The Takeaway: Could Kalshi Get Legal Clarity 'Too' Quickly?
Gambling news roundup: Report says Bet365 is considering a sale; a run of bad news for sweepstakes casinos and sportsbooks.
Let’s lay out a scenario that seemingly becomes more likely with each passing day:
Kalshi keeps racking up wins in court against states that say prediction markets are offering illegal sports betting.
The Commodity Futures Trading Commission not only green-lights everything Kalshi et al have done so far with sports event trading, but also paves the way for an expansion of federally regulated sports betting with even more markets.
What are the odds that Kalshi keeps its winning streak alive and nothing slows it down? They’re not zero, and they’re considerably better today than even a few weeks ago. Two federal courts have sided with Kalshi in recent weeks, and the CFTC inexplicably canceled a roundtable that was supposed to let folks voice their concerns.
So let’s contemplate that world, with fewer hurdles/roadblocks, etc. That’s when others will start moving into national sports betting sports event trading.
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To be clear, I am not advocating for a federal sports betting expansion to happen, at least not in the haphazard way it is now. But if judges in the federal court system continue to see it Kalshi’s way (granted, it’s still early), and the CFTC is going to have a permissive/friendly stance toward sports events contracts, then the cake might already be baked.
In that world, I don’t blame anyone who wants to get involved in sports event trading. If the rules of the game have changed, you can be mad all you want and fight, but you might have to play by the new rules.
Those new rules and legal clarity would unquestionably be good for Kalshi, right? I’d argue it depends. First, where things stand:
Kalshi is largely on an island on all of this, and is the first/primary mover.
Crypto.