State of the Union: CFTC cancels roundtable; MGM admits wrongdoing in illegal bookies case, more

CFTC abruptly cancels prediction markets roundtable

For weeks, a 30 April forum on balanced regulations for prediction markets has served as one of the most anticipated dates on the gaming industry calendar.

Kalshi and others such as Robinhood and Crypto.com have taken the industry by storm with the rollout of event contracts on sports. For instance, Kalshi trading volume on March Madness eclipsed $500 million (£375.1 million/€439.5 million), as the burgeoning site wrestled away market share from traditional sportsbooks.

But on 24 April, the US Commodity Futures Trading Commission (CFTC) abruptly canceled the event, days before the scheduled roundtable.

A new date has not been determined, with a CFTC attorney only stating that “more details will be provided when available”. A CFTC spokesman confirmed to iGB Friday that the roundtable has been canceled, adding there is no update for now on “when it will be rescheduled”.

Cease-and-desists, lawsuits piling up

The reasoning for the sudden delay is unclear, as the CFTC sent stakeholders scrambling for answers on a hectic close to the week. Over the last month, prediction market platforms have been subject to a wave of cease-and-desist orders, while the debate on federalism vs. states’ rights intensifies.

Kalshi has responded by filing lawsuits in several key jurisdictions, including Nevada, where a district court granted a preliminary injunction to the company that enabled it to continue operations in the state. Kalshi has also filed suit in New Jersey and Maryland. Conversely, a handful of other states have filed C+D orders since the start of March Madness.

The upshot is that the CFTC initially scheduled the roundtable to disentangle a complex web of issues related to the derivatives market on sports-related securities. As CFTC interim chair Caroline Pham noted in February, the roundtable served as a “necessary first step” to establish a “holistic regulatory framework” for fostering thriving prediction markets.

Cancellation ‘disappointing’ for stakeholders

The CFTC in the February memo identified a host of other issues in establishing balanced regulations, including, but not limited to: the Commerce Clause, state regulatory schemes, preemption doctrines, tribal sovereignty and other federal laws applicable to sports betting. Since then, the Trump administration nominated former CFTC commissioner Brian Quintenz to lead the agency. As of now, Quintenz serves as a director on Kalshi’s board.

The abrupt delay is “disappointing”, a leading industry lobbyist told iGB, adding that he is hopeful that it is not a “permanent one”.

“A forum like this was an opportunity for stakeholders to share perspectives openly and for CFTC commissioners to gather essential information so they can make informed and balanced decisions,” the source told iGB on Friday.

Colorado bill seeks to eliminate free bets deduction

Over the last few weeks, a plethora of states have floated proposed legislation that aims to raise the tax rate on operator revenues from sports wagering. 

Now, as the NBA Playoffs kick into high gear, a Colorado bill contains a new twist. The bill, HB 25-311, seeks to eliminate a deduction used by commercial sportsbooks to lower their tax liability. In calculating net sports betting proceeds, operators have the ability to deduct all payments to players, all federal excise taxes and a small percentage of free wagers made by customers. Sponsored by senator Dylan Roberts and two members of the Colorado House, the bill removes the deduction for all free bets. 

Under Colorado law, operators are allowed to deduct up to 2% of free bets in fiscal year 2025-26. The figure is set to drop to 1.75% for the following fiscal year. But if the bill is signed into law, the deduction will be removed by 1 September 2025. 

As of Friday, the Nuggets had odds of +10000 to win the NBA Championship. Denver’s odds to win its second title in three years tumbled after a blowout loss to the Clippers on Thursday night, putting them down 2-1 in the series. With a defeat to the Clippers this weekend, Nikola Jokic could be on the verge of elimination.

According to a fiscal note attached to the bill, the proposed change will result in an additional $11.8 million in revenue to the state’s sports betting fund for FY2025-26. The authors cautioned that operators may respond by offering fewer free wagers.

As a result, the state projects additional revenues of $10.6 million for FY2026-27. A portion of sports betting revenues are allocated to the state’s Water Plan Implementation Cash Fund.

RWLV appoints Roberts as compliance chief

Resorts World Las Vegas (RWLV) has appointed industry veteran Jennifer Roberts as chief compliance officer, notching another addition to its C-suite as the beleaguered casino attempts a major turnaround plan.

Roberts, an adjunct professor at the UNLV William S. Boyd School of Law, will oversee a bevy of compliance issues including anti-money laundering (AML), responsible gaming and technical compliance, according to a press release on her hiring.

The hiring comes several weeks after the Nevada Gaming Commission (NGC) approved a $10.5 million settlement against the casino for a slew of AML deficiencies. RWLV did not admit to any wrongdoing at the March hearing.

As one of the nation’s most respected gaming attorneys, Roberts has held numerous high-profile positions since the Supreme Court’s 2018 PASPA decision. She most recently served as vice president and general counsel at WynnBET, where she oversaw compliance operations and developed reporting systems across multiple jurisdictions.

Prior to her stint at WynnBET, Roberts served as director of sports gaming regulation for the Tennessee Education Lottery Corporation.

“I want to thank the leadership team for this opportunity and look forward to working closely with them as we build on the significant progress already made,” Roberts said in a statement.

