Gambling regulators across the country may soon contend with a new derivatives market with ties to the White House.
Representatives of Trump Media and Technology Group Corp. last week announced plans to roll out Truth Predict, a partnership with crypto.com that links social media platform Truth Social to a new prediction marketplace.
Gambling regulators across the country have criticized prediction markets as illegal sports betting platforms because they sell contracts similar to sports betting where participants take sides in a yes-or-no proposition on the outcome of a game.
Regulators in several states, including Nevada, say offering these contracts is tantamount to providing illegal sports betting because the companies are not licensed in the states where they operate.
Existing prediction markets argue that they do not need to be licensed because they are regulated and overseen by the federal Commodity Futures Trading Commission. They say they can operate in any state, even those that don’t offer sports betting, like California and Utah.
The Nevada Gaming Control Board in March issued a cease-and-desist order to KalshiEx LLC for offering contracts in Nevada, and the company responded by filing a lawsuit in US District Court in Nevada against the board and its individual members.
The trial will begin soon
The Nevada Resort Association joined the state’s defense to protect the interests of its 72 members in offering legal sports betting.
The trial is expected to begin at the end of the year.
Representatives of the Board of Control and the Resort Association say they cannot comment on the lawsuit or the launch of Truth Predict because they are involved in the case and former board chairwoman Becky Harris, now a distinguished colleague in gaming and leadership for UNLV’s Office of Economic Development, has been called as an expert witness in the case and would not comment.
Joe Asher, owner of the new Las Vegas-based Boomer’s Sportsbook and a critic of prediction markets’ attempts to enter sports betting, said he had heard the reports about the launch of Truth Predict and is not surprised because President Donald Trump’s son, Donald Jr., is an adviser to Kalshi and President Trump is an active participant in Truth Social.
“It’s pretty much the same story around prediction markets,” Asher said. “It’s clear the CFTC is not going to crack down on this.”
New CFTC Chair Nominated
In fact, Trump recently nominated Mike Selig, a high-ranking cryptocurrency regulator, to be the commission’s next chairman. The White House withdrew the nomination of Brian Quintenz, a Kalshi board member who was criticized by lawmakers in a confirmation hearing in August.
Rope. Dina Titus, D-Nev., wrote a letter in August to Acting CFTC Chairwoman Caroline Pham questioning Quintenz’s ability to avoid potential conflicts of interest.
In addition to offering prediction contracts on sports results, Truth Predict promises to offer contracts on election results and has already posted a tip on the outcome of the New York City mayoral election in which Democratic nominee Zohran Mamdani is considered the favorite over former New York Gov. Andrew Cuomo, who is running as an independent, and Republican nominee Curtis Sliwa.
Nevada’s constitution prohibits betting on election results.
Asher, who said he once bet on Joe Biden winning the 2020 election in Britain where election betting is legal, said he expects the legal battle between the states and the prediction markets to be a long one.
“The legal proceedings are dragging on,” Asher said. “You get smart lawyers involved in the case and they make all kinds of arguments. I continue to believe that sports betting is not something that is allowed under the CFTC rubric. It is not within the Commodities Exchange Act and gambling is something that is regulated by the states, sports betting in particular. What was the point of PASPA (Professional Protection Act) and trusted amateur sports (Professional State Act) to offer sports betting) if this was legal all along and nobody knew about it?”
Commodity exchanges have been criticized for not having responsible gaming programs, no checks on the age of participants, and no geofencing to limit where contracts can be implemented from.
Can reach the Supreme Court
Crypto.com is another futures exchange that has had mixed success operating in states that have legalized sports betting. While some federal courts have sided with the states, others have supported the markets. Experts say it may take a decision from the US Supreme Court to reach a final outcome on the issue.
“Prediction markets are poised to become a multi-deca billion dollar industry,” said Kris Marszalek, co-founder and CEO of crypto.com, in a release announcing the unveiling of Truth Predict. “Crypto.com has quickly become one of the most trusted providers of prediction market services and we are excited to combine with Truth Social to support the world’s first prediction markets accessible from a social media platform.”
According to the release, Truth Social users will be able to trade prediction contracts related to major events and milestones, such as political elections, interest rate and inflation changes, gold and crude oil commodity prices, events across all major sports leagues and more with the new product technology. Prices will be updated in real time, allowing users to react directly to the development of major current events.
“We are proud to become the world’s first publicly traded social media platform to offer our users access to prediction markets,” said Devin Nunes, chairman and CEO of Trump Media, in a press release. “Truth Predict will allow our loyal users to engage in prediction markets with a trusted network while leveraging our social media platform to provide completely unique ways for users to discuss and compare their predictions.”
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