The Closing Bell: So We Aren't Having A Prediction Markets Roundtable, But Why Not?
Speculation on why the CFTC canceled the roundtable with no explanation. Prediction markets news roundup: Updates from Maryland, NJ and Nevada legal wrangling for Kalshi; CFTC eyes 24/7 trading.
The headline is the $64,000 question, isn’t it?
In case you missed it, the Commodity Futures Trading Commission is no longer holding a roundtable about prediction markets, at least not right now. Story about the cancellation here.
To be fair, the CFTC had never publicly announced the roundtable. Still, it wasn’t a terribly well-kept secret that it was planned for April 30. All of the stakeholders who were invited to attend by the CFTC were given that date, and up until yesterday, everyone still thought it was supposed to happen. Plane tickets had been bought by panelists attending from outside of the Washington DC area.
But the roundtable isn’t happening. The CFTC didn’t say it would never happen in communications with panelists, and intimated it could be rescheduled. But the CFTC was telling folks it was canceled, not postponed. Is that a material difference in language? Who knows.
To my knowledge, the CFTC told no one involved in the roundtable externally why it was canceled.
Since the CFTC won’t tell us why and has left us with virtually no information about what it actually thinks about sports event contracts, it feels appropriate to speculate wildly about why it’s not taking place.
Closing Line Consulting
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So here we go. To be clear, these are just theories and nothing more:
Waiting for the new chairman?: Caroline Pham is the acting chairman. Brian Quintenz is the incoming chairman who still needs to be confirmed. Prediction markets (and sports event contracts) are arguably the biggest thing on the CFTC’s plate right now. Does it make a ton of sense to have a roundtable before Quintenz is in the big chair? Arguably not.
Still, if this is the reason, why did the CFTC announce the roundtable and go through the trouble of planning it, onboarding panelists, etc., if Pham didn’t want to step on Quintenz’s toes? It’s kind of hard to square, but it’s still a possible reason.
Political machinations?: I can’t stress this enough: As recently as earlier this week, the CFTC was still working with panelists and planning to do the roundtable. Did something change between Monday and Wednesday (when I understand the roundtable was supposed to be publicly announced)? It’s hard to understand why people would have been pretending that the roundtable was still going to happen if it wasn’t going to happen. Occam’s razor says everyone thought it was still happening, and then something changed. Could there have been pressure from somewhere to call the whole thing off? I am going to stop short of going too far over my skis here. But the whole timeline of events is very strange.
The CFTC stepped in a bigger pile of doo-doo than it thought?: Pham and the CFTC might have thought it would get a fair amount of people advocating for an expanded role for prediction markets when this whole thing started. But with sports event contracts in the spotlight, the backlash, especially at the state level, has been severe. A roundtable would have largely laid out the arguments against sports contracts, and not much else. If Kalshi is going to keep doing them and the CFTC doesn’t actually want to stop Kalshi right now, what’s the point of a roundtable telling them to knock it off?
Waiting to see what the courts say?: This seems plausible, but the first two court cases have been around since the end of March. If the CFTC wanted to let the legal process play out and not have the roundtable because of that, that’s at least not a terrible rationale for cancellation. But it doesn’t really explain why the roundtable was canceled at the eleventh hour. It might have made sense to hit “pause” weeks ago, but less so now.
I am not sure we’ll ever know why the roundtable didn’t happen. But at the end of the day we’re still left with about a million questions about what the CFTC thinks about sports event contracts, and what it plans to do, if anything.
If the CFTC wants entities under its purview to be in the business of sports betting, it can’t continue to say absolutely nothing. It needs to lead and not be a passive actor. What it will actually do remains to be seen.
Cease-and-desist tracker
I created a new page just to track what’s going on with all the cease-and-desists, lawsuits and legal shenanigans around sports event trading at prediction markets. See it here: Are prediction markets legal?
Each week in this roundup, I’ll just tell you what’s new. So here’s what’s new:
Maryland
Kalshi Files Suit Against Maryland In Sports Betting Case: “Kalshi is going to court yet again. The prediction market platform filed a lawsuit in a Maryland federal court on Monday night, asking a district court to stop enforcement of the state’s cease-and-desist order. Maryland regulators had told Kalshi they believe the company is offering sports betting illegally in the state.”
We also have a hearing schedule (h/t Dan Wallach). Briefs from the parties will be due in May, with a hearing in late May or early June.
New Jersey
Why New Jersey's Case Against Kalshi Is Stronger Than Nevada's: “Kalshi may regret bringing the fight to New Jersey. The state filed its response to Kalshi’s preliminary injunction motion — and it delivers quite a punch. New Jersey’s brief persuasively argues that, even in the sandbox of the Commodity Exchange Act, there’s room for state regulators to play.”