A ‘Dream Team’

The regulatory complaint against RWLV stems from the casino’s dealings with two illegal bookmakers, both of whom are awaiting sentencing on federal money laundering charges. Matt Bowyer, a California bookmaker, lost at least $7.9 million at RWLV across at least 80 separate visits. Bowyer’s enterprise also accepted more than $325 million in illegal sports wagers from Ippei Mizuhara, the former interpreter of Shohei Ohtani.

The NGC referenced a so-called “dream team” of RWLV officials who attended the hearing in March. New CEO Alex Dixon has assembled a team of advisors with considerable experience on the regulatory landscape. The team is led by former Nevada governor Brian Sandoval, along with ex-MGM Resorts CEO Jim Murren and former Nevada Gaming Control Board chairman AG Burnett. 

“Jennifer will play a key role in further strengthening our compliance program, ensuring it is appropriately designed, resourced, tested and empowered to promote a culture of compliance,” said Dixon in the release. “Her deep expertise in gaming law and understanding of the casino regulatory environment makes her uniquely positioned to continue our efforts to build and sustain a robust, world-class compliance program.”

The $10.5 million fine against RWLV is the second-largest by a gaming regulator in state history.

South Carolina committee hears arguments on sports betting

A committee in the South Carolina House of Representatives convened for nearly two hours on 22 April for a hearing on sports betting, but adjourned without taking a vote.

The House Ways and Means Revenue Policy Subcommittee discussed three gambling-related bills, including H. 3625, otherwise known as the South Carolina Sports Wagering Act. Under the bill, operators will be subject to a 12.5% privilege tax on sports betting revenues. The tax will bring as much as $31.3 million in revenue to the state in fiscal year 2025-26, according to a statement from the South Carolina Revenue and Fiscal Affairs Office.

A group of religious organizations, including the South Carolina Baptist Convention and the Roman Catholic Diocese of Charleston, submitted a joint letter to the South Carolina General Assembly. In light of elevated problem gambling trends nationwide, the groups urged lawmakers to oppose all three bills. The authors cited a study from UCLA which found that the legalisation of sports betting has increased a household’s probability of declaring bankruptcy by a range of 25% to 30%.

While sports betting continues to flourish in Tennessee, it has largely failed to gain traction in the southeast and Gulf Coast regions.

Already this year, a last-ditch effort to legalise sports betting failed again in Georgia, while a Mississippi bill on mobile sports wagering died in committee. Sports betting is available on a limited basis in Mississippi in casinos only. Legal sports wagering remains a longshot in Alabama.

South Carolina governor Henry McMaster plans to veto any bills that attempt to legalise sports wagering throughout the state. 

UN office concerned on criminal nexus with online gaming

Building on findings from an extensive investigative process over the last several years, a new report from a United Nations office sheds additional light on the links between online gaming and transnational organised crime.

An 81-page report from the UN Office on Drugs and Crime (UNODC) describes the growing influence of illegal syndicates in southeast Asia and the connection with the world of online gaming. Supported by underground banking and cryptocurrency laundering, the enterprises have been responsible for billions of dollars in financial losses in recent years, according to the UNODC.

In particular, the office called attention to the work of white-label online gambling websites, which employ intricate methods to obscure funds through fake tournaments, in-game transfers and illegal wagers, among other techniques.

In the US alone, law enforcement attributed more than $5.6 billion in financial losses to crypto schemes in 2023. The amount is dwarfed by an estimated $37 billion in east and southeast Asia losses, according to the report.

At present, two illegal bookmakers are awaiting sentencing in a sweeping investigation into the illicit southern California sports betting market. One defendant, pro poker player Damien Leforbes, used various cryptocurrency wallets to receive proceeds from his business and to pay bettors whom he owed money, according to a federal complaint.

Preventive measures ahead of 2026 World Cup

Last December, Tennessee senator Marsha Blackburn cited the work of the UNODC during a closely-watched federal hearing on sports betting on Capitol Hill. Blackburn and Nevada senator Catherine Cortez-Masto have called on the Justice Department to examine the connection between organised crime and illegal sports betting ahead of next year’s FIFA World Cup tournament.

A UNODC study found that in 2014, criminal syndicates laundered approximately $140 billion through illegal and unregulated sport betting. The amount has likely grown since, the senators wrote in a letter to the Office of the Attorney General.

Moving forward, the UNODC recommends regulatory enhancements that address money laundering, virtual assets and online gaming oversight, with periodic review and reforms.

The office also calls for stronger international collaboration and oversight mechanisms of investment activities in high-risk areas such as special economic zones. 

ICYMI on iGB

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MGM admits to wrongdoing in illegal bookie case as Nevada regulators approve $8.5M settlement

Caesars CEO Reeg: Relationship with Icahn on solid footing as company considers digital spin-off

Waterhouse VC: The difference between average punters and sports betting experts

Michigan igaming revenue hits record $260.5 million in March

Massachusetts sports betting revenue falls to six-month low in March

Bally’s files prospectus for new Chicago IPO programme geared towards city, state residents

Tennessee sports betting handle rises to $548.6 million in March

 Welcome to iGB’s State of the Union, a look at the biggest North American sports betting stories we’ve covered over the week and briefs on others we found interesting.