Two Princes
After spurning Kalshi at the altar, X has announced a partnership with Polymarket that makes the company X's official prediction market partner.
The Bulletin Board
THE LEDE: X has an official prediction market partner, and it’s not Kalshi.
ROUNDUP: IGB chair resigns; AL Gov. candidate talks lottery; RI OSB expansion bill advances; LA passes tax hike.
NEWS: Bet365 joins the Sports Betting Alliance.
NEWS: Conservative groups and think tanks support sports contracts.
AROUND the WATERCOOLER: The Daily Show takes on online gambling.
STRAY THOUGHTS: Opening and closing door.
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The Lede: X Scorns Kalshi, Partners with Polymarket
We had a textbook Friday Night Newsdump with the announcement that X has partnered with Polymarket, with the latter becoming X’s “official prediction market partner.” Notably, Polymarket is not available in the US due to a 2022 settlement with the Commodity Futures Trading Commission (CFTC).
Excellent analysis of the X-Polymarket deal from Dustin Gouker’s Event Horizon newsletter
Details of the partnership remain sparse, but it includes plans for integrated products, such as real-time integrations of Polymarket’s forecasting platform with X’s real-time data and Grok’s AI analysis, to deliver data-driven insights.
As I noted on X, the Polymarket-X deal is an added layer of palace intrigue, as it occurred at the height of a very public spat between X owner Elon Musk and President Donald Trump (which has since cooled down), and soon after a prematurely declared partnership with xAI by Kalshi — Donald Trump Jr. is a strategic advisor to Kalshi.
On May 20, 2025, Kalshi CEO Tarek Mansour tweeted about his company’s new deal with Elon Musk’s AI company, xAI, claiming it would “shape the future of news.” Bloomberg reported the deal, but within hours, Kalshi retracted the statement, and Mansour’s social media posts, as well as the original Bloomberg article, were deleted.
Speculation abounds about what happened with Kalshi, and how X teamed up with Polymarket, with posts on X noting the (coincidental?) timing. There is some speculation that Musk may have pivoted to Polymarket to distance himself from Trump-aligned entities, or to rub salt in the recently opened wound with President Trump. However, deals like this typically require months of planning and negotiations, making a spite-driven decision less plausible.
STTP’s Three Big Thoughts on the Deal
Prediction markets as truth engines. The X-Polymarket partnership furthers the notion that prediction markets, where users put money where their mouth is, are some type of truth-telling machine, which, as I noted last week, wouldn’t pass muster in an intro to statistics class.
Should we be betting on that? Polymarket’s willingness to offer contracts on everything from California wildfires to the outcome of the Titan submersible raises ethical concerns. X’s integration risks amplifying these issues and highlighting the seeming lack of regulatory guardrails.
On the crypto and regulatory tightrope: Kalshi’s legal battles aside, Polymarket’s crypto-based platform and ongoing DOJ scrutiny suggest a preference for global scalability over the short-term US opportunity by X. That said, Polymarket has signaled a desire to return to the US. By aligning with Polymarket over Kalshi, X sidesteps the current US regulatory quagmire, while also leveraging Polymarket’s more global reach and the borderless nature of crypto.
Roundup: IGB Chair Resigns; AL Gov. Candidate on Lottery; RI OSB Bill Advances; LA Passes Tax Hike
Illinois’ top regulator announces resignation [Casino Reports]: Charles Schmadeke, chairman of the Illinois Gaming Board, announced his resignation effective July 1, 2025. During his two terms, Schmadeke oversaw several major gaming expansions, including the legalization of sports betting, the awarding of six new casino licenses, and an expanded presence of VGT machines, all while navigating COVID-19 lockdowns.
Frontrunner for Alabama governor not opposed to a state lottery [Lottery Geeks]: “US Senator, former Auburn football coach, and near mortal lock to become the state’s next governor,” may not have endorsed a state lottery, but he is not opposed to it either: “The legislature has got to do it first, no matter what it is. And then, of course, the … Alabama people and the referendum will have to vote on this.” However, Tuberville did say he’s a bit skeptical about where the money ends up: “If your people want to pass the lottery, just make sure that the money goes to the state and not to the people running the lottery system.”
Bill expanding Rhode Island sports betting passes Senate [Legal Sports Report]: The Rhode Island Senate passed SB 748, a bill that would end IGT’s sports betting monopoly, and open up the state to no less than three and as many as five platforms. Companion legislation has stalled in the House. The Rhode Island legislative session is scheduled to end on June 30.
