In the two weeks since the previous Dollars & Sense column on prediction markets and other unlicensed outlets that accept wagering on horse racing, suddenly stories on prediction markets seem to be everywhere.
Granted, that buzz likely doesn't all trace to that column.
But 60 Minutes jumped in with a story related to prediction markets, which operate under the Commodity Futures Trading Commission. And a number of sites that focus on gaming news have devoted significant coverage to prediction markets.
While to date most prediction market wagering has been on United States and international events—think election outcomes or an upcoming Federal Reserve decision on interest rates—these sites also have offered action on sports and horse racing. At this year's International Federation of Horseracing Authorities Conference, Tom Chignell, consultant of integrity projects for the Hong Kong Jockey Club, said one prediction market site saw $1.2 million wagered on this year's Triple Crown races.
As wagering through these prediction markets does not support the sport's purses or tracks, obviously this is a concern.
So if you haven't already, read that column, which highlights the litigation efforts of 1/ST Racing to protect the sport from unlicensed betting outlets that do not benefit the sport. A recent court decision awarded 1/ST Racing more than $3.6 million from an unlicensed offshore site that took bets on two of its California tracks. Because that ruling was made under the Interstate Horseracing Act, perhaps a similar legal approach can protect racing against emerging prediction markets.
That brings us to this week's column: The racing industry is not alone in its concerns about prediction markets.
IGaming Business has posted a number of stories on legal challenges of prediction markets from both states and Native American tribes. It reported Dec. 8 that Louisiana Gaming Control Board chair Christopher Hebert issued an advisory that prediction markets are offering sports betting that is not in compliance with state law.
"It is the Board's position that such activities constitute sports wagering under Louisiana law and are not being conducted in compliance with Louisiana Gaming Control law or under a valid Louisiana-issued license or permit," reads the letter that iGB obtained.
Beyond that, the board letter went on to note that entities that participate in prediction markets could jeopardize their sports betting licenses.
"The Board issues this advisory to make it clear that any direct or indirect involvement in the operation, offering, or facilitation of sporting event contracts (prediction market wagering) may affect a Regulated Party's suitability for licensure or permitting in Louisiana."
IGB reports that other states are taking a similar stance, which is certain to catch the eye of a number of licensed outlets that have entered, or are entering, the prediction market arena; a group that includes DraftKings and FanDuel. Those two sites also offer licensed pari-mutuel wagering on horse racing.
The gaming news site reports that "more than 20 lawsuits tied to prediction markets are active nationwide, many pitting (prediction market site) Kalshi against state regulators. There are also tribal arguments that prediction markets violate the Indian Gaming Regulatory Act."
That litigation suggests racing at least will have some powerful friends as it attempts to address this latest threat to the licensed pari-mutuel wagering that serves as a driving force in its business model.
