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As Kalshi announced the launch of single-game markets for Major League Baseball, the head of the U.S. gaming industry’s main trade association insisted the prediction market's sports event contracts are being offered in violation of federal law. 

“What really began as an exercise to legalize betting on elections, has transformed into an exercise of predictions,” Bill Miller, CEO and president of the American Gaming Association (AGA), said during a presentation at the East Coast Gaming Congress in Atlantic City on Wednesday (April 16).

“I believe they’re bets, money-line bets in essence, on sports,” Miller said. “So, we have seen a number of states that have reacted to that, I think appropriately.”

Kalshi’s decision to launch wagering on Major League Baseball (MLB) games on Wednesday came two days after the platform launched trades on National Basketball Association playoff games.

MLB wrote to the Commodity Futures Trading Commission (CFTC) in March, expressing its concern that as the resemblance between sports event contracts and traditional sports-betting markets continues to grow, so too does the need to replicate the integrity and consumer protections that exist in state regulatory regimes for sports wagering.

Earlier this week, Tennessee became the latest state to raise concerns over the legality of prediction markets, urging the CFTC to reconsider allowing the platforms to operate under federal regulation.

In a letter sent to the CFTC, the Tennessee Sports Wagering Council, which regulates the state’s mobile sports-betting market, opposed the contracts currently being offered within the state by Kalshi and others. 

The regulator also made it clear it believes the sports event contracts constitute illegal gambling under the Tennessee Sports Gaming Act. 

Tennessee has joined a handful of states, including Nevada, New Jersey, Illinois and Ohio, in trying to halt the expansion of prediction market platforms. Several of these states have sent cease-and-desist letters, while Kalshi filed a lawsuit in response to letters from Nevada and New Jersey regulators.

Last week, a federal judge in Nevada granted Kalshi’s request for a temporary restraining order blocking the Nevada Gaming Control Board from taking enforcement action against the prediction exchange. 

A similar lawsuit filed by Kalshi remains pending in New Jersey, with filings due later this month. A judge is expected to hear the company’s motion for an injunction ahead of an April 30 deadline imposed by the New Jersey Division of Gaming Enforcement.

“I don’t know where that is going to go. That’s a state versus federal issue that is above my pay grade,” Tom Reeg, CEO of Caesars Entertainment, told 91����ԭ�� GamblingCompliance on the sidelines of the East Coast Gaming Congress. 

Caesars operates 51 casinos in the U.S., including multiple resorts in Nevada and New Jersey. 

Miller added the AGA to the list of tribes and state gaming regulators who have filed letters with the CFTC expressing their concerns over how prediction markets threaten the regulated gaming industry.

“It is hard for me to see this as anything other than a threat,” Miller said. “It starts with the upending of federalism and states’ rights. I’ve had conversations with a lot of people, and for tribes, it’s simple. The tribes are sovereign that negotiate with state governments as equals.

“And the federal government is just going to preempt whatever agreements that they have,” he said of the potential expansion of sports bets via prediction markets. “Then it is hard not to see this as a violation of the federal Wire Act and IGRA (Indian Gaming Regulatory Act).” 

Jim Allen, CEO of Hard Rock International and Seminole Gaming, did not address prediction markets specifically during his presentation on Wednesday, but reminded regulators and legislators that why would gaming companies invest $500m or more in a state when there is “not a field of competition we know is fair”.

Both Miller and Allen suggested that many executives of financial trading platforms would be unwilling to go through the strenuous process that is involved in state licensure of gaming.

The CFTC is expected to hold a roundtable discussion on sports event contracts on April 30 in Washington, D.C, although it has yet to confirm when or where the meeting will be held or a list of participants.

“The notion that a little-known agency in the federal government that provides self-certification for money-line bets on predictions ... when it, in essence, undermines and upends decades of state regulation, state statute, in some cases, in New Jersey, arguably is contravening the state’s constitution, I think that’s problematic,” Miller said.

Miller also agreed with comments made by MGM Resorts International CEO Bill Hornbuckle on Tuesday that by allowing this to happen, a new and concerning precedent was being set for having a federal agency in charge of gaming, because the CFTC certainly does not have the appropriate resources.