Prediction markets weren’t at G2E. Here’s why they dominated gaming business discussions

On Election Day 2024, on-line monetary alternate and prediction market Kalshi took out an advert on the outsized digital promoting board above the doorway to the Miracle Mile Shops at Planet Hollywood, itemizing reside wagering odds on Donald Trump and Kamala Harris.

At the time, the gaming business’s issues about Kalshi and different prediction market operators getting into the sports activities betting area have been simply starting to percolate.

Nearly a yr later, the pot boiled over right into a full-scale meltdown simply in time for final week’s Global Gaming Expo in Las Vegas. 

Commonly known as G2E, the annual gathering sometimes facilities on the latest on line casino video games showcased on the tradeshow ground contained in the Venetian Expo. But not in 2025.

Starting with remarks on the primary stage’s opening day by American Gaming Association (AGA) CEO Bill Miller to a number of panel discussions, the impact Kalshi and different related companies are having on state and tribal-regulated sports activities betting operations drew the majority of the G2E viewers’s consideration. 

Through their on-line presence, prediction markets — that are regulated federally by a commodity-focused regulatory panel — attain into all 50 states, together with these that don’t provide authorized sports activities betting, akin to California and Texas.

In Tuesday’s keynote tackle, Miller highlighted state and tribal gaming operations as a system “founded on a regulatory approach that upholds the public interest and looks out for consumers while giving companies the license to operate, innovate and grow.”

“The free riders?” he stated, referring to prediction markets. “They thumb their nose at this approach to gaming.”

Nevada is one in every of practically two dozen states and tribal gaming authorities which have filed federal lawsuits in search of to dam Kalshi and different prediction markets from providing sports activities wagering contracts (the time period firms use to explain the enterprise) of their jurisdictions. 

Multiple circumstances are winding their approach by way of the federal judicial course of, with consultants predicting {that a} authorized treatment may not be in place till someday in 2026.

Jefferies Equity Research analyst David Katz wrote in a Thursday analysis word that ongoing concern about prediction markets might be the catalyst for state gaming authorities to draft new rules.

“While legal processes are likely longer-term, operators, states, leagues and tribes are likely to drive regulatory solutions,” Katz wrote.

G2E organizers knew heading into the tradeshow and convention they couldn’t ignore prediction markets, which permit folks to wager on the outcomes of occasions starting from leisure, politics, popular culture, monetary markets and even the climate within the type of “yes” and “no” contracts. 

Sports as a share of prediction market buying and selling quantity has grown exponentially over the previous yr, and the beginning of the soccer season heightened the curiosity. Kalshi introduced final month that the platform had taken in more than $441 million in trades — the time period they use to explain wagering — throughout the opening 4 days of the NFL season.

Miller’s aggressive feedback about prediction markets come amid fears that firms akin to Kalshi will slice into the $13.7 billion produced by U.S. sportsbooks in 2024, which was practically one-fifth of final yr’s record-breaking $72 billion in complete gaming income. 

“They decide where and when they’ll operate, telling states, tribes and citizens they have no voice in the process,” Miller stated of the prediction market’s emergence. “They pay a pittance in taxes and certainly do not generate the $330 billion in economic impact or any of the community benefits we provide. When it comes to helping customers play responsibly, they couldn’t care less.”

Prediction market firms weren’t invited to G2E, on condition that they don’t seem to be members of the group, however that didn’t cease Kalshi from making information. On Friday, Kalshi announced raising $300 million in funding that may permit enlargement into 140 international locations. According to Kalshi CEO Tarek Mansour, the deal values the corporate at $5 billion.

Sara Slane, a longtime sports activities betting guide and former gaming affiliation government who turned Kalshi’s head of company improvement in April, defended the present regulatory construction in an electronic mail to The Nevada Independent. 

“The federal government is significantly better equipped to regulate financial markets than 50 separate slot machine regulators, which do not have the capacity, expertise, or legal jurisdiction to regulate futures,” Slane wrote.

“U.S. markets need to encourage innovation and choice in financial services,” she added.

Regulators and Congress react

Gaming regulators and members of Congress have begun to weigh in on the problem, and it’s not favorable to the prediction markets. 

On Wednesday, Nevada Gaming Control Board member George Assad publicly applauded a ruling by U.S. District Judge Andrew Gordon denying a request by Crypto.com to proceed working sports-related occasions contracts in Nevada whereas litigation filed by the board makes its approach by way of the courts.

“The gig is up. A derivative contract, whatever you want to call it, is nothing more than a sports wager,” Assad said during the board’s public comment session. “Every wager made on this city is a contract. You can name it a by-product contract. You can name it a credit score default swap, like they did through the housing bubble. Whatever you need to name it, it is nonetheless a sports activities wager. It’s below the jurisdiction of the Nevada Gaming Control Board.”

