Lawmakers Struggle to Regulate Sports Gambling and Prediction Markets

3 weeks ago 0

Efforts to pass legislation on sports gambling and prediction markets have stalled. Despite bipartisan agreement, these industries remain underregulated by federal authorities. Criticism is directed at leading online sportsbooks like FanDuel and DraftKings for not doing enough to prevent corruption and game rigging while profiting from millions of Americans, many of whom face gambling addictions.

Prediction markets are gaining popularity, allowing bets on non-sporting outcomes in politics and the economy. Recent scandals have arisen where government employees exploited sensitive information using prediction markets. Unlike traditional sportsbooks, these platforms offer event contracts on various topics.

“These prediction markets have almost gotten to be like insider trading,” stated Sen. Tim Kaine (D-Va.). “Sports betting is sad, it drains money from people’s pockets, especially young males.”

The SAFE Bet Act, designed to establish federal standards to protect consumers in online sports betting, gained little traction in the Senate. Frustration mounts as more instances of corruption emerge in sports leagues.

“These issues are relatively recent,” said Sen. Richard Blumenthal (D-Conn.), a bill co-sponsor. “Companies are using resources to stop us, lobbying with lawyers and money.”

Sports gambling is regulated by states, yet questions grow regarding the partnerships between sportsbooks and professional sports leagues. Philadelphia Phillies’ Bryce Harper faced controversy over a video for a FanDuel customer, leading to a lawsuit against the sportsbook.

The NCAA faces scrutiny due to partnerships with sportsbooks, highlighted by the case of Brendan Sorsby from Texas Tech, who was banned for betting on his team.

Prediction markets like Kalshi and Polymarket use two-way contracts to manage bets, regulated by the Commodity Futures Trading Commission. Recent investigations have questioned their integrity monitoring capabilities when government employees have utilized these platforms.

Phil Smyth, a gambling addiction specialist, highlighted the compulsion these platforms fuel, particularly in young men, potentially leading to addiction.

Legislation on gambling and prediction markets faces uncertain prospects ahead of upcoming elections. A Republican strategist stated that action may only occur if attached to other bills.

Sen. Adam Schiff (D-Calif.) proposed legislation to ban event contracts on sports games by prediction markets, citing their susceptibility to corruption.