Louisiana is the latest state to pass a sports betting tax increase bill [HB 639]: The Louisiana Senate passed HB 639, a bill that will increase the state’s sports betting tax rate from 15% to 21.5% — the bill still needs the signature of Gov. Jeff Landry. Illinois added a per-wager fee, Maryland bumped its tax rate from 15% to 20%, and Colorado sunsetted promotional deductions.
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News: Bet365 Joins the Sports Betting Alliance
The Sports Betting Alliance (SBA) has a new member: Bet365. The news was first revealed on the Casino Reports’ Low Rollers podcast by SBA President Jeremy Kudon.
The addition of Bet365 comes at a moment when sports betting (and online casino) legalization efforts have stalled, while the industry attempts to fend off challenges from sweepstakes operators, prediction markets, and state-level efforts to increase tax and regulatory burdens.
The SBA represents five of the top seven sports betting companies by market share (based on Eilers & Krejcik Gaming’s trailing three-month GGR):
#1 FanDuel
#2 DraftKings
#3 Fanatics
#4 BetMGM
#7 Bet365
However, Bet365’s performance is much stronger than its #7 ranking, as it is only operational in 13 states (and New York isn’t one of them), and only recently ramped up its marketing in select states. As EKG has noted, Bet365, along with Fanatics, are the fastest-growing sportsbooks in the market.
News: Conservative Groups Support Sports Contracts
Fifteen conservative and free-market organizations (many on the libertarian side) jointly sent a letter to the CFTC in support of prediction markets’ contracts on elections and “other current events,” noting the accuracy of prediction markets compared to legacy polls.
“We believe this performance shows there is potential for prediction markets to disseminate practical information to Americans on political, cultural and economic trends that can help them better plan their futures. Therefore, we ask that in contrast to the CFTC under the Biden administration, the CFTC in this new administration adopt a policy of permissionless innovation toward prediction market venues… We believe that to fully reverse the Biden CFTC’s damage, the CFTC must affirm now that prediction markets dealing with elections and other current events are allowable as futures trading venues under federal law. ”
The letter also expressly mentions sports contracts:
“… regarding sports outcome contracts increasingly being offered by prediction markets, small firms affected by the performance of a team in a game or a season can buy prediction market contracts to manage effects on their sales of sports-related products or services. As Quintenz notes, “contracts relating to the outcome of sporting events could now have a legitimate economic and hedging purpose for businesses.”
The more high-profile groups that signed the letter are:
Americans for Tax Reform (ATR), led by Grover Norquist, is a cornerstone of the conservative movement. Its Taxpayer Protection Pledge has shaped Republican fiscal policy for decades, with nearly every GOP elected official signing it.
Competitive Enterprise Institute (CEI) is a leading libertarian-leaning think tank with a national profile known for promoting free-market policies. CEI was one of the most outspoken critics of efforts to apply the Wire Act to online gambling.
60 Plus Association has positioned itself as a conservative alternative to AARP. Its focus on senior issues gives it a broad demographic appeal, and its media presence suggests significant resources. The group claims to have millions of senior supporters.
Separately, Genius Sports submitted a letter to the CFTC in support of sports contracts, saying, “We are confident that a Federal regulatory approach to sports markets, led by the CFTC, can foster continued growth and innovation within sports event contracts in a responsible way.”
The words “responsible way” are an important caveat, as Genius argues that “ensuring data integrity and the integrity of the underlying sporting events is essential to validating and being able to conclude that a sports event contract is not readily susceptible to manipulation.”
As I previously opined, the CFTC’s appetite and ability to regulate a 50-state sports betting operation:
“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).
“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?”
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Around the Watercooler
Social media conversations, rumors, and gossip.
Podcast guest (Episode #46), Jonathan Cohen, was featured on The Daily Show, where he talked about his new book, Losing Big, and his belief that the legalization of sports betting has created a public health crisis.
While I don’t completely agree with everything Jonathan says (nor do I disagree entirely), I really like the way he frames DFS, as “it’s not gambling, but it’s not, not gambling.” That definition could easily be applied to prediction markets.
You can listen to Jonathan Cohen’s appearance on the STTP Talking Shop podcast here:
Episode 46: The Pros and Cons of Legal Sports Betting with Jonathan Cohen
“The thesis of the book is that sports betting should be legal, but it was rolled out in a way that was heedless of... some of these negative externalities… it could have been safer. It still could be safer, whether through government regulation or self-regulation by the industry itself.”
Stray Thoughts
"When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us." ~ Alexander Graham Bell