CFTC Looking Into Mention Markets, Horse Racing Controversy, Vegas Dave Highlight This Week’s Gambling Industry Bingos & Busts
While the CFTC is showing signs that it's willing to regulate prediction markets, one operator is taking its own steps toward responsible trading. Here's a look back at some of the past week's newsmakers.
Prediction markets and states continue to trade blows in the courtroom, and while the CFTC is eager to join the fight, the agency is starting to put up guardrails for the exchanges to follow. Concerns persist, though, that not enough is being done to curtail insider trading, and recent developments at President Trump’s media company are doing nothing to quell them.
Meanwhile, flags were immediately raised around horse racing due to a suspiciously timed turn of events that expanded from a pair of prominent northeast tracks all the way to the UK, and a figure particularly reviled among the gambling community appears to be running from the law.
Here’s our end-of-the-week review of some of the top headlines around the industry:
Bingo: Is CFTC Starting to … Regulate?
The Commodity Futures Trading Commission has been under fire for its laissez-faire approach to prediction markets, but the agency is showing signs of trying to get its arms around an industry that’s been growing, in some critics’ views, unchecked. The CFTC has launched an investigation into easy-to-manipulate mention markets, NPR reports, and Kalshi has responded by removing such contracts tied to sports (there are still plenty of ways to bet on what Trump or NASA or Walmart might say). The commission also issued an advisory warning operators that certain market maker incentive programs could encourage nefarious activity, such as “wash-trading, pre-arranged trading, or other fraudulent, manipulative, or disruptive trading practices.” The CFTC is backing prediction markets in the legal realm and protecting its own federal oversight of exchanges, as promised by Chair Mike Selig, but the agency is beginning to act like the regulatory body it’s supposed to be.
Bust: Trump Social Sued for Selling Information
The Intercept and Freedom of the Press Foundation filed a lawsuit against President Trump and several White House officials over Trump Social offering advanced access to government announcements for those willing to pay for it. More than 10 customers have signed up for Trump API since it launched on Aug 1, paying between $60,000-100,000 for the new service, interim CEO Kevin McGurn said, per The Block. With insider trading on prediction markets still a major concern, the optics of this pay-for-information plan are not good.
Bingo: Novig Sets RG Standard for Prediction Markets
Novig is among the prediction market companies going about their business the right way. The exchange, which makes clear without hesitation that it offers a sports betting product, announced on Thursday a “comprehensive responsible trading framework” that includes an age minimum of 21, addressing one of the major complaints about PMs. The new set of standards, which Novig says is the first to be formalized by a CFTC-regulated exchange, also includes self-regulation tools, responsible marketing guidelines, and measures to restrict loss-chasing and escalating deposits. Optics are surely part of the motivation here, but the move is landing well with industry observers.
Bust: ‘Fair Hill 5’ Betting Coup Sparks Investigation
Alarms sounded Sunday after four of five horses hailing from the same training facility, many of them out-of-form longshots, won their respective races at Saratoga Race Course and Monmouth Park, and bookmakers in the US and UK discovered suspicious betting patterns linking the results. All the horses shipped from Fair Hill in Maryland and were coming off long layoffs. At the New Jersey track, the daily double pairing The Great Amira in the third race with Tepeyac in the fourth paid $25 on a $2 bet, way short of the $180 expected return on entries priced at 17-to-1 and 4-to-1 odds, per ESPN’s David Purdum. Bet shops in England faced a reported £600,000-£800,000 in liability thanks to the coup (h/t BloodHorse). While an investigation is underway, Angel Quiroz – the trainer connected to all five horses who’s denying any wrongdoing – was charged after his filly Bonita Rough (not among the “Fair Hill 5”) tested positive for a banned substance on July 10.
Bust: The iGaming Boom That Isn’t
Once leaned upon as a pillar of the gambling industry’s future, the legalization of online casinos seems to have stalled. From The Racing and Gaming Conference at Saratoga, Steve Bittenbender reported that New York State Assembly member Carrie Woerner, chair of the racing and gaming committee, is throwing cold water on iGaming’s chances in her state, projecting legalization to “perpetually five years out.” The new reality, Steve writes, is a “glacial pace” for iGaming expansion, and hope is fading that New York will be a catalyst.
Bingo: Hedging Use Cases Continue to Emerge
While sports event contracts are so far dominating trading volume, evidence is accumulating that prediction markets can indeed be used as legitimate economic hedging instruments. Facing a potential crippling increase in labor costs, Western Grazers – a goat herding company in California – took a position on a Kalshi contract that pays $500,000 should a wage exemption not be reinstated by the state. Per a CNBC report, N.Y.-based startup Castle suggested the arrangement and worked through market maker Susquehanna to set it up. Expect more to come. A young tech entrepreneur and economist named Lauris Zminsky has teamed up with Kalshi to deploy a new tool called Blanket, designed to help small businesses hedge against various forms of risk.
Bust: Vegas Dave on the Run After Skipping Court Date
Dave Oancea didn’t show up for his court appearance on Thursday, prompting District Judge Joe Hardy to issue a warrant for the arrest of the maligned tout, the Las Vegas Review-Journal reported. Last month, Oancea was ordered to pay $30 million in restitution to a real estate agency in Mexico for sabotaging rental reservations for his properties, and was given two choices to purge contempt of court orders: forfeit assets or be willingly taken into custody. He’s done neither. While many would consider incarceration as comeuppance for a known scammer, authorities may have a long way to travel to catch him. About four weeks ago, a few days before he was served the contempt order, Vegas Dave posted on Instagram that he was on his way to Bora Bora.
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