Prediction Markets Big Election Winners
On Nov. 5, U.S. voters decisively sent Donald Trump back to the White House for a second presidential term after four years away. But prediction markets, the derivatives exchanges that allowed the country to stake legal wagers on the election for the first time, were also huge winners.
Perhaps the most notable market was Kalshi, reports iGB, which secured approval in federal appeals court to list its political “yes/no” event contracts less than six weeks ago. Like all exchanges, Kalshi matches opposite contracts to each other and makes money on trading commissions.
As of the morning of Nov. 6, the platform had taken in more than $700 million in contracts for this election cycle. Nearly $430 million was staked on the presidential race.
On Oct. 15, the overall total was $15 million. On Nov. 3, it was $250 million.
Kalshi successfully argued in court twice that the contracts did not involve gaming. With its rulings in hand, it then aggressively marketed its offerings in the lead-up to the election. It did so by frequently referencing the word “bet,” which seemed contrary to how it was approved.
Regardless, Americans did not hesitate to pounce on the opportunity to stake real money on a legal platform for the first time. And while Kalshi is currently the only legal prediction market in the U.S., others prospered as well, such as the gray-area platforms Polymarket and PredictIt.
Colorado Wagering Tax Proposition Passes
Colorado voters on Nov. 5 approved Proposition JJ, which will allow the state to direct all sports betting tax revenue (minus some set costs and fees) to water projects in the state. Under previous law, up to $29 million in betting tax revenue could be directed to such projects, and anything above that would be sent back to operators.
But 76 percent of voters on the statewide referendum agreed to remove the cap. The idea to lift the cap came earlier this year as sports betting tax revenue has been consistently growing since betting went live in May 2020. Over the last three fiscal years, tax revenue has been rising steadily. At the end of the most recent fiscal year on June 30, the Colorado Division of Revenue reported taxes of $29.9 million from sports betting, meaning that $900,000 was returned to operators.
Colorado is the only state in the nation that directs sports betting proceeds to water projects. Wagering platforms are taxed at 10 percent of adjusted gross revenue.
Revenue Reports
Virginia sports betting operators had a strong September, taking $622.1 million in wagers and recording an 11.5 percent hold, according to a Nov. 1 Virginia Lottery report. Both were near records.
In Ohio, where the casino control commission reported September results late last week, bettors laid down a year-high $863 million in wagers while operators held nearly 12 percent. FanDuel had more revenue than competitor DraftKings, but DraftKings took more money in wagers.
The Montana Lottery reported a loss of $26,938 on sports betting in October after bettors won big on football. According to the revenue report, bettors placed $4.9 million in football wagers and won $5.1 million. Football betting accounted for 65 percent of all wagers during the month.
In Other News …
SI Sportsbook is delaying its Michigan exit until early 2025, owner Evoke revealed in its Q3 report in late October. According to the report, the company wrote that it expects the “Conclusion of sale of New Jersey and Virginia businesses with full exit from US B2C now expected in Q1 2025 with the sale of Colorado and Michigan.”
Hard Rock Bet this week launched betting on eSoccer in Florida, the company announced. Consumers will be able to bet on top players competing in the upcoming FC 24.The market is available only in Florida.
