Digital Wager Wire highlights the most important events impacting the domestic and international sports betting and gaming industry each week throughout the year.
Trading Platforms Scoring Legal Victories
Derivatives trading platforms like Kalshi, Crypto.com, and Robinhood have recently stirred controversy by entering the sports betting markets and offering contracts on games, just as they routinely do on commodities like silver, gold, and pork bellies.
Key Differences from Traditional Sportsbooks
These contracts differ from sportsbooks offering odds on games in that the value of the contracts fluctuates and their prices are dynamic, as opposed to sportsbooks whose odds are fixed the moment the bet is made.
The disparities between the two are nuanced, but the trading platforms and sportsbooks are essentially vying for the same gambling dollar. This new competition has caused an uproar among the state regulators, sportsbooks, and other gaming stakeholders.
Trading platforms are licensed by the Commodity Futures Trading Commission (CFTC), a federal agency, and not state regulators like those in Nevada, Maryland, Ohio, Illinois, New Jersey, and Montana, all of whom have issued cease-and-desist orders to Kalshi and others. However, Kalshi contends that they are not beholden to these state agencies, only to the CFTC, and therefore can operate in any U.S. market despite regulators’ objections.
Kalshi’s Legal Position
“We’re not necessarily very concerned [because] we are regulated at the federal level,” Kalshi CEO Tarek Mansour said earlier this month at a StrictlyVC event in San Francisco. “The state law doesn’t really apply.”
Kalshi has scored early legal victories and continues to operate unfettered. The CFTC had promised to schedule a roundtable discussion involving all the interested parties but recently cancelled those plans and has not scheduled a new date. This may signal that the CFTC does not wish to arbitrate the matter, nor draw the ire of the White House, considering Donald Trump Jr. was recently hired as a consultant for Kalshi.
Is Georgia Sports Betting On the Horizon?
Georgia State Representative Marcus Wiedower (R-Watkinsville) introduced HR 450 which if enacted would permit Georgia sports betting under the supervision of the state lottery.
South Carolina Hears Sports Betting Bill
South Carolina is one of only 11 states that has not launched a retail or mobile sports betting industry, but lawmakers in the Palmetto State appear to be warming to the idea. Whether a recent sports betting bill introduced by Representative Chris Murphy in the form of HB 3625, known as the South Carolina Sports Wagering Act, will gain enough traction during this legislative session is still unknown, but it does signal a shift in the state’s previous intractability.
Bill Under Review by Lawmakers
South Carolina’s House Ways and Means Committee’s Revenue Policy Subcommittee recently heard the bill but has not voted on it, preferring to reconvene after considering several amendments. Representative Bruce Bannister, the chair of the committee, has not disclosed if the bill would be discussed again during this session.
The impetus for the legislation appears to be driven by the launch of mobile sports betting in neighboring North Carolina. South Carolinians are routinely crossing state lines to make their wagers, putting money in the pockets of those adjacent states and not keeping it in the state. Proponents contend that those tax dollars could be used on projects in South Carolina, but critics claim it may do more harm than good, citing potential problem gambling increases.
“It’s a no-brainer,” argued House Minority Leader Todd Rutherford. “We shouldn’t have to make people drive up to the border to try to get as close to this gate or change their VPN. So, they’re out there appearing to look like they’re in another state who are already doing it. We recognize that we need to get the tax revenue.”
