Prediction markets seem to be inevitable, panel says
During Wednesday’s panel discussion “Trading on the Future: Prediction Markets are Here to Stay” at SBC Summit Americas in Fort Lauderdale, Florida, panelists vociferously debated the future of prediction markets, sometimes with great passion.
“Unfortunately, this is a very nuanced topic,” said Alex Kane, the CEO and Founder of Sporttrade. “And I think to call what DraftKings currently offers and what Kalshi or Crypto.com offers, or what Sporttrade offers as both sports betting, it’s intellectually inadequate.”
“I think you can tell who the lawyers are up here,” Kane added, referring to Jones Day Counsel David Aron and Wallach Legal Founder David Wallach. “They’ve got so many notes. Melissa (Blau, CEO of iGaming Capital) and I have nothing. I think so many people follow what Dan is saying, and they think this is some existential threat to what we currently think sport betting is.”
While Kane’s tone was genial, he was adamant that prediction markets offer a service to consumers. But Aron and Wallach, often citing legal precedent, were equally adamant. Aron in particular cited precedents by the Commodity Future Trade Commission wherein prediction markets were declared illegal.
Wallach was more pointed in his critique, noting that the passage by Congress of the Dodd-Frank Act and the Federal Wire Act that ban predictive markets are “the very kind of event contracts that Kalshi now claims it has a federal right to engage in,” Wallach said. “It’s all based on, in my view, on smoke and mirrors because Kalshi has taken adverse different positions on other federal court proceedings when they were litigating against the CFTC over the right to offer event contracts around political events. … So, at best, what Kalshi is doing today is gaslighting everyone. At worst, they’re committing a fraud on the courts by changing this story and saying that Congress would have allowed this. It’s gambling and there’s no economic utility in connection with sports related event contracts.”
Stuck in the middle was Blau, who noted her clients have been asking if they will have to deal with prediction markets while still processing sweepstakes.
“Now they have to deal with this,” she said, noting the reaction has varied among different tribes. “They don’t know if this headwind is about to be taken away from them. But the problem is, the ones who know, they can’t do anything about it. They’re not allowed to, but they have to watch everyone else be able to do it. And they just have to sit idly by and watch their addressable market shrink and shrink.”
Knox countered that by citing that Maryland last month reported a 11.5% yield out of around US$100 million, with US$11 million kept by sports books. For an exchange, it would be 1/100 of that. We’re not even 100 times off if we were to say that sports betting and what these prediction markets are the same.”
Aron noted that the nominee to head CFTC, Brian Quintenz, seems inclined to favor prediction markets.
“It seems unlikely he’s going to prevent exchanges from listing sports,” Aron said, adding that view is unlikely to change unless the courts or Congress intercede.
Wallach, however, thinks the die is already cast. And he blames the current political climate.
“This only happens under the Donald Trump administration and it’s inconceivable to me that a current Kalshi board member who probably received stock-based compensation, blind trust or not, will be putting his thumb on the scale,” Wallach said. “It’s favoring one company and this is already happening because Kalshi self-certified their event contracts and the CFTC stood down and did nothing about that while taking more aggressive action against Crypto.com … And shouldn’t it bother everybody that this is how our government is doling out entitlements?
“I know Alex (Knox) very badly wants to be on a CFTC regulated exchange and have a level playing field. I know everybody in this room wants in on this, the new vertical. … The basic level that this is how it’s happening because the son of a president is a strategic advisor to a gaming company.”
Dig deeper
2025/05/16: Women seek to level the field when it comes to sports betting, SBC Summit Americas panel says
2025/04/23: Prediction markets platform Kalshi files lawsuit in Maryland
2025/04/14: Michigan regulator to investigate unlicensed prediction markets
2025/05/05: NBA expresses concerns over sports prediction integrity to CFTC
