCAA has long sought to prohibit player props, and the NBA and MLB are collaborating with operators to restrict or prohibit easy-to-manipulate markets.
As ESPN reported last week, the NBA is discussing prohibitions or restrictions on easily manipulable sports betting markets: “Before the season, the NBA identified missed free throws, fouls, and turnovers as types of wagers susceptible to manipulation and asked its partner sportsbooks not to offer those bets, according to the sources.”
Even before the NBA scandal, MLB Commissioner Rob Manfred called federal oversight necessary or somewhat inevitable to ensure the proper safeguards are in place [bold mine]:
“I may be a federalist in the broadest sense of the word. I do think a single (federal framework) when you have something like this that’s nationwide, I’ve always believed that a single set of rules is probably better than going state by state. To the extent that we’re active in states, we are active in trying to make sure that those states adopt the kind of safeguards that we feel are important in terms of types of bets and like. That’s our principle focus when we lobby.”
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Around the Watercooler
Social media conversations, rumors, and gossip.
The amount of shit-talking between Kalshi and Polymarket surrogates on social media is astounding, and it brings me back to something Philip Atkinson said on my podcast not too long ago about serious and unserious companies:
“In the Full Tilt-PokerStars story, it just obviously made a difference because when the water went out, one set of people were wearing clothes and one set of people weren’t.
“[PokerStars was] serious people building a serious product in a serious company. Tilt people, not a serious company, run by not serious people, and that’s what happens.”
“Now, that’s a bad analogy for Kalshi and Polymarket because they’re doing a very different thing. But on some level, you can’t just meme your way to success. And you can’t just pretend that all the things that have grown up with the industry — that you are pretending not to be part of, but actually very much are part of — are something you’ll just get around to at some point.”
You can listen to the entire podcast here:
Episode 67: Everything Old Is New Again with Philip Atkinson
“I now understand that you make money sometimes in the gray area and you sort of have to be willing to believe what other people don’t believe.” ~ Philip Atkinson
Stray Thoughts
I definitely agree with this take.
The trick is to understand what you’re training for.
Modern BJJ tournaments (or even modern MMA) are a far cry from early UFC matches, just as squaring off with someone under a specific ruleset, on padded mats, with a referee standing by to stop the fight, is different from being surprised on the street by two attackers. But as long as you understand what you’re training for, you’re good — and yes, some of the training overlaps with one another.
There’s probably a lesson in there somewhere for gambling companies.