A quiet battle is brewing in New York, one that could reshape the future of online prediction markets. State Senator Joseph Addabbo Jr. has initiated a formal review, consulting with legal counsel to determine the state’s authority to regulate these rapidly emerging platforms when the legislative session reconvenes in January.
This scrutiny arrives amidst a legal challenge from prediction market operator Kalshi, currently locked in a dispute with the New York State Gaming Commission over whether its political contracts violate state gambling laws. Simultaneously, a federal bill is being considered that could dramatically alter the regulatory landscape nationwide, adding layers of complexity to the situation.
Addabbo, a key architect of New York’s successful mobile sports betting system, isn’t focused on the legal intricacies. His driving concern is consumer protection, particularly safeguarding vulnerable individuals from the potential harms of gambling addiction. He draws a parallel to the recent surge in sweepstakes casinos, which operated in a legal gray area before facing regulation.
“These particular markets have very little guidelines or guardrails or safety measures for those who may have a gaming addiction,” Addabbo explained. The lack of established safeguards is a critical point, especially when contrasted with the robust protections built into New York’s regulated sports betting ecosystem – a system that has already generated half a billion dollars for education.
The core question facing New York lawmakers is one of jurisdiction. Can the state effectively regulate prediction markets, or do they fall under the purview of federal agencies like the Commodity Futures Trading Commission? Addabbo insists on exploring every avenue within the state’s power, even as federal debates unfold.
He’s carefully examining Assemblymember Clyde Vanel’s proposed ORACLE Act, a bill designed to regulate prediction markets within New York. However, Addabbo emphasizes that determining the state’s legal authority remains the paramount issue. The senator wants to understand precisely “what we can do within New York’s jurisdiction.”
Addabbo isn’t fixated on classifying prediction markets as either gambling or finance. His priority is preventing potential risks to consumers and ensuring oversight. He worries that prediction contracts related to elections, politics, or entertainment could easily bleed into the established mobile sports betting world, jeopardizing the state’s existing regulatory framework and revenue streams.
The speed of technological advancement adds to the urgency. Addabbo recognizes the need to proactively address these emerging platforms, stating, “You want to be ahead of the curve, you don’t want to be reactive.” The accessibility of these markets demands immediate attention and careful consideration.
A clearer picture is expected to emerge early in the new legislative session in January. As state and federal regulators grapple for control, and legal battles continue, the coming months will be pivotal in determining the fate of prediction markets in New York – and potentially, across the nation.
