One of the key figures behind the national spread of sports betting in the United States has taken up the fight against prediction markets as a form of betting.
Former New Jersey Gov. Chris Christie serves as an adviser to the American Gaming Association on prediction markets, the entities that sell event contracts to investors in current events and last year entered into sales contracts on the outcomes of sporting events.
The sports event contracts of the prediction market are yes-or-no propositions that can pay an investor who correctly predicts an event outcome with those on the losing side getting nothing and losing their stake.
Nevada gambling regulators have said the federally regulated markets are a form of betting and should have gambling licenses if they intend to sell contracts in the state.
Christie shared his views on the ongoing battle between prediction markets and gambling regulators across the country in an interview with the Review-Journal ahead of Sunday’s Super Bowl. Also this week, another prediction market filed a lawsuit against Nevada gaming regulators and Attorney General Aaron Ford, seeking an injunction to block the sale of contracts.
“I think it’s important to remember the role I played in us even being here,” Christie said. “We spent six years of my term as governor in court battles with (professional sports) leagues to allow sports betting to be established in New Jersey, and in the end we won the battle at the United States Supreme Court. So it’s an issue that means a lot to me and that I’ve invested a lot in and now you’ve seen as a result of that case that we’re seeing sports betting done the right way in four states. A lot for me because I’m the guy that got it all started.
Educate the public
Christie believes that educating people about how prediction markets work will be an important part of his work.
“I think the whole country now understands what’s going on here, which is that the prediction markets are operating illegally in all 50 states of the country,” he said. “In the 40 states that have legalized sports betting, they don’t follow the rules, they don’t pay their taxes, they market to teenagers, and they don’t protect consumers or the integrity of the leagues.
“In the 10 states where the voters or the legislature or both have decided they don’t want sports betting in their state, in places like Alabama, Georgia, Texas, they’re saying ‘too bad. We’re going to let people bet on sports in your state anyway” and clearly violates state law. So no matter what state you have the right to violate markets and states, I have the right in those states. imagine where this fight will be won in the courts across the country where states stand up for their own rights.”
The state’s court strategy
Nevada recently joined Massachusetts with another strategy to combat prediction markets. Instead of suing in federal courts, they take their claims to state courts. The Nevada Gaming Control Board recently filed a lawsuit against Blockratize Inc., which does business as Polymarket, in Carson City District Court.
Earlier this month, U.S. District Judge Jason Woodbury sided with the control board on a temporary restraining order, preventing Polymarket from writing derivatives contracts in Nevada ahead of a Wednesday hearing.
Christie believes it was a good move because he believes state courts may be better invested in protecting states’ rights.
“The reason is that the state courts understand the state laws better than the federal courts do,” Christie said. “They understand the importance of protecting state statutes and state regulations. I think state courts will be much better informed about that than federal courts will be.”
He said federal judges should be as well-informed as state judges, but that state judges tend to have a greater sensitivity to state issues.
Christie has also seen the trend of some national sports betting providers experimenting with a predictive market model. Licensed sportsbooks in Nevada have been warned that if they engage in prediction markets, they could be disciplined with fines or license suspension or revocation. He does not believe those efforts will be successful.
“If it walks like a duck and quacks like a duck, it’s a duck,” he joked. “They can dress it up with whatever they want, but at the end of the day it’s a sports game. It’s a sports game in 40 states that have rules and taxation and in 10 states it’s (illegal), no matter what they call it.”
New trial
Meanwhile, another lawsuit has been filed in US District Court against state regulators by a company that wants to operate a prediction market in Nevada.
Coinbase Financial Markets Inc. filed its lawsuit Wednesday against Attorney General Aaron Ford and Gaming Control Board members Mike Dreitzer, George Assad and Chandeni Sendall and Nevada Gaming Commissioners Jennifer Togliatti, Rosa Solis-Rainey, Brian Krolicki, George Markantonis and Abbi Silver.
The complaint, filed in US District Court in Nevada, seeks a preliminary and permanent injunction against Ford and regulators from enforcing Nevada gambling laws that prohibit Coinbase from operating a derivatives market.
In the lawsuit, Coinbase calls itself “a pioneer in the cryptocurrency industry” that seeks to offer event contracts in the futures market.
State officials are seeking a restraining order to oppose an injunction and a hearing is scheduled for Feb. 17 before U.S. Magistrate Maximiliano Couvillier III.
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