Gaming Lawmaker Asks Tribes to Put Up a Fight Against Prediction Markets

Summary:

• NCLGS wants tribal leaders to adopt an offensive approach against prediction market companies.
• Shawn Fluharty argued that these markets could intensify their lobbying efforts if the U.S. Supreme Court limits their operations.
• Industry leaders insist prediction markets undermine state gaming regulations and tax revenues.

The debate over prediction markets doesn’t seem to be anywhere near an end, with efforts intensifying across the United States amid one of the country’s leading gaming lawmakers urging tribal leaders to prepare for a prolonged battle.

The Laws Are on the Gaming Industry’s Side, Thinks Fluharty

Speaking on the Indian Gaming Association’s podcast, Shawn Fluharty, president of the National Council of Legislators from Gaming States (NCLGS), warned that prediction market companies are increasingly positioning themselves to challenge existing gaming frameworks at both the federal and state levels.

Fluharty, who also serves in the West Virginia Legislature, said prediction markets were among the most discussed topics during last week’s NCLGS conference in San Diego, which brought together lawmakers, regulators, tribal representatives, and gaming industry stakeholders.

According to Fluharty, the future of prediction markets may ultimately be decided by the U.S. Supreme Court. The central question is whether federal regulators can authorize companies to offer sports-related contracts without complying with state gambling laws.

I can imagine that in the Supreme Court, part of the argument will be, ‘Look at our value and the number of consumers on this product'”

Fluharty said, adding that he believes existing laws are on the gaming industry’s side.

However, he warned that even if prediction markets lose in court, the fight is unlikely to end, as they will keep lobbying “to clear out their own lane“. The president went on to comment that it does not appear that prediction markets are interested in getting licensed and being “in the lane these states worked on at a very high level“.

Uneven Field for Players

Fluharty also used the argument that licensed operators have heavily invested in complying with state regulations, while also paying their licensing fees, creating jobs, and adhering to strict oversight requirements. To allow prediction markets to operate outside those rules, he believes, would create a clear imbalance.

The problem has become particularly serious in North Carolina, where prediction markets were recently approved under a tax framework that is significantly different from the state’s online sports betting industry.

Victor Rocha, conference chairman for the Indian Gaming Association, criticized the decision, noting that prediction markets will face a 6% tax on net trading-fee revenue, compared with the state’s 23% tax rate for online sportsbooks.

Fluharty described the situation as “revenue theft from states” echoing criticism from former White House official Mick Mulvaney, who estimated North Carolina could be leaving more than $100 million in potential tax revenue on the table.

The president also took the opportunity to formulate concerns regarding consumer protections, explaining that some prediction market platforms freely usher in users ages 18 to 20, while most regulated sports betting markets are required to impose an age limit of at least 21.