Kalshi continues to push the boundaries of what markets are acceptable under its prediction market business model. MLB moneylines appeared on the website on Wednesday for the first time.
Users can now “predict” or some might say bet on the winner of baseball matches. This follows Kalshi adding NBA moneylines to the site earlier this week.
The site also traded high volumes on the Masters last week and is quickly expanding into more and more sports.
MLB moneylines a step too far?
The MLB, however, have already sent a letter to the Commodity Futures Trading Commission (CFTC) expressing concern over prediction markets. In the letter, sent last month, they wrote:
“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 at the state level. Currently, those protections are lacking. …
“MLB has supported legal sports betting at the state level based on robust regulation and relationships in which sports leagues are viewed as partners and integrity of competition is considered paramount. If the CFTC decides to permit sports event contracts, this same integrity framework should be applied.”
The CFTC also received a letter from Tennessee regulators this week about their concern over sports event trading. There is growing frustration at the ever-expanding reach of prediction markets, which state regulators claim are unlicensed betting.
Six states sent Kalshi, Crypto.com, and Robinhood cease-and-desist letters after March Madness, which saw high trading volume.
Prediction markets or sports betting?
In a hearing last week in Nevada, a judge asked how do you tell the difference between a “sports-related event contract” and a sports bet or wager?
Kalshi’s lawyers answered, “So the answer is, it has economic consequences outside of the transaction at issue”. He went on to give an example of a coin flip, “but the coin flip would not have independent real-world consequences in the world at the start of a football game”.
On the other hand, “the winner of the Final 4 Men’s Basketball or Women’s Basketball Championship clearly has real-world financial consequences for the schools, the sponsors, et cetera. So that’s how Kalshi draws the line.”
MLB moneylines are deemed fair game as the results can have financial consequences for the players, the teams, and the fans.
Kalshi’s lawyer stated the company would refrain from creating prop bets. He added, “So Kalshi is careful to offer contracts that have financial consequences in the real-world rather than the sort of prop bets that you might see at a sportsbook”.
The boundary between sports betting and prediction markets continues to be blurred. What is clear is that players want to gamble. The industry continues to boom and alternative platforms such as prediction markets, crypto betting, and sweepstakes casinos are also thriving.
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