3 minute read | November.08.2024
A recent court ruling lifted a CFTC ban to offer political prediction-market contracts. While appealing the decision, the Commodity Futures Trading Commission (CFTC) is stepping up as an "elections cop," and committed to regulating these markets, according to Chairman Rostin Behnam in a Bloomberg Television interview. Behnam emphasized the agency's role in overseeing political derivative markets and taking action based on public tips.
The CFTC is still in a legal battle with Kalshi, a New York-based exchange allowing election outcome bets, citing public interest concerns. Kalshi argues that prediction markets help combat misinformation and aggregate valuable electoral information efficiently. Trading activity on Kalshi has surged, with significant bets on the presidential election.
Meanwhile, the unregulated crypto-based platform Polymarket has stated that it is excluding U.S. users, following a spike in pro-Trump activity.
The launch of online lottery sales in Massachusetts is facing significant delays and reduced revenue expectations. Initial projections placed expectations at $100 million in revenue for FY2025. State Treasurer Deborah Goldberg announced that the online lottery will not be available until April 2026 and the revenue estimate for the first year has been revised down to $70 million. Lawmakers now face the challenge of addressing a $100 million budget shortfall in the coming budget year.
The Tennessee Sports Wagering Council has issued a cease-and-desist letter and $50,000 fine to Bovada, a Curacao-based online sportsbook that has been the serial target of regulator action this year. Since June, Bovada has withdrawn from 14 states, plus the District of Columbia. The council's executive director, Mary Beth Thomas, emphasized the importance of a safe, regulated environment for sports bettors. Bovada remains one of many unlicensed and unregulated offshore gambling sites still accessible to U.S. residents, many producing significant traffic.
This is the first notable effort to impose a fine, in addition to sending a cease-and-desist order. It will be interesting to see how Bovada responds. The enforcement options for state regulators are limited in dealing with offshore operators that do not comply with state demands.
A Philadelphia judge rejected District Attorney Larry Krasner’s attempt to classify Elon Musk’s daily $1 million giveaway to voters in battleground states as an illegal lottery under Pennsylvania consumer protection laws. Judge Angelo Foglietta denied Krasner’s request for an injunction against Musk and his America PAC.
Musk’s attorneys argued that the giveaway was not a lottery since winners were selected based on specific criteria and became paid spokespersons for the PAC, rather than being chosen by chance. Krasner's team claimed this was a deceptive practice, suggesting it was marketed as a random lottery.
Musk's PAC planned to issue one more $1 million award to a registered voter in Michigan, regardless of the court's decision.
The case, initially delayed by attempts to move it to federal court, did not receive a substantial hearing until November 3rd, the day before Election Day.