Woke Up And Chose Violence
The knives are officially out in the fight between prediction markets and the entrenched gambling industry.
The Bulletin Board
THE LEDE: LVRJ op-ed from prediction market trade group blasts the AGA.
ROUNDUP: A look at the stories you may have missed.
NEWS: US Senators are done with the prediction market charade.
VIEWS: The legalization argument that isn’t landing.
AROUND the WATERCOOLER: Was legalization sold as revenue?
STRAY THOUGHTS: The easiest way to keep an open mind.
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The Lede: Prediction Market Trade Group Blasts AGA in Op-Ed
Former US Representative and Ambassador to OECD Patrick Maloney went in on the American Gaming Association (AGA) in a commentary published by the Las Vegas Review-Journal, the paper of record in the backyard of the AGA’s constituency.
The commentary starts with Maloney, the chairman of the Coalition for Prediction Markets, a recently created trade group, declaring the “casino industry is on fire,” and its opposition to prediction markets as “sour grapes.”
“The American Gaming Association recently launched an effort targeting these markets. AGA officials claim they’re ‘unsafe.’
“But AGA officials aren’t concerned about your well-being. The organization’s existence rests on taking advantage of people. And they’re worried about losing their monopolies.”
Maloney went on to argue that state-regulated gambling is a monopoly (which it is in some states) and critics of prediction markets want them regulated and taxed like casinos. He calls these critics, “wrong and self-motivated in their interests.”
“You will hear repeatedly that prediction markets punch holes in state budgets by cutting into tax revenue from gaming. They say that, “Prediction markets bypass state taxes and drain resources from a system that works.”
“But who is to say that states should have the exclusive right to create monopolies? Who is to say that states should tie their citizens to monopolies and then extract rents and fees, all while depriving their residents of the choice to spend their hard-earned money?”
The glaring hole in Maloney’s argument is that prediction market critics are not trying to protect a monopoly, they simply want prediction markets regulated in the same manner they are.
Another debatable claim is pricing:
“Just look at any casino’s odds for the Super Bowl coin toss. There is a 50 percent chance of it being either heads or tails, but the betting line isn’t minus-100, which it should be for a 50/50 event. It’s minus-102. The math doesn’t add up.”
However, as Citizens has dutifully tracked all year, Kalshi’s pricing is on average, worse than DraftKings and FanDuel (STTP would call Kalshi’s pricing nearly identical, but definitely not better):
“According to the team at Citizens, after closing the gap in previous weeks, Kalshi’s pricing took a step backward last weekend: “We tracked pricing Friday (10/31) afternoon, whereby Kalshi’s pre-game odds across these games had worse pricing compared to DraftKings and FanDuel when adding in the transaction fee, on average.”
I also take exception to the ongoing effort to recategorize everything, like framing active users as anyone who looks at prediction market graphs (which are now unavoidable thanks to the numerous partnerships Kalshi and other PMs have with the ‘fake news’ outlets they malign (which begs the question, why would biased media use prediction markets if they are biased?):
“Nearly half of Americans under 45 are active users, whether they trade on them or use them to learn from their forecasts. These markets have emerged as a powerful way to harness the wisdom of crowd-based thinking.”
And apparently, ‘rely on’ now means cite or consider: “Economists, journalists, traders and everyday people now rely on prediction markets for high-quality signals among the biases of public discourse.”
The commentary seems to have riled up the AGA, as head of research, David Forman, fired off this tweet yesterday morning:
This isn’t Forman’s first time wading into the fight on X:
Forman and the Coalition for Prediction Markets also engaged in a Twitter war in late January:
Roundup: So Much News; So Little Newsletter Space
MA slot attendants fear job loss from slot reporting threshold increase [WWLP.com]: File this one in the unanticipated consequences folder: During a Revenue Committee hearing in MA last week Jaimie McNeil, general agent for UNITE HERE Local 26, made the case against raising the slot reporting threshold at the state level (the threshold was raised federally in One Big Beautiful Bill): “Doesn’t seem like a big deal. We’re here today to tell you why it is a big deal.” UNITE HERE Local 26 estimated that roughly 65% of slot jackpots are between $1,200 and $2,000, with Karen Marzo, an Everett resident who works as a slot attendant at Encore Boston Harbor, telling the committee that the union “can only imagine that there’s going to be loss of jobs and decline in tips” if attendants are no longer needed for jackpots under $2,000.
