Sporttrade Requests Relief From CFTC
Sporttrade became the first operator overseen by a state gaming regulator to request approval to offer a federally regulated sports prediction market.
Dated April 25, Sporttrade made the request in a six-page letter to the Commodity Futures Trading Commission. The CFTC is the regulator for the U.S. derivatives market, including futures, swaps and other kinds of options. The agency is in the process of reviewing a balanced approach to the regulation of designated contract markets involving sports-event contracts.
At the moment, prediction markets such as Kalshi and Robinhood are not expressly prohibited at the federal level from listing and trading sports event contracts. The CFTC, however, does not expressly allow the contracts either.
Earlier this week, Kalshi notched a win in New Jersey when a U.S. District Judge granted the site a preliminary injunction that will enable it to continue operations in the Garden State. In a 16-page opinion, Judge Edward Kiel wrote that he was persuaded that Kalshi’s sports-related event contracts fall within the CFTC’s exclusive jurisdiction.
Sporttrade, which is live in five states, is in a unique position in that it launched state operations that far predated the debut of Kalshi’s sports contracts. The exchange bills itself as a prediction market that aims to be the catalyst toward the “financialization” of sports betting.
One of its unique features is that Sporttrade allows a participant to trade in and out of a position, just as a financial trader does with a security. In the final round of The Masters, Justin Rose had a 2 percent probability to win the year’s opening major, before Rory McIlroy chunked his approach into a stream on 13. An astute trader could have bought Rose low, then sold the contract when it moved near 45 cents on a dollar to lock in a massive profit.
Kane argued that a CFTC-led regulatory approach for exchanges could foster a healthy and competitive environment across the landscape. The approach, he contends, is devoid of the “monopolistic forces” that dominate the market structure for sports betting on the state level.
Given its track record as a “compliant event contract exchange,” under the regulatory scrutiny of numerous state regulatory agencies, Sporttrade is asking for relief from the CFTC. Given the unique circumstances, Sporttrade requests that the CFTC apply discretion to provide “no action” relief to the exchange.
There is precedence in granting relief, Sporttrade wrote, as the agency has acted in a similar fashion with two others that offered event contracts in the past – Iowa Electronic Markets and Victoria University of Wellington. The timing for when the CFTC may rule on the decision remains unclear.
Portion of Louisiana Tax Increase to Fund College Sports
A legislative proposal that would more than double the sports betting tax in Louisiana advanced on April 28.
The bill, HB 639, passed through the House Appropriations Committee with little opposition. Sponsored by Rep. Neil Riser, the bill seeks to increase the tax on sports wagering revenues from a current rate of 15 percent to 32.5 percent. The measure advanced despite concerns from industry lobbyists, who say that the rate is already higher than the nationwide average of 14 percent.
Legislation is pending in several other states, New Jersey among them, that would also dramatically increase tax rates on sportsbook revenue.
Under the Louisiana legislation, approximately 25 percent of tax proceeds would be allocated to a fund that would benefit student-athletes at the state’s Division I public universities. Under the proposal, the pool is expected to receive approximately $31 million in funding annually. The funding would be critical for small Division I schools such as University of Louisiana-Monroe and Southern University.
Riser’s bill advanced to third reading. The bill is tied to a larger one from Rep. Chance Henry that would establish a flat tax on certain insurance premiums. More details of the bundled bill are expected to be released before it is debated on the House floor.
Separately, the Louisiana Senate unanimously approved a bill prohibiting sweepstakes casinos by a vote of 39-0. The legislation, SB 181, calls for expanding digital crimes to include sweepstakes sportsbooks that employ a dual-currency model.
IC360 Signs Comprehensive Agreement With Brazil’s Gaming Ministry
IC360 signed a technical cooperation agreement with Brazil’s gambling ministry under which the prominent integrity monitor will assist the government in identifying patterns on suspicious sports betting activity.
Formerly US Integrity, IC360 signed a five-year deal with the Secretariat of Prizes and Bets (SPA), Brazil’s gambling regulator. The nation’s online sports betting market launched on January 1 with great fanfare. The SPA awarded 14 full sports wagering licenses, while it granted dozens of others with provisional ones.
The multi-year deal grants the ministry with IC360’s specialized knowledge in identifying anomalous betting activity, thereby aiding in the detection and containment of efforts to manipulate outcomes. “Integrity entities such as IC360 play a fundamental role in supporting SPA’s activities, especially in identifying signs of manipulation of results, in addition to the structured exchange of information,” said Regis Dudena of the SPA.
The Brazil market is still reeling from a sweeping match-fixing scandal in 2023. The MLS suspended former Colorado Rapids midfielder Max Alves amid an investigation that Alves allegedly accepted $12,000 from a match-fixing gang to receive a yellow card in a match against the LA Galaxy. In total, the Goias investigation in Brazil led to charges against 16 individuals, including seven pro soccer players. The Rapids transferred Alves to Brazilian club Cuiabá Esporte Clube last year.
“The mission is to foster a culture of responsibility and provide a detection alert system for all stakeholders, to ensure that integrity is respected and sustainable for the Brazilian community,” said Scott Sadin, co-CEO of IC360.
On this week’s MGM Resorts’ earnings call, the company identified a total addressable market of $7 billion in Brazil. The company plans to ramp up marketing spend for its Brazilian online gaming division over the next six months.
