The Current: NJ Report On Responsible Gambling Highlights Sweepstakes, Prediction Markets & More
Gambling news roundup: Kalshi files a lawsuit in Maryland; Texas Lottery Commission director resigns.
Lots of people like to make a lot of noise about responsible gambling issues around regulated online gambling — and rightly so! But I rarely see people talking about the issue when it comes to unregulated gambling.
So I was happy to see New Jersey’s Report to the Governor on Responsible Gaming highlight the issue alongside concerns in the regulated space.
You can see the whole report here, but I’ll pick out some highlights below if you don’t want to search through the whole thing, which is more than a hundred pages and touches on far more issues.
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“The Task Force also reviewed gaming products that are not regulated by the State and are not subject to any RG requirements or funding obligations. Notably, the Sofis Report found that 28% of New Jerseyans have reported engaging in one or more forms of unregulated or illicit gambling in the past 24 months. These include participating in sweepstakes (purchasing coins for cash prizes); using a virtual private network (”VPN”) to place online bets; intentionally using a ”proxy”-style app to place a bet that would otherwise be prohibited due to factors like location, age, or self-exclusion; and placing bets through social media platforms (e.g., DMs and channels with unauthorized bookkeepers or proxies).
“Currently, four main areas of unauthorized gaming generate complaints to State agencies: sweepstakes; event-based contracts (elections and all other events, especially sports); wagering on purported skill-based games; and illegal casinos/sportsbooks.”
Sweepstakes: “The exponential increase in sweepstakes and social casino operations based on a sweepstakes model has drawn the attention of numerous state gaming regulators in recent years. While traditional sweepstakes and horse racing sweepstake activity are legal under federal law and the laws of many states, including in New Jersey, recently operators have introduced new types of sweepstakes that allow participants to have the same experience as they do with actual gambling.”
“The Task Force notes that sweepstakes and social casino operators that are not licensed in any jurisdiction and are offering unregulated or unlawful gaming activities present serious issues, including the potential to undermine RG efforts, as they permit customers from New Jersey to illegally gamble on their platforms. While traditional sweepstakes entries are legal in New Jersey, the new forms of online sweepstakes are not addressed expressly and are unregulated.
“DCA (Department of Community Affairs) has received complaints about social casinos and certain other sweepstakes. The complaints include allegations that the operators of these contests are refusing to pay out prizes, are not being transparent about a contest’s rules or gameplay, or are blocking customers’ access to their accounts, including, critically, the ability to withdraw their funds.”
“Furthermore, unlicensed operators do not contribute to RG or PG resources and do not pay license fees, investigative costs, or gaming taxes; nor do they offer any protections against PG. These platforms provide no protections against gambling harm, creating significant risks for consumers, particularly for individuals under 21. The games offered by sweepstakes casinos, which often mimic real-money casino games, slots, and poker, expose young people to gambling mechanics, risk and loss, at an impressionable age. This early exposure can normalize gambling behaviors, increase susceptibility to addiction, and pave the way for problem gaming once they reach legal age. Furthermore, the lack of stringent age verification processes in sweepstakes casinos allows underage individuals to participate unchecked, compounding the potential harm.”
Prediction markets: “Event-based contracts are based on the occurrence or non-occurrence of a specific event, rather than ownership in an asset. Legitimate event-based contracts are considered derivative contracts and are governed by the Commodity Exchange Act and are regulated exclusively by the United States Commodities Futures Trading Commission (“CFTC”). Rather than using traditional sports betting methods like a point spread or a money line, event-based contracts are structured similar to a commodities option. Recently, however, event-based contracts tied to political, economic, and entertainment outcomes have gained increased attention, particularly in the context of recent offerings on Congressional and Presidential elections. … The Task Force notes, however, that election wagering is prohibited in New Jersey.”
“As a result of the interest in, and volume of wagering on, the recent elections, events-based contracts have expanded wagering markets to include hundreds of events, such as Grammy winners and sports markets, including wagering on the 2025 Super Bowl, the 2025 NCAA men’s college basketball championship, the 2025 NBA Finals, and the 2025 Masters.
“The AGA has expressed concerns over markets which circumvent state regulatory frameworks.”
Skill-Based Games Wagering: “As the use of smartphones and mobile applications has exploded in recent years, and especially as mobile gaming has become more commonplace in New Jersey, regulators in New Jersey have also noticed an increase in the offering of so-called ‘skill-based’ online games, where users deposit real cash and play these games for real cash prizes. A typical example of these types of contests are online solitaire tournaments, where users pay entry fees, which come from accounts that the users fund with their own money, to participate in a tournament against other players and where the company offering the tournament pays out real cash prizes to the winner(s) but also takes a cut of the entry fees for themselves.”
To the extent these contests are not considered gambling, because the outcome of the contests is based on the skill of the players and their performance is based on events within their own control, the operators are not required to be licensed by DGE, DCA, or any other regulator. Nevertheless, as the gameplay closely resembles gambling in many aspects, and as participants are staking their own money to participate in the contests for the chances to win monetary prizes, the participants may still benefit from RG and PG (problem gambling) resources, and recommendations in this report may be relevant to skill-based gaming.”
Illegal Operators: “DCA has previously issued social media notifications and press releases warning consumers about using unregulated fantasy sports websites. For example, on September 1, 2023, the Office of the Attorney General, DGE, and DCA issued a joint press release reminding New Jerseyans to steer clear of illegal sites when betting on professional and college football or engaging in fantasy sports activities related to those sports. The press release explained that using licensed sports wagering sites and authorized fantasy sports sites is the only way to ensure that the operators are doing business under regulatory oversight and are abiding by the laws that protect consumers against fraud, deceit, and other illegal conduct.”
“Licensed operators are required, pursuant to regulation, to implement controls and procedures related to AML, fraud, KYC, collusion, RG, underage gambling, geolocation, and various other consumer protection policies. Illegal sites are not subject to any of these requirements or testing protocols and therefore are lacking important integrity and public safety standards. Moreover, they do not contribute to RG or PG resources and do not pay taxes.”
Policymakers and regulators — and really everyone — need to be aware that state-regulated online gambling ecosystems are not the only place where responsible gambling issues and potential harm from problem gambling arise. This report from a New Jersey task force is a great reminder of that.
Gambling news roundup
Kalshi Files Suit Against Maryland In Sports Betting Case (Event Horizon): “Kalshi is going to court yet again. The prediction market platform filed a lawsuit in a Maryland federal court on Monday night, asking a district court to stop enforcement of the state’s cease-and-desist order. Maryland regulators had told Kalshi they believe the company is offering sports betting illegally in the state.”
There’s an interesting email exchange involving Maryland officials and lawyers for Orrick and Milbank that was entered into evidence, if you click through.
The judge in the case, Adam Abelson, has noted that “The Court will hold a status teleconference on Wednesday, April 23, 2025, at 11:30 a.m.”
I have started a tracker for all the state-level actions around sports betting via prediction markets. With a map! Half of the states that have sent cease-and-desist letters to Kalshi have now been sued by Kalshi.
“I Was Blessed With The Strength To Seek Help…I Am Not Alone In This” (The Comeback with Craig Carton): “In episode 2 of The Comeback, Craig Carton talks with Scott who is 9 months out from his last bet. A career day trader and avid golfer, Scott’s gambling did not become a problem until 6 years ago. Watch here:”
“Scott opens up about his struggles with gambling, describing how we would get caught in a cycle of delusional thinking and constantly rationalizing the next wager. He also shares his troubled history with alcohol, and the experiences and mindsets that have helped him in his recovery journey.”
Director of the embattled Texas Lottery Commission resigns as agency's controversy swirls (Austin American-Statesman): “The executive director of the embattled Texas Lottery Commission resigned his post Monday after a tumultuous one-year tenure leading the state's retail gambling enterprise, which brings in $2 billion annually to the state treasury. The lottery officially announced Ryan Mindell's departure without comment. Sergio Rey, the lottery’s chief financial officer, was named acting deputy executive director, while the state agency determines its selection process for a permanent replacement during the governing board's April 29 meeting. Mindell, who previously served as the lottery's deputy director and operations director, leaves behind an agency under legislative scrutiny and investigations by the Texas Rangers in the Department of Public Safety and the Texas Attorney General's Office. Both investigations concern how the agency handled the introduction of courier companies.”
The events of recent months in Texas are putting a Texas-sized hole in the addressable market for lottery couriers that will be hard to replace. There’s even a chance the Texas Lottery itself goes away. More from the AAS: “The high-profile resignation comes after the Texas House's unusual move to set the Lottery Commission's budget at zero for the two-year spending cycle that begins Sept. 1. Unless funding is restored during House and Senate budget negotiations, the lottery would likely be out of business at the end of August.”
I love that I am getting served a Jackpocket ad on this story.
Meanwhile, someone won $1,000 a week for life in Massachusetts by buying a scratcher via Lotto.com.
Major Sports Figures Donated at Least $15M to Second Trump Inauguration (Front Office Sports): “The two major sports betting companies, DraftKings and FanDuel, donated to Trump’s inaugural committee. DraftKings gave $502,000, while FanDuel provided about $482,000. A FanDuel spokesperson tells FOS that ‘participation at the inauguration is part of FanDuel’s regular government affairs activities. The inauguration provides FanDuel an opportunity to meet with state legislators from across the country in one place at the same time to discuss opportunities to collaborate on growing a legalized and regulated gaming market.’ … Robinhood, which has made waves in the sports world recently through partnerships with controversial exchange operator Kalshi, donated $2 million. … The Sycuan Band of the Kumeyaay Nation, which co-owns recently launched MLS franchise San Diego FC, contributed $500,000.”
