American Gaming Association on ‘War-Time Footing’ Over Prediction Markets

The American Gaming Association (AGA) says it is on a “war-time footing” over the rise in prediction markets in the U.S., its president has said.

Speaking at the G2E conference in Las Vegas, Bill Miller warned that prediction markets were “trying to prop themselves up” in a burgeoning industry.

Nevada’s largest gambling operators backed Miller as he took to the stage. The CEOs of MGM, Caesars and Wynn said that prediction markets should be state-licensed.

‘Well-Funded Bad Guys’

The AGA is the trade and lobby group for regulated casinos and gambling in the U.S. In addition to promoting regulation and promoting responsible gambling, it also helps combat illegal gaming.

In his keynote speech, Miller argued that prediction markets ignore state laws and regulation, tax systems, and tribal casino sovereignty.

“We come in through the front door,” he said, adding that regulated operators, “follow state laws, respect regulations…honor tribal sovereignty.” There is, he said, a “new group of well-funded bad guys [who have] kicked in the back door.”

He added that on the flipside, licensed operators create jobs and adhere to responsible gambling programs.

Bill Miller’s Key Criticisms

• Prediction markets bypass state gambling laws and taxes
• They stretch the Commodity Exchange Act past its original intent
• They frame gambling as investing, and appeal directly to young traders

AGA vs the ‘Cashmere Hoodie Bros’

America has had regulated gambling of some sort for decades. However, the young upstarts of the prediction markets are ruffling feathers with the American Gambling Association and the industry as a whole.

The regulated gaming industry in the U.S., Miller said, “supports 1.8 million [American] jobs.” In comparison, he added, the “cashmere hoodie bros in Brooklyn” had created “maybe a dozen jobs.”

However, it’s this tech bros mentality that is appealing to young traders. Prediction markets are regulated on a federal level as derivatives markets, not betting sites. Therefore, traders as young as 18 can sign up and buy event contracts, compared to the age limit of 21 at many online betting sites in the U.S.

Casino CEOs in Alignment

The big casino chains were broadly on board with Miller’s concerns expressed at G2E. There also seemed to be a wider concern over the impact of prediction markets on the established regulated betting industry.

Tom Reeg of Caesars Entertainment said that he was worried that, “something awful is going to happen in this interim period, because of the lack of regulation and oversight, that’s going to tar all of us, whether we’re operating in the regulated markets or in predictions.”

MGM’s Bill Hornbuckle added that they had not entered the prediction market industry themselves for fear of the impact on existing licenses. However, he added that “principles” should be considered, including age limits and taxes.

What the panel agreed on was that the Supreme Court will play the ultimate role in deciding the future of prediction markets – and with it, state regulation. With appeals court rulings split on who should regulate prediction market exchanges, all eyes will be on that key decision.