Despite the general unease of addressing a racy subject at a top industry event, Tres York did his best to maintain a modicum of decorum.
York, vice president of government affairs at the American Gaming Association, appeared on a prediction markets panel at last week’s Saratoga Racing and Gaming Conference and apologised to a large crowd before crossing the proverbial Rubicon.
Days after a second arrest that involved someone throwing an adult toy on or toward a WNBA court, York criticised an offshore prediction market for offering event contracts on the strange trend.
York made reference to a series of contracts at Polymarket that enabled users to trade on whether the object would land on a court during a live game. The AGA official made the comments on 11 August, the first day of the Saratoga conference. On the same day, Polymarket handled more than $70,100 on a binary contract to choose whether a fan would successfully launch a toy onto the court in that evening’s Connecticut Sun-Golden State Valkyries contest.
In a summer when integrity concerns about live betting markets have intensified, York questioned the appropriateness of such contracts.
“I’d be real curious to hear what the economic utility is for that type of behaviour, because it’s pretty pathetic to me,” he said on the panel.
Another panelist, David Aron, a special counsel at Lowenstein Sandler with prior experience working for the US Commodity Futures Trading Commission, agreed that there’s no “economic utility” in the “wacky contracts”.
Staking money on adult toy tosses
Phoenix police arrested Kaden Lopez, 18, on 6 August after he attempted to throw an adult toy onto the court at the Phoenix Mercury’s home game versus the Sun. The throw by Lopez didn’t land on the court, instead hitting a spectator who attended the game with his nine-year-old niece.
On the same night, a fan hit Indiana Fever guard Sophie Cunningham on the leg with a bright green toy, another act in a string of boorish activity.
On Polymarket, one event contract gave users the opportunity to trade on the colour of the next adult toy to reach the court. The structure of the contract, York suggested, creates an incentive for a syndicate to stake an individual to throw a green toy onto the court.
For arenas with a no-bag policy, there is a lower likelihood that a fan will sneak in the device, he explained, raising further integrity concerns. The markets on the Polymarket website generated considerable liquidity, with one user netting a four-figure profit.
York made the comments several days after the founder of a crypto meme took responsibility for the pranks in a post on X. The individual, who goes by the name Lt. Daldo Raine on X, noted that the group committed the acts in an attempt to market a crypto coin created by his online community.
In spite of the admission, Polymarket continued to offer the markets through 12 August. However, as of Thursday, the exchange did not have a live offering for the WNBA adult toy contracts.
A Polymarket spokesperson did not respond to a request from iGB for comment.
Applying an economic purpose test to adult toys
The concerns raised by the adult toy contracts are the latest in a contentious debate over the regulation of prediction markets by the Commodity Futures Trading Commission, which has had considerable turnover this year. Several leading prediction markets announced plans this month to offer various event contracts tied to the upcoming football season.
At the moment, prediction markets do not face the same regulatory and tax burdens as legal sportsbooks. As a result, some gambling industry groups believe those companies are operating on an unlevel playing field. Following the 2018 repeal of PASPA, those groups contend, the states are in better position to regulate sports betting than the federal government.
Last year, the CFTC approved a noticed of proposed rulemaking aimed at overhauling the agency’s process for regulating event contracts. The proposal sought to restore an “economic purpose test” for evaluating whether the contracts are contrary to the public interest.
On Wednesday, meanwhile, FanDuel announced a partnership with the CME Group to develop a new event contracts platform.
The event contracts will be subject to the rules of CME Group exchanges, pending CFTC review, the companies wrote in a joint statement.
Further integrity measures
Also on the Saratoga prediction markets panel was John Berlau, a senior fellow at the Competitive Enterprise Institute, a Washington DC-based think tank. Berlau did not opine on the adult toy contracts, but he noted comparisons with a fan who grabs a foul ball simply to win a legal sports bet. He also disagreed with arguments that place prediction markets at fault for bad behaviour of certain customers.
“It’s a slippery slope to try to blame this on a prediction market venue or on actual sports wagering,” Berlau said.
The panel was moderated by Michelle Cohen, a partner at Ifrah Law and counsel at iDEA Growth. Cohen emphasised that bettors cannot wager on everything on the regulated markets, noting that legal bets must be approved through state event wagering catalogues.
“It sounds like we need some additional integrity-based tools,” Cohen said.
While designated contract markets such as Kalshi are permitted to self-certify under CFTC regulations, Kalshi says it has taken steps to add protections for customers. In March, Kalshi announced a partnership with integrity monitor IC360, which CEO Tarek Mansour said will enhance its “ability to prevent bad actors” and report them to sports leagues and regulators.
Unlike Kalshi, Polymarket is not available yet in the US. Last month, however, the Justice Department concluded an investigation of Polymarket without bringing any charges. Roughly a week later, Polymarket completed the acquisition of CFTC-licensed exchange, a move CEO Shayne Coplan said paves the way for its re-entry into the US.
Event contracts from prediction markets are supposed to have an economic utility, something lacking in the strange options connected to boorish fan activity at recent WNBA games.