States Express Concern Over Prediction Markets Similar to Racing Industry
Recently, prediction markets have garnered significant attention, prompting concerns within the racing industry. These markets, operated under the Commodity Futures Trading Commission (CFTC), facilitate wagering on various events, including political outcomes and economic decisions. However, they have expanded to include sports and horse racing bets, raising alarms about their impact on the regulated racing environment.
Racing Industry Raises Alarm Over Prediction Markets
At the recent International Federation of Horseracing Authorities Conference, Tom Chignell, a consultant with the Hong Kong Jockey Club, revealed that one prediction market site recorded over $1.2 million in wagers during this year’s Triple Crown races. This surge in betting poses a unique challenge as it does not contribute to the purses or operational costs of racetracks, leading to serious concerns among industry stakeholders.
Legal Actions Against Unlicensed Betting
The issue of prediction markets has sparked major legal discussions. Notably, 1/ST Racing successfully secured over $3.6 million from an unlicensed offshore website that accepted bets on two of its California tracks. The recent court ruling, based on the Interstate Horseracing Act, suggests a potentially viable path for the racing industry to safeguard its interests against unauthorized betting platforms.
State-Specific Regulations and Concerns
The concerns are shared beyond the racing community. In Louisiana, the state’s Gaming Control Board, led by Chair Christopher Hebert, highlighted that prediction markets are often in violation of local sports wagering laws. The board underscores that participating in these markets could jeopardize existing sports betting licenses.
- Louisiana Advisory: Prediction markets may constitute sports wagering under state law.
- Risk of License Revocation: Involvement in these markets may affect licensure suitability for regulated parties.
This warning from Louisiana is echoed in several other states. Major gaming outlets like DraftKings and FanDuel, which currently provide licensed pari-mutuel wagering on horse racing, are closely monitoring this evolving legal landscape. Over 20 active lawsuits related to prediction markets are pending nationwide, many involving the site Kalshi in disputes against state regulators.
Tribal interests have also expressed concerns, contending that prediction markets could infringe upon the Indian Gaming Regulatory Act. This litigation represents an effort to stabilize the regulated racing market against the backdrop of expanding and often unregulated prediction markets.
As the landscape continues to shift, the racing industry is determined to protect itself. The collaboration is vital as it navigates through these challenges to ensure the longevity and integrity of licensed pari-mutuel wagering.
