This week, we summarize significant developments in the gambling sector, including insights from a recent congressional hearing.
As the World Cup fades into the past and with the football season still on the horizon, sports bettors and bookmakers are enjoying a brief respite. However, the gambling industry remains active, particularly in the realm of prediction markets, as states strive to protect their interests and the competitive environment evolves.
While the global soccer tournament has been a focal point for the past six weeks, we reflect on its impact from a betting perspective as all the figures are tallied.
In other news, Kalshi faces another setback in court, the partnership between CME and FanDuel encounters issues, and Netflix is preparing to release a documentary focused on prediction markets.
Let's delve into the highlights from Tuesday's congressional hearing:
Bingo: Former CFTC Attorney Shares Insightful View on Prediction Markets
During the session held by the US House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development, we commend Robert Schwartz for his balanced perspective on prediction markets. The former CFTC General Counsel, now a partner at Morgan, Lewis & Bockius, recognized that financial exchanges offering sports contracts represent a novel idea but emphasized that discussions surrounding various asset classes have been ongoing for centuries. He pointed out that futures and options have historically been viewed as forms of gambling. While he expressed reservations about the CFTC's unusual directive for Kalshi to defy a Michigan state court ruling, Schwartz remarked, “In a more fundamental sense, we have been here before, many times, literally over the course of centuries.”
Bust: Scrutiny of AGA’s Assertions
American Gaming Association Senior VP Christopher Cylke testified that, according to the organization’s estimates, prediction markets have led to over $1.2 billion in lost tax revenue for states and tribes. Although quantifying this data is challenging, indications suggest a growing business for sportsbooks, casinos, and tribes. Research supports the idea that the volume in prediction markets is largely driven by states that have not yet legalized sports betting. An Eilers & Krejcik Gaming (EKG) report from April indicated that 69% of trading volume on these exchanges originates from non-regulated states, with California and Texas accounting for 43% of that volume.
Bingo: World Cup Betting Thrives
World Cup betting has certainly made a significant mark in our weekly summary, especially following Spain's triumph over Argentina. Kalshi emerged as a major player, reportedly handling nearly $14 billion in World Cup transactions, with claims of $27 billion in total volume and three million new users, as stated by Mike Breen of DeFi Rate. This event has undoubtedly exceeded expectations for Kalshi.
Dan Bernstein from Sportico highlighted that Robinhood's Rothera might represent the most significant advancement in prediction markets related to the World Cup. The newly launched exchange in June surpassed Crypto.com to claim third place in notional volume for July, capturing a 4.6% market share during the tournament's conclusion.