SAN DIEGO, CALIF. — Prediction markets emerged as a key topic during the National Council of Legislators from Gaming States (NCLGS) Summer Meeting. A pressing question echoed in the sessions on Thursday: what proactive measures can lawmakers take in response to the surge in sports event contracts?
Various states have begun introducing legislation aimed at prohibiting or limiting these markets. For instance, Kentucky, Illinois, and North Carolina have enacted laws to tax them and regulate them similarly to licensed sportsbooks.
At the federal level, Congress is currently reviewing multiple proposals linked to prediction markets, with a significant focus on the contentious issue of insider trading.
What impact, if any, will these efforts have?
The topic was front and center in the first session of the NCLGS conference, featuring a dialogue between NCLGS President and West Virginia Delegate Shawn Fluharty and former White House Chief of Staff Mick Mulvaney.
Now serving as the Executive Director of the Gambling Is Not Investing (GINI) lobby, which opposes federal regulation of sports contracts by the Commodity Futures Trading Commission (CFTC), Mulvaney expressed skepticism regarding the ability of the CFTC to take on this role. He compared it to having a baseball umpire officiate a soccer match: “It’s simply not set up to do that,” he remarked.
Mulvaney urged states against pinning their hopes on the CFTC altering its position on sports contracts or on Congress intervening to limit prediction markets. He pointed out the inefficacy of federal legislation as a remedy, referring to the current political environment as “not a healthy place for lawmaking.”
Having previously acted as Chief of Staff during Donald Trump’s administration, Mulvaney is familiar with the former President's style. He noted, “Trump never admits he’s wrong on anything,” advising attendees to abandon any notion that the CFTC would reverse its long-held stance, which holds that sports event contracts are classified outside of sports betting, thereby maintaining the CFTC’s authority over them.
In a recent development, North Carolina Governor Josh Stein signed the state’s new financial budget, which imposes a 6% tax on prediction markets, considerably lower than the 18% to 23% tax increase applied to licensed online sports betting. However, this new budget lacks any regulatory or licensing mechanisms for prediction market companies, contrasting with the approach taken towards sportsbooks.
Mulvaney questioned the swiftness of North Carolina's new stance, considering the lengthy approval period for its licensed online sports betting, which was only initiated in 2024.
During a separate panel discussion, Pechanga Band of Indians General Counsel Steve Bodmer stated that legislative actions by states like North Carolina essentially amount to “tacitly approving” products that resemble gambling while competing unfairly against state-licensed operators, which are subject to stricter regulations.
Numerous states nationwide continue to find themselves embroiled in legal disputes over prediction markets with the CFTC or specific operators such as Kalshi and Polymarket. The measures advanced by Kentucky and Illinois to regulate and tax these markets are already facing court challenges, a situation that may mirror developments in North Carolina.
In his keynote address later that day, Nevada Gaming Control Board Chairman Mike Dreitzer advised that pursuing legislation concerning prediction markets is largely a futile endeavor, especially given the ongoing legal battles regarding whether the CFTC’s authority takes precedence over state gaming laws.
Industry insiders predict that the Supreme Court will ultimately rule on this matter; however, the timeline for such a resolution remains uncertain.
Howard Glaser, Head of Government Affairs and Legislative Counsel at Light & Wonder, stressed the need for immediate action, cautioning that it would be misguided for states to wait idly for Supreme Court outcomes. “The barbarians would not be at the gate; they would be over the gate,” he asserted.
NCLGS panelists suggested that instead of directing efforts solely at prediction market operators, legislators may find success in targeting their supporting ecosystem, which includes marketing affiliates, media outlets, and payment processors. Glaser remarked, “You cannot run a prediction market if you can’t process the payments.” He believes this strategy is the most effective short-term action until a clearer legal path emerges from the courts.
Mulvaney encouraged legislators to be proactive and deliberate in how they communicate their positions. By utilizing formal public comment periods, such as those related to the CFTC’s proposed rules on prediction markets, he highlighted the value in documenting their approach, arguing that collective efforts would resonate more loudly. He suggested engaging with mainstream media to reach influential figures, including Trump, to better advocate against prediction markets, reinforcing that such direct communication channels do exist.