Kevin King, a Washington legal professional who’s a accomplice with Covington & Burling, stated the ruling towards Crypto.com might confuse the matter as Gordon earlier this yr dominated in Kalshi’s favor on an analogous request for a preliminary injunction. Crypto.com made an analogous request, however Gordon denied it verbally. The written order along with his rationale has not been filed as of Friday.

“The same judge has come to different conclusions,” King stated. “One can speculate that that might generate additional action, maybe an additional appeal.”

Per Slane, Kalshi’s attorneys imagine the corporate is “on very strong legal footing in all cases and are confident that these matters will be adjudicated quickly.”

Meanwhile, Capitol Hill has additionally taken discover. 

Sen. Catherine Cortez Masto (D-NV) and Sen. John Curtis (R-UT) wrote in a Sept. 30 letter to the Commodity Futures Trading Commission (CFTC) that gaming actions are lawfully regulated by state and tribal authorities and {that a} federal company mustn’t have a task within the business.

“The CFTC is expressly prohibited from allowing event contracts that involve gaming,” the senators acknowledged within the letter that was signed by 4 different senators, together with Sen. Jacky Rosen (D-NV). “Despite this prohibition, the CFTC is permitting sportsbook gaming to inappropriately designate themselves as ‘event contracts’ with oversight by the CFTC.”

Cortez Masto and Curtis stated the CFTC is undermining “the sovereign authority of states and tribes to regulate gambling within their jurisdictions and risks federalizing an area of law that the Supreme Court has held is reserved to the states.”

On Thursday, Pennsylvania Gaming Control Board Executive Director Kevin O’Toole despatched a letter to the state’s 19-person congressional delegation calling sports activities prediction markets “a significant threat” to Pennsylvania’s gaming regulatory construction.

O’Toole wrote that the federal commerce fee wants “to consider the inherent problems caused by a dual-track system of state-regulated legal sports wagering and purported futures trading on sporting events under the facade of federal regulation.”

Slane bristled at remarks that in contrast Kalshi to unlawful offshore sports activities betting operations.

“The notion that Kalshi is in any way similar to an illegal offshore gaming operation is laughably inaccurate,” she stated. “Kalshi is authorized, onshore and never a gaming platform.”

‘A major disadvantage to us’

During G2E’s keynote session, three gaming executives had different opinions on prediction markets. 

MGM Resorts International CEO Bill Hornbuckle, whose firm operates sports activities wagering supplier BetMGM, stated competing with an organization “that’s unregulated in the context of gaming and not taxed, is competitively a major disadvantage for us.” 

He stated that prediction markets being regulated by a authorities company invitations the notion that the federal authorities will “step into our space.” Hornbuckle added, “That is something this industry has historically and categorically said ‘thank you, but no thank you,’ to for decades.”

The CEOs of the nation’s two largest sports activities betting operators — FanDuel and DraftKings — took a extra muted strategy on prediction markets. Neither firm is licensed in Nevada.

FanDuel proprietor Flutter Entertainment introduced in August it would partner with the Chicago Mercantile Exchange to probably create an occasion contracts platform within the U.S. CEO Peter Jackson instructed the G2E viewers that the corporate is “very well-placed irrespective of which path we end up following.”

Meanwhile, DraftKings applied to join the National Futures Association in August, a transfer thought of an early step towards coming into the prediction markets. CEO Jason Robins stated firms akin to Klashi have flourished as a result of larger states akin to Texas and California haven’t legalized sports activities betting.

“I just don’t see a world where people are going to prefer [prediction markets] unless you’re somebody that’s maybe been limited and can’t get action,” he stated.

Robins declined to reply a query posed by moderator Hope King of Yahoo Finance and Axios, whether or not prediction markets have been one other type of playing or if they need to be shut down.

A ‘battle royale’

Florida-based gaming legal professional Daniel Wallach, who spoke on a number of G2E panels protecting the prediction markets, believes the authorized questions round whether or not or not prediction markets needs to be thought of gaming operations will in the end be settled by the U.S. Supreme Court. He stated appellate courts will more than likely have various opinions.

Wallach recommended some smaller sports activities betting firms that had preliminary conversations with prediction market companies went nowhere as a result of operators have been terrified of licensing repercussions. 

“All these new legal fronts, and the legal arguments geographically are expanding because the tribes are now involved,” Wallach stated. “This is becoming a battle royale. It’s confusing to everybody because it’s such a dynamic, fluid situation, because we also don’t know how many more states are going to be in litigation with Kalshi.”

Wallach isn’t certain the Republican-controlled Congress will really do something with the matter, on condition that the president’s son, Donald Trump Jr., is a strategic advisor to Kalshi.

“Will Congress come in and try to eliminate the activity, provide more clarity or place its thumb on the scale at Donald Trump’s direction?” Wallach stated. “We don’t know because so much money is now flowing into these markets.”