Bettors Are Being Forgotten In Battle Over Sports Contracts

After more than a year of legal battle, the US Supreme Court will soon decide the fate of sports prediction markets in the US.

Once the nation’s highest court delivers a ruling, it will determine if the states or the Commodity Futures Trading Commission will regulate the emerging industry going forward. Both sides have argued that rejecting their respective argument will hurt efforts to curb problem gambling, putting increased pressure on the impending ruling.

However, there is reason to wonder if protecting bettors is really the motivation for either side.

Are States Capable?

Most betting markets in the US have been active for several years now. This has allowed them to make changes and updates to adapt to the industry's challenges. However, there has been little success when it comes to reducing problem gambling.

One key issue is that states use tax revenue from regulated sports betting to fund crucial projects. Unfortunately, states like Colorado have learned that increased regulations aimed at fighting problem gambling would significantly decrease that tax revenue. 

This has led some lawmakers to fear that addressing the crisis would just create another, ultimately rejecting those proposals.

The lack of progress has led federal lawmakers to consider setting national regulations, removing some of that authority from the states themselves. 

If prediction markets are forced into the regulated sports betting industry, states would face a whole new set of risks and dangers for which they don’t have solutions. While they have experience regulating gambling, the success of their efforts remains in question.

Do Prediction Platforms Care?

When Kalshi and Polymarket were first launching sports prediction markets, they rejected calls for responsible gambling protocols. Instead, they argued that Americans have the right to spend their money however they want without government intervention.

That has begun to change over the last year, especially for Kalshi. The industry-leading platform has changed course, adding responsible gambling protocols and even joining the National Council on Problem Gambling. 

While Kalshi and other platforms' shift in stance is promising, questions remain about their motives. US courts have begun siding with states over the industry, raising concerns that SCOTUS could do the same. As a result, some believe these operators are trying to improve their image ahead of the final ruling.

What About Bettors?

As the fight over sports prediction markets comes to a final resolution, there is no clear indication that bettors will be safer.

On one hand is state regulation, which has struggled to address problem gambling since PASPA was overturned in 2018. Many lawmakers from betting states have aggressively accused prediction platforms of offering illegal gambling, but have not spoken much on why bettors are choosing to exit the regulated market. 

As a result, they cannot guarantee those bettors will return if prediction markets are regulated or banned. 

On the other hand, the prediction industry's motives remain in doubt. If they win, the CFTC will remain the industry's sole regulator. The regulator is already understaffed and has several other areas of focus. Its attempts to set regulations and ease industry concerns have failed, showing it still doesn’t have a firm grasp on how to handle it.

With neither side having an effective way to fight problem gambling, it seems unlikely that bettors will truly benefit, regardless of who ultimately wins.