There is growing confusion around what constitutes “gambling” for purposes of legislation and regulation. Prediction markets, some trading platforms, and social sports wagering apps have followed the precedent of daily fantasy sports and cryptocurrency trading in skirting the legal prescriptions applied to gambling operators on legalized platforms worldwide. Most recently, tensions increased when prediction markets began offering sports-related event contracts nationwide, threatening sportsbook revenues, state tax income, and gambling bans in non-legal states. Many view these markets as gambling, while prediction market executives argue they function as financial markets because payouts are set by market activity, not bookmakers. This presentation will outline this debate and the legal implications of public policy considerations that attempt to distinguish gambling behavior and the infrastructure for gambling-like activities. This distinction calls into question the claim that federal oversight by the Commodity Futures Trading Commission supplants state gambling law. The resulting tension challenges the historically state-controlled gambling framework by promoting activity that is virtually indistinguishable from illegal gambling. Applying traditional legal definitions of gambling to these emerging mechanisms will be discussed. Time will be held at the end for audience participation in Q&A.