Kalshi Fires Back At New Jersey With Reply In Federal Court: “Kalshi led its reply to the US District Court for the District of New Jersey by noting that a Nevada court had granted its request for a preliminary injunction under ‘almost identical issues.’ ‘Defendants here barely acknowledge this decision, but it confirms that a preliminary injunction is warranted. Kalshi should not be required to incur irreparable harm while it litigates here after another federal court granted preliminary relief,’ the brief continued.”
The Casino Association of New Jersey is offering a brief in support of the state. You can read the whole thing below.
Plenty of interesting content and arguments in there, but I enjoyed this passage: “In short, the notion that Kalshi is offering anything other than sports betting is not a serious one. Kalshi’s sports gaming contracts are not being marketed to commodities traders. Kalshi instead seeks to replace traditional sports betting and to target traditional gaming organizations’ customers. Kalshi should of course be free to compete on the open market, like any other company. But it has to abide by the same rules as everyone else.”
Nevada
Nevada filed a motion to dismiss Kalshi’s complaint for permanent injunction and declaratory relief. “…the Complaint suffers from numerous defects that render it subject to dismissal in toto. First, the Complaint fails to properly name the State of Nevada pursuant to NRS 41.031. By failing to invoke the State’s waiver of sovereign immunity, Kalshi’s complaint is void ab initio. Second, notwithstanding this failure, Kalshi failed to effectuate proper service on the Defendants. Third, even if Kalshi were to cure these defects by filing a new action,1 its claim is barred by immunity—Eleventh Amendment, official act, and/or discretionary act. Fourth, the individual defendants should be dismissed because the complaint is bereft of allegations of misconduct on their part. Fifth, the passage of other federal laws—Wire Act, Indian Gaming Regulatory Act, and Professional and Amateur Sports Protection Act—show that Congress did not intend for the CEA to preempt state gaming laws. And neither the text nor the legislative history of the Commodity Exchange Act support Kalshi’s allegation of preemption—not field or conflict. Sixth, Kalshi’s claim should be barred under the Tenth Amendment because it seeks to supersede historic police powers. Seventh, Kalshi’s inconsistent legal positions should judicially estop it from arguing that its sporting event-based contracts do not constitute “gaming.” Finally, none of Defendants’ defenses should be waived because of the emergent circumstance that brought the matter before the Court and the absence of surprise or prejudice.”
Here’s the whole thing:
This humble little newsletter was cited by Nevada counsel! See the footnote.
The Closing Bell
A roundup of prediction markets news, analysis and other thoughts:
Is Kalshi aiming for a quick Supreme Court review? (LinkedIn): “Usually, it takes years to get legal questions teed up before the Supreme Court. That's changed somewhat in recent years — just Google ‘shadow docket’ — but the general rule still holds true. The Supreme Court likes ‘percolation,’ which is just a fancy way of saying ‘letting the lower courts work their way through the issues and the arguments, and seeing if it's really necessary for the Supreme Court to step in.’ ‘Percolation’ takes time. But Kalshi doesn't have time. It wants nationwide clarity *now*. How does Kalshi try to get that from the Supreme Court?“
MGM CEO: Prediction markets may be ‘cement’ for federal government to enter gambling space (iGB): “Operating tax free on trading revenues, prediction markets pose an existential threat to the regulated gaming industry in the view of some industry lobbyists. Hornbuckle, the CEO of MGM Resorts, appeared on a keynote panel at the East Coast Gaming Congress in Atlantic City on Tuesday.
‘If we don’t handle this correctly, it’s going to be the cement that’s being poured for the federal government to enter the space,’ Hornbuckle told iGB on the sidelines of the conference.”
Broker or bookie? Robinhood's mix of betting, investing concerns advisors (Investment News): “When you're Robinhood and you're trying to mingle the two, I think that's going to be very dangerous for millennials and Gen Z, who go in there and contribute to an IRA, and then they think, ‘let me just hop over to the betting markets and gamble $50 here’,” Herzog said. “You could have stuck that 50 bucks into your IRA instead, or put it into a traditional brokerage account and bought some stock or ETF that could theoretically generate value. There's a little bit more logic and reasoning than let me just throw something at the wall and see if I win big.”
No matter what Kalshi’s CEO says, I think everyone realizes they are gambling at Kalshi; it’s not meant to be your bank or anything else. The stakes are much higher (pun intended) at Robinhood, which wants people to store their money and investments with them as well. I agree with the folks in this article that there’s a ton of risk for users. And it feels like Robinhood is just blowing through yellow lights or stop signs or some other metaphor to offer sports betting. So far, Robinhood is only allowing sports event futures, and not single-game betting. If it draws that line, maybe that’s a defensible position. But I think that defense breaks down if it offers more granular betting opportunities. Robinhood’s CEO is on the record saying he wants to offer all prediction markets, eventually, and not just a limited menu.