News from the North; Alberta strengthens cybersecurity regulations ahead of launch [Covers.com]: As Geoff Zochodne put it at Covers.com, “In other words, the AGLC wants operators to have specific proof that they can safeguard customer data in a certain way. The Alberta sports betting regulator also wants that proof up front, before an operator can launch in the province’s new iGaming market.”
News from the North; Ontario suspends PointsBet license for 5 days [Canadian Gaming Business]: “In what it said is a first for the province’s regulated iGaming industry, the Alcohol and Gaming Commission of Ontario (AGCO) intends to temporarily suspend PointsBet Canada, alleging that the licensed sportsbook and casino did not properly detect and report suspicious betting patterns related to the bet-rigging scheme involving the former Toronto Raptors player,” calling it a “systemic failure.” STTP Thoughts: Good for Ontario, and I wish US regulators would stop issuing tsk-tsk-level fines for similar missteps and drop the suspension hammer like Ontario is doing.
News from the North; Trade group pitches iGaming regulation in Quebec [Gaming News Canada]: “As part of pre-budget consultations in Québec, the Québec Online Gaming Coalition has filed a brief to the province’s Ministry of Finance warning that the unregulated market is putting vulnerable people at risk and depriving the province of more than $300 million in tax revenue annually. On Monday, the coalition — whose members are Bet99, DraftKings, Flutter, Entain, Apricot Investments, Betway, Games Global and Rush Street — sent out a press release again making the pitch for Québec to move to an open, regulated online gambling market.”
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News: Is Congress Fed Up With Prediction Markets?
23 US Senators (all Democrats) have signed a letter to Commodity Futures Trading Commission (CFTC) Chair Michael Selig, expressing their concerns with his “recent actions and public remarks concerning predictions markets.”
The letter highlights Selig’s recent decision to withdraw draft rules from the tenure of Rostin Behnam and guidance issued under his immediate predecessor, Caroline Pham, cautioning exchanges about sports-based event contracts, as well as signaling “that the Commission would move toward rules that would permit these markets to continue operating while litigation remains pending, and that the Commission may intervene in that litigation.”
“Taken together, it appears that you intend to steer the Commission in a direction that is at odds with the intent of the Commodity Exchange Act, respect for state law and tribal sovereignty, and with the testimony you presented to the Senate Agriculture Committee on November 19, 2025.”
The letter goes on to point out the discrepancy between Selig’s statements during his confirmation hearing and his actions as Chair:
“In your Senate Agriculture Committee confirmation hearing, you stated that it would be ‘irresponsible’ to prejudge whether contracts tied to sporting events constitute gaming, and that you would approach the issue with a ‘blank slate.’ When asked directly whether betting on the outcome of a professional football game is gambling, you answered simply: ‘I would look to the courts.’
“However, two months later, you announced that the Commission will intervene in the matter before it has been fully litigated in the courts by withdrawing guidance cautioning against the use of prediction markets for sports betting, and that the Commission may even enter ongoing litigation. In addition, you recently posted that you ‘strong[ly] disagree’ that prediction markets violate the law, a stark reversal of your statements before the Committee.”
The letter urges Selig to “abstain from intervening in pending litigation involving contracts tied to sports, war, or other prohibited events,” and “initiate a rulemaking on event contracts, as you suggested, we ask that those rules adhere to the statute and prior regulations, and reiterate that contracts involving gaming (including sports), war, terrorism, assassination, or other enumerated activities are barred and may not be listed, traded, or cleared under the Commodity Exchange Act.”
The Senators also hammered home a point that prediction markets tend to gloss over in their arguments, one of Congressional intent:
“Congress made its intent clear and determined that these activities are ‘contrary to the public interest,’ and has embedded that determination into 7 U.S.C. § 7a-2(c)(5)(C).
“Once a contract involves gaming or another enumerated activity, the public-interest analysis is complete. The Commission has the statutory authority to categorically prohibit the listing of contracts that involve these enumerated activities, and it has done so for more than fifteen years…
“However, your recent comments instead suggest that you view the prohibitions Congress enacted… as subject to reinterpretation through regulatory posture or litigation strategy.
“That approach converts a statutory prohibition into case-by-case policy judgments. It also places the Commission in direct conflict with state and tribal governments whose gambling laws Congress expressly chose not to preempt.”
This, toward the end of the letter is a good summary:
“Declining to intervene on behalf of prediction market platforms and clarifying by rule that enumerated activities are contrary to the public interest would restore confidence that the CFTC is enforcing the law Congress enacted—not reshaping it through post-hoc policy shifts.”
Views: I Beg You, Stop Making This Argument
“States would be crazy to raise sports betting taxes now with everything going on with prediction markets,” DraftKings CEO Jason Robins said during the company’s earnings call on Friday, when asked if prediction markets are pushing states to consider legalizing online gambling.
As I said on X:
As I wrote in June, following the passage of the per-wager fee in Illinois:
“As I’ve said many times (including here), head-scratching policies that don’t protect consumers and prop up the black market are a feature, not a bug: “The best way to rein in an industry is to kneecap it with excessive burdens.” The toothpaste isn’t going back in the tube, but that doesn’t mean lawmakers won’t try to minimize the amount that comes out going forward; If they can’t get rid of it, the next best option is to tax it to death.”
Or, as I said in a July 2025 newsletter on misaligned goals:
“The problem, as I see it, is that the industry equates success with revenue growth, but lawmakers measure it differently… While others are citing rising addiction rates and a glut of advertisements, the industry is touting growth and future growth. Cross-selling to increase customer spend might sound good to investors and shareholders, but it doesn’t sit well with lawmakers and advocacy groups. When there’s a weekly newspaper article on rising addiction rates, a 25% year-over-year revenue increase starts to look like the problem, not the solution.
“And that’s where the revenue goals become misaligned; the industry wants to boost revenues and, by extension, tax revenue by expanding the market. Lawmakers don’t care about the total addressable market (TAM) as long as tax revenue grows, or at least doesn’t decrease. If it does, they’ll simply take a larger share of the operators’ slice of the pie and chalk it up as an effort to curb the industry’s excesses.
“Basically, the industry is at the mercy of lawmakers. No one is losing an election because they expanded gambling, but no one is losing an election because they increased the burdens on online gambling operators or restricted gambling advertisements.”
To be clear, I don’t think the argument is useless, I think it needs to be used far more sparingly and in a, “You catch more flies with honey than with vinegar,” tone.
Around the Watercooler
Social media conversations, rumors, and gossip.
This is more of a Beyond the Headline of the previous header:
Three things:
#1: That states were sold consumer protections (not revenue) is at best a partial truth. Consumer protections and revenue were significant arguments in the push for legalization. Virtually every report handed to state lawmakers highlighted potential revenue, including capturing funds lost to illegal and offshore betting. And as I’ve mentioned before, while consumer protection is the sales pitch to the masses, revenue is the reason it’s even considered. As every legalization proponent points out, the reason poker hasn’t been legalized is that ‘there’s no money in it.’
#2: Kudon’s second statement sounds an awful lot like a dare from operators to states, which didn’t work out too well in Illinois last time around (see quote below). And now, after their embrace of prediction markets, states have fewer reasons to treat parts of the industry as a friend and not a foe:
“The SBA has also been screaming from every rooftop that tax increases (and numerous other policies) are a gift to the black market… [but] it appears that the more they protest, the worse they are treated. Sportsbooks continually escalated the rhetoric while the legislature debated the tax increase, going so far as to threaten to leave the state when the graduated tax rate was introduced… Now, instead of a 35% tax rate (that many believe could have been negotiated down to 20-25%), the industry is staring down a graduated tax rate based on adjusted gross revenue that starts at 20% and quickly increases from there.”
#3: The threat of leaving isn’t as big of a threat as some operators think. There is always someone willing to step in and fill the void. Believe it or not, there are markets around the globe where FanDuel and DraftKings are missing that are doing just fine.
Again, there is a, let’s use vinegar instead of honey tone here. As aways, my inbox is open to chat about these things.
Stray Thoughts
In one of his recent columns, Richard Schuetz wrote:
“Whenever I am visiting with someone who says they spent 20-some years at a specific location, I wonder how they learned anything toward the end of their tenure, for I do believe that learning curves have an early steep portion and then flatten. I also believe that there is value in looking at the same thing from different perspectives, and by moving about, one develops a greater understanding of the menu of options available to address different issues.”
I wholeheartedly agree. There is certainly value in experience, and learning to do a job on muscle memory, but habit and routine are not true experience, they simply create complacency.
I know martial artists who have spent 20+ years in the same school/system. They are terrific at what they do, but they are often fish out of water when presented with something new. They are also the most rigid people I encounter, as their myopic view of martial arts has embedded a “my way is the right way” mentality, discounting everything else — it has to be the right way, because they are good at it. And while it is the “right way” in their specific dojo environment, it is severely limiting.
There are advantages to routine, like someone who has spent 60 years in the same town and knows every minute detail vs. a world traveler who might not know that Beth at the town hall always goes to lunch at 1:15, but those advantages are fleeting when change is thrust upon them.
And in the gambling world, change is the only thing that is certain.