The Bulletin Board
THE LEDE: The #1 problem with peer-to-peer gambling.
ROUNDUP: A look at the stories you may have missed.
NEWS: North Carolina lawmakers consider sports betting tax increase.
VIEWS: Congressional sports betting hearing focuses on prediction markets.
AROUND the WATERCOOLER: There’s that missing word again.
STRAY THOUGHTS: Housekeeping.
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The Lede: Peer-to-Peering Ain’t Easy
I already covered quite a bit of DraftKings cofounder Matt Kalish’s multi-day anti-prediction market rant, but as I said on Tuesday, there was one aspect of Kalish’s tirade that I felt deserved its own newsletter entry: Is there any there there?
Here’s what Kalish (colorfully) said on the topic:
“Do you have any fucking clue how much money Kalshi need[s] normal long-term unprofitable retail gamblers like me to lose on Kalshi to PAY them enough fees to be worth $22bil valuation? Then on top, how fucking much money all of Wall Street’s MMs & Pro Gamblers export? And do it with a very bad product compared to SB on casual experience? What an absolute fucking house of cards my brothers and sisters.
“But don’t worry, not like there’s not any competition coming to pressure Kalshi, squeeze them on their model and make it even more abundantly clear the product is uncompetitive. Just Poly, DK, FD, Fanatics, Robinhood, Coinbase, all smoke them on consumer product development.”
And here’s what I said on this a couple of weeks ago:
“Yes, peer-to-peer games of skill are a zero-sum game that can be beaten, where a small percentage of users will profit in the long run. But ask anyone who has been around these games for a while and they’ll let you in on a deep, dark secret: yes, a non-trivial number of players will win, but, most of the money is going to the very top.”
The bolded line in Kalish’s tweets is critical to understand. As I’ve said many times, the peer-to-peer ecosystem is the hardest to sustain, and the reason is that winning users are extracting money from the ecosystem with no regard for its sustainability.
As I said in December 2025:
“The problem P2P gambling has always had is that the sharks don’t care about the ecosystem’s health; that’s the operator’s problem. They’re not into sustainable fishing. They’ll fish until there’s nothing left, leaving the pond empty and the operator scrambling to restock it (at massive costs).”
And that’s where everything falls apart, because skill-level is relative and churn is real:
“Unfortunately, in the real world you don’t get a slow bleeding of your customers, you get a shrinking ecosystem where a very small percentage of your customers are feeding on your other customers… Once all the losers are chewed up and spit out, they become the prey.
“That isn’t a problem when the industry is in a period of rapid growth (prediction markets are in their Poker Boom phase), but when that growth slows, and losing customers grow frustrated and move on to the next thing, it becomes a very serious problem, very fast.”
As I wrote in an article on limit vs. no limit poker:
“This ties directly into something poker author and theorist Mason Malmuth has discussed publicly many times, and also something he and I discussed more than a decade ago at a conference. Malmuth has long argued that limit is superior for cash games precisely because it allows weaker players to lose slowly, shearing the sheep repeatedly rather than skinning them in one brutal hand.
“No limit losses can leave a poor taste in a player’s mouth. A bad no limit player can burn through multiple buy-ins in 45 minutes, playing maybe five significant hands. But in a limit game, they will get hours of play, and be involved in dozens of pots, and likely lose less money.
“In no-limit, mistakes are punished severely, and poor players get cleaned out quickly, drying up the games and making them unsustainable for both card rooms and pros. Malmuth pointed out back in the early ‘90s that no-limit and pot-limit variants nearly killed poker in places like England, where the rapid extraction of “dead money” from casuals led to empty tables.”
The bottom line is this: Prediction markets are still in their Poker Boom phase, with plenty of new fish being added. The concern is: What happens when the fresh supply of fish stops? History tells us that once the low-hanging fruit is picked, things start going sideways, which is why the next 12 months will be good times for all, but after that we’ll find out if these platforms can actually build a sustainable business.
Roundup: So Much News; So Little Newsletter Space
Betr acquires introducing broker ACM Futures [InGame]: Betr has acquired Chicago-based introducing broker ACM Futures. ACM Futures is registered with the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA), as an ICM, allowing Betr to partner with DCMs like Kalshi. As InGame notes, “Introducing brokers can partner with designated contract markets (DCMs), which are exchanges like Kalshi or Crypto.com, to offer the exchange’s contracts to their users. Existing introducing brokers include Fanatics Markets and DraftKings Predictions.”
Table games are coming to Fairmount Park [Hoodline]: Fairmount Park Casino & Racing will be adding blackjack, roulette, and more to its offerings. “The new lineup is part of a roughly $3 million build-out that the operator says will create about 35 jobs in the Metro East. The live-dealer pit sits inside the racetrack’s temporary casino footprint and is intended to spark more evening activity around the track’s live racing dates.” Previous STTP coverage of Accel’s purchase of Fairmount.
