With the Kentucky Derby set for Saturday, Churchill Downs has been in the headlines this week. So too, as always, have prediction markets. Here’s our weekly rundown of winners and losers in the gambling industry.
Tomorrow marks the first Saturday in May, which means it’s time to run for the roses at Churchill Downs. Prediction markets won’t partake in the Kentucky Derby, but with the NBA and NHL playoffs heating up, and the World Cup and football season on the horizon, it’s becoming clear that a big portion of the sports betting action in unregulated states is flowing through the platforms.
Meanwhile, as it considers new rules to govern prediction markets, the CFTC received a flood of responses from a wide-range of entities during the public comment period that ended Thursday. Pro sports leagues and players’ unions were among the stakeholders that made their voices heard, as were members of congress, state regulators, tribes, gambling companies, financial institutions, and prediction markets themselves
Here’s a look back at the positives and negatives in this week’s hot-button stories impacting the the gambling industry:
Bingo: Prediction Markets Seeing the Light on Economic Benefit Argument?
Among the public comments submitted to the CFTC ahead of the agency’s rule-making, a prediction markets trade group suggested that its members – which include Kalshi, Robinhood, Crypto.com, Coinbase and Underdog – understand that event contracts must have a real-world financial element to be legally justifiable. While gambling industry observers have feared that slots, roulette, blackjack, etc. would eventually be available on the sites, the Coalition For Prediction Markets is urging the CFTC to include casino-style games in its definition of “gaming”, which would effectively prohibit the platforms from offering them. Meanwhile, CFTC head Mike Selig hinted during a conversation with Front Office Sports that player props and parlays could be placed on prediction markets “do not touch” list. While prediction markets aren’t letting go of all sports contracts anytime soon, they are at least making baby steps toward rationality.
Bust: California, Texas Leave Soft Spots Open
It doesn’t feel particularly timely to be calling out states for their failure to pass sports betting laws, until the debut release of Eilers & Krejcik Gaming’s Prediction Market Monitor. The report confirmed a dynamic many have suspected: The bulk of sports-event contract trading volume – 69% – is happening in states without regulated betting, with 43% coming in California and Texas. Prediction markets accounted for 11% of OSB handle in March, per EKG’s analysis, and Kalshi was the nation’s fourth-largest sports betting operator for the month. While scooping up sports bettors in non-legal states is on page one of the prediction market playbook, the data is another illustration of a missed opportunity for states sitting on the sidelines.
Bingo: Churchill Downs Chases Away Prediction Markets
Churchill Downs Inc. has succeeded where multi-state coalitions, gaming regulators, tribes, and the NCAA have not – backing off prediction markets. At the behest of the horse track operator, event contracts are not being offered on the 152nd Kentucky Derby. Polymarket and Novig took down Derby markets shortly after opening them; Kalshi never even put them up. NTRA president and CEO Tom Rooney, a former US Congressman, leaned on the Interstate Horseracing Act to threaten prediction markets via a letter to the CFTC, and it’s a battle apparently not worth fighting for the rising yet besieged companies.
Bust: CDI Wants No Part of Fixed-Odds Horse Racing
Computer-assisted wagering is another rock on the pile of problems facing the horse racing industry, and the Kentucky legislature offered part of a solution, wrapping fixed-odds into recent gambling reforms. Thanks to CAW’s algorithmic handicapping, lightning-quick technology and ability to tap into pari-mutuel systems, track-goers are watching odds on their bets plummet, even after a race starts. With fixed-odds, gamblers don’t have to worry about such sudden price changes. For operators, though, fixed-odds don’t offer the guaranteed margin of pari-mutuel wagering, and it’s a risk CDI would rather not take – to the detriment of its customers. “We will not offer fixed odds wagering at any of our racetrack properties,” the company told Gambling Insider’s Steve Bittenbender in Louisville this week.
Bingo: Colorado Sports Betting Reforms Move Forward …
By a 20-14 vote, the Colorado state senate approved legislation designed to make the state’s gambling industry a little safer. Under SB 131, Colorado would become that first US jurisdiction to ban the often incessant push notifications customers receive from sportsbooks. The bill, among other measures, also curbs sports betting advertising and limits the number of deposits bettors can make in a day. Before sending the bill to the House, senators wisely nixed a proposed ban on prop bets, a move that would have had a significantly adverse effect on the industry, and also softened an outright advertising prohibition.
Bust: … But Show No Sympathy for Sharp Bettors
One man’s bingo is another man’s bust, and sharp bettors in the Rocky Mountain State sure don’t love the legislation RG advocates are lauding. Part of the original language, a ban on the all-too-common practice of limiting winning players was stricken from the bill. After a rule was passed in Massachusetts earlier this year requiring operators to inform customers why they’re being limited, sharp bettors will have to look elsewhere as they hope for more progress on this front.
The post Churchill Downs Inc. Figures Into Kentucky Derby Week’s Bingos & Busts, While Prediction Markets Exhibit Signs of Rationality appeared first on Gambling Insider.