Sportsbooks ‘cringe’ at the NFL draft – but take bets anyway (The Washington Post): At noon sharp Tuesday, the sportsbook at the Westgate casino in Las Vegas will start allowing bettors, for the first time this offseason, to place wagers on where prospects such as Shedeur Sanders and Cam Ward will get picked in this year’s NFL draft, which begins Thursday. Bets will fly in. And throughout the afternoon, the bookmakers who set the betting lines, for Westgate and other sportsbooks, will refresh the social media feeds of prominent NFL reporters to see if any new reports, usually a leak from an agent or GM, requires updating the odds. Then, at 7 p.m., the bets will come off the board at the Westgate — and the bookmakers will exhale. ‘It’s the most difficult thing we book,’ said Jeff Sherman, the vice president of risk management at the Westgate.”
NBA players sound off on league’s gambling partnerships and their impact (The Athletic, paywall): "For a significant segment of players who are merely trying to do their jobs as best they can, there’s another destructive element to all this. Some fans who’ve lost bets take their frustrations out on players online. In the most extreme cases, players have received death threats. It’s part of the dark side of the lucrative cash cow that is sports gambling. Sports gambling is an important, complex topic. That’s why The Athletic included a question about it in this year’s Anonymous NBA Player Poll. Nearly one-third of the entire league — 150 of the 158 players with whom we spoke — shared their opinions with our writers.”
Governor Lombardo Announces Mike Dreitzer as Incoming Chairman of Nevada Gaming Control Board (press release): “Today, Governor Joe Lombardo announced Mike Dreitzer as the incoming Chairman of the Nevada Gaming Control Board. Dreitzer will replace Chairman Kirk Hendrick, who earlier this year announced his plans to resign following the 2025 Legislative Session. ‘I’m pleased to announce Mike Dreitzer as the incoming Chairman of the Nevada Gaming Control Board,’ said Governor Lombardo. ‘Mike has an extensive background in gaming compliance and brings decades of industry experience to the role. I’m confident that Mike will lead the Nevada Gaming Control Board with integrity and honor, while furthering its recent innovation and progress.’ Dreitzer most recently served as the Chief Executive Officer of Gaming Arts, LLC, a full-service gaming equipment supplier with over 150 gaming licenses. Dreitzer is resigning from the company and will provide transition services until he can begin his role at the Board. Merkur Gaming, which is acquiring the interests of Gaming Arts, expects to appear before Nevada’s gaming regulators next month.”
Home Run Prop Bets for Nick Castellanos Surge Following Pope’s Death (Covers): “Following Pope Francis' passing Monday, multiple sportsbooks saw heavy action backing the Philadelphia Phillies' outfielder’s home run prop for Monday’s game against the N.Y. Mets. BetMGM’s John Ewing reported Castellanos saw three times as many wagers to hit a dinger as any other player Monday. … The allure of wagering on the Phillies' outfielder to go deep originated when former Reds' announcer Thom Brennaman was giving an apology for using a homophobic slur in 2020. A Castellanos' home run interrupted the broadcaster, and a meme took shape.”
It’s wild that what amounts to a meme created a ton of betting action. When people tell you that sports bettors want to be sharp, maybe point them to this nugget. Castellanos did not homer yesterday, so this meme might finally be dead.
Oregon Is Trying To Ban Simulcast Dog Race Betting — Which States Still Allow It? (Casino Reports): “House Bill 3020 would make all types of betting on dog racing illegal in Oregon. It has already passed the House. On April 17, it unanimously passed through the Senate Labor and Business Committee.
‘The governor asked me to do anything I can to stop taking greyhound wagers,’ Connie Winn, director of the Oregon Racing Commission, told committee members on April 17, ‘and that’s why we have this bill.’
I have to admit, I had no idea we had greyhound betting here in Oregon.
Kentucky Horse Racing and Gaming Corporation to Decide on New Sports Betting Markets (Covers): “According to a public notice released Monday, the meeting will notably include a ‘request for approval of sports wagering catalogue additions and clarifications,’ though there's no word on specifics beyond that.
Currently, the KHRGC allows for a robust offering of markets and wagers, including all four major professional leagues, various NCAA offerings, as well as boxing, eSports, professional cornhole, and of course, horse racing.”
Gambling bill still roiling lawmakers while governor keeps open mind (Hawaii News Now, video).
Sen. Yaw Brings Back Skill Games Regulation Bill to Support Veterans (PlayPA): “Pennsylvania Senator Gene Yaw (R-23) announced last week that he has reintroduced a bill to regulate and tax skill games, with the goal of helping small businesses and raising revenue for veterans’ organizations. State legislators are divided on the issue, with some wanting to ban the devices while others, like Yaw, would prefer to see their legality formalized. Yaw wrote a memo earlier this year stating his continued intent to bring the legislation to fruition.”