Sporttrade calls it quits (as a sportsbook) [InGame]: It looks like Sporttrade could soon be approved by the Commodity Futures Trading Commission to operate as a prediction market, as the company announced it is shuttering its licensed sports betting product in the five states it operates: “Sporttrade customers in New Jersey — where the company first launched — have until May 25 to withdraw their funds, as the site will go dark that day. Customers in Arizona, Colorado, Iowa, and Virginia have until June 25, with the sites shuttering the following day. For customers who take no action and have funds in their account, checks will be mailed.” The official announcement from Sporttrade hints that it is likely to reemerge as a prediction market:
News: OSB Tax Finds Its Way Into NC Budget Talks
2025 saw multiple states increase the financial burdens on sports betting operators, but thus far, it’s been a quiet 2026, despite efforts in Arizona, Kansas, Ohio, and West Virginia.
However, that could change, as North Carolina lawmakers are considering bumping the state’s tax rate on sports betting to as much as 20-30%.
“People familiar with state budget negotiations tell WRAL that lawmakers have discussed recommendations to increase taxes paid by sports betting companies and an additional tax to lottery sales and individual sports bets. The people spoke on the condition of anonymity because they weren’t authorized to publicly discuss the behind-the-scenes negotiations.”
This is the second attempt to increase the sports betting tax rate. Last year the Senate budget included an increase to 36%, but that was left out of the final budget negotiated between the House and the Senate.
Here are the states that have increased taxes since 2023 (Straight to the Point Forecast Tier subscribers have access to the full Tax Policy page):
Ohio (2023): Doubled its tax rate from 10% to 20% in 2023.
Tennessee (2023): Shifted from a 20% revenue tax to a 1.85% handle tax.
Illinois (2024): Shifted from a flat 15% rate to a tiered tax rate of 25-40% in 2024.
Maryland (2025): Increased the tax on mobile sports betting from 15% to 20%.
Louisiana (2025): Bumped its tax rate from 15% to 21.5%.
Illinois (2025): Added a $.25 per wager fee on the first 20 million wagers and $.50 thereafter.
New Jersey (2025): Increased its online gambling tax rate from 15% on online casinos and 13% on mobile sports betting to 19.75% (plus 2.5% IAT for iCasino and 1.25% on sports betting).
Illinois (2025): The city of Chicago added a 10.25% tax on sports bets placed in the city.
And here’s where promotional deductions have been reduced or eliminated:
Louisiana (2024): Reduced the amount of promotional spending that gaming operators can deduct from their tax obligations.
Colorado (2024): Imposed a phased reduction on the amount of promotional spending that sports betting operators can deduct from their taxable revenue.
Maryland (2024): Decreased the allowable deductions for promotional spending by gaming operators.
Virginia (2024): Reduced the amount of promotional spending deductions for sports betting operators.
Colorado (2025): passed a bill that sunsets promo bet deductions.
Views: PMs and Sportsbooks Get a Typical Congressional Hearing
Editor’s note: The original version incorrectly identified French Hill as the chair of the Senate Finance Committee; this has been corrected to the Chair of the House Finance Committee.
A hearing billed as a look into sports integrity, turned into a two-plus-hour struggle session on prediction markets, as the witnesses were peppered with questions from the Senate Commerce Subcommittee on Consumer Protection, Technology, and Data Privacy on Wednesday.
You can find a replay of the hearing here:
Most importantly, there wasn’t any major news broken, nor is Congress likely to take action on prediction markets in the near future.
During an interview at Semafor’s Banking on the Future Forum Wednesday, French Hill, Chair of the House Finance Committee told the outlet:
“His committee is focused on educating members about current rules around prediction markets, like Kalshi and Polymarket, because many lawmakers lack a ‘basic understanding’ of the current roles played by the Commodity Futures Trading Commission and Securities and Exchange Commission.”
“Hill indicated he wants to allow room for court disputes between states and the Trump administration to play out, adding that he believes the leaders of the CFTC and SEC ‘have the primary responsibility of demonstrating that they’re able to oversee these markets in the right way in compliance with the law.’”
That said, the overall tone indicates that prediction markets, despite friends in high places, aren’t finding many buyers on Capitol Hill for what they’re selling, as Dustin Gouker pointed out in his excellent recap in his Substack newsletter.
My overarching takeaway from the hearing is that senators from both sides of the aisle took turns kicking Patrick McHenry (a 20-year veteran of the House of Representatives) around.
Nick Devor also has a great writeup at Barron’s: Senate Sports Betting Hearing Highlights Bipartisan Opposition to Prediction Markets
And Matthew Wein’s (podcast episode #52) newsletter also has some terrific highlights:
Around the Watercooler
Social media conversations, rumors, and gossip.
The Coalition for Prediction Markets put out this tweet following yesterday’s hearing:
Regular readers already know what word was left unsaid: “As I keep saying in the newsletter and on X, if you add the word “yet” to every statement you start to see where things are going.”
Stray Thoughts
Quick reminder: Straight to the Point will be taking a short break for the holiday weekend.