In late January, the National Conference of State Legislatures (NCSL) sent a letter to U.S. Senators advocating for the reaffirmation of state authority to regulate online sports betting and casino-style gambling. The letter highlights the rapid growth of platforms like Polymarket and Kalshi, which operate under the guise of selling ‘event contracts’ to avoid gambling regulations. This loophole allows these companies to function nationwide without adhering to essential regulatory safeguards, including licensing standards and consumer protections.
The NCSL’s Banking, Financial Services and Insurance Committee, co-chaired by Massachusetts Senator Michael Moore, emphasized that prediction markets operate similarly to legal sports wagering. The letter urges Congress to include provisions that strengthen state regulatory authority in light of the Murphy v. National Collegiate Athletic Association ruling, particularly as cryptocurrency-related legislation is being considered.
Senator Moore stated, “I want to be very clear: Massachusetts has the legal authority to regulate betting markets that operate like Polymarket and Kalshi. So, why is this letter necessary? Because these corporations are misrepresenting what they are to shield themselves from regulations that protect everyday people and taxes that fund critical state services.”
He further clarified that the goal is not to eliminate online gambling in Massachusetts but to ensure that betting platforms operate under a comprehensive legal framework designed to protect residents from addiction and illicit practices. Moore expressed hope that the NCSL’s bipartisan appeal would prompt swift action in Washington, D.C.
The letter also points out that regulated betting markets, such as DraftKings and FanDuel, have generated significant economic activity, contributing $328 billion across 39 states that have legalized sports gambling. These platforms have also produced $53 billion in tax revenue and supported 1.8 million jobs. In contrast, unregulated markets like Polymarket and Kalshi, which reported over $1.6 billion in trading volume during Super Bowl LX, evade these financial responsibilities by classifying their services as ‘commodity’ trades.
The NCSL letter coincides with a recent amicus brief filed by Commodity Futures Trading Commission (CFTC) Chairman Michael Selig, who argues that his agency holds exclusive authority over prediction markets, potentially overriding state regulations. The letter asserts that several CFTC-registered platforms have neglected crucial regulatory safeguards, undermining state gaming laws and diverting substantial revenue from essential public services.
The letter concludes by underscoring the importance of preserving state authority in regulating sports betting and online gambling, a sentiment echoed by bipartisan majorities in both red and blue states. The letter was signed by NCSL committee co-chairs Representative Jim Dunnigan (R-Utah) and Senator Michael Moore (D-Massachusetts), along with Vice-Chairs Representative Brenda Carter (D-Michigan) and Representative Michael Meredith (R-Kentucky). It was addressed to key Senate committee leaders, including Chairman Tim Scott (R-South Carolina) and Ranking Member Elizabeth Warren (D-Massachusetts).
