New Federal Bill Targets Prediction Markets & Sports Betting

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Examining the Fair Markets and Sports Integrity Act

The Fair Markets and Sports Integrity Act, a new federal bill introduced by Congressman Dina Titus, a Democrat from Nevada, targets prediction markets and proposes significant regulatory changes. This legislation arises from the ongoing contention that prediction markets exploit loopholes to offer sports betting disguised as financial derivatives. This allows them to evade state sports betting laws and taxes.

Currently, prediction markets operate across all 50 states, whereas only 39 states have legalized sports betting. Unlike sportsbooks under state regulation, prediction markets are regulated over the Commodity Futures Trading Commission (CFTC). As it stands, these markets capitalize on a lack of clarity in current federal laws, notably the Commodities Exchange Act.

Additionally, the new bill aims to completely prohibit prediction markets from offering any betting options related to athletic events or casino-style games. It represents an effort to prevent these platforms from morphing into online gaming sites under the guise of trading financial derivatives. This is crucial because entities like Kawhi and Polymarket have yet to venture into online gaming, highlighting potential areas of exploitation.

This development follows comments from Michael Selig, the new CFTC chair, who suggests forthcoming rules to solidify the status quo, implying that the federal government may soon take a definitive stance on these issues. Of note, this bill also reflects divisions within the gambling industry, as traditional casino operators like MGM and Caesars have not yet entered the prediction markets unlike newer entities such as DraftKings and FanDuel.

As the bill begins to circulate in Congress, where it may potentially garner support, the impact on the broader legal landscape concerning sports betting and online gaming could be significant. With existing state lawsuits and potential Supreme Court involvement, the passage of this bill could preemptively resolve some of the ongoing legal battles concerning prediction markets and sports integrity in the United States.