Fact Sheet: Origins of the CFTC: Protecting the Integrity of the Commodities Markets (Better Markets): Emphasis added by me. “Cantrell Dumas, Director of Derivatives Policy, issued the following statement in connection with the release of Better Markets’ new Fact Sheet, ‘Origins of the CFTC: Protecting the Integrity of the Derivatives Markets.’ As the Commodity Futures Trading Commission (CFTC) commemorates its 50th anniversary, it’s a moment to acknowledge the agency’s critical role in overseeing the U.S. derivatives markets. The CFTC has been tasked with ensuring transparency and stability in markets that directly affect the prices of everyday essentials such as groceries, gasoline, airline tickets, and housing. This milestone isn’t just a celebration of past achievements. It’s a reminder that understanding our regulatory history is essential to navigating the financial innovations of the future. Building on this reflection, we must confront emerging challenges that echo the past. The introduction of digital assets and event-based contracts, particularly those tied to sports outcomes, blurs the line between regulated financial instruments and speculative gambling. This scenario is reminiscent of the era of ‘bucket shops,’ where speculative betting masqueraded as legitimate trading, leading to public distrust.’”
CFTC Staff Seek Public Comment on 24/7 Trading: “The Commodity Futures Trading Commission’s Divisions of Market Oversight, Clearing and Risk, and Market Participants today issued a Request for Comment to better inform them on the potential uses, benefits, and risks of trading on a 24/7 basis in the derivatives markets the CFTC regulates. ‘As I have long said, the CFTC must take a forward-looking approach to shifts in market structure to ensure our markets remain vibrant and resilient while protecting all participants,’ said Acting Chairman Caroline D. Pham. ‘One evolving trend is the move to 24/7, 24/6, or 24/5 trading hours. I look forward to the public comments on this market innovation.’
If this means we’re getting around-the-clock sports betting at Kalshi, it made me think of America’s favorite thing to bet on overnight: table tennis.
As Kalshi Expands Into Robinhood and Webull, Fees Loom Large (Prediction News): “Prediction market platform Kalshi continues its steady expansion across brokerage platforms, with Webull becoming the latest to offer Kalshi markets to its users. While great for liquidity, the expansion comes with costs for traders in the form of increased fees like those Kalshi recently announced on sports-related contracts now being offered at Robinhood.”
Ridiculous things you can
bettrade on at prediction markets:Polymarket edition: Sperm Race: Tristan (USC) vs Asher (UCLA). I think the title of the market speaks for itself.
Kalshi edition: What will the next Pope's name be? This is obviously a very important market that has major financial implications on …okay I tried to say that without bursting into laughter, but no dice.
If you like to consume your prediction markets takes via podcast, a couple from Straight to the Point:
Other things I have published this week on prediction markets
Guest Column: Prediction Markets May Be 'Gambling,' But Does The Definition Miss The Point?
Editor’s note: I am not the only “source of truth” in the prediction markets industry. In that light, I am going to include some commentary below with which I don’t agree 100%. But I think it’s important as we all learn more about prediction markets and what their future in the United States might be that we consider other viewpoints.
Sports market update
Here are the sports markets that Kalshi currently offers as of Friday morning (Bold and italics for additions since last week):
Basketball, 12 + game-winner markets: Moneyline betting on single games. Playoff series winners. NBA and WNBA futures markets.
Baseball, 11 + game-winner markets: Moneyline betting on single games. World Series, AL, NL and division winner markets; 2025 College World Series champion; and 2026 World Baseball Classic champion.
Football, 17: College football champion, college conference champions, Super Bowl champion, NFL division and conference winners, and UFL champion.
Soccer, 8: League futures for various international leagues.
Tennis, 3: Champions of major tournaments. There are currently no single-match markets.
Golf, 7: Current PGA Tour and LIV Golf events. Major men’s tournament winners and team competition winners.
Formula 1, 7: Drivers Champion, Constructors Champion and three props.
Hockey, 11 + game-winner markets: Moneyline betting on single games. Playoff series winners. Stanley Cup winner, conference final winners.
Cricket, 1: IPL winner.
eSports, 1: League of Legends champion market.
Other platforms:
Crypto.com offers a much smaller portfolio of markets, but does allow betting on single NBA games. NHL single-game markets launched this week as well.
Robinhood offers NBA and NFL futures markets, including series winners, new this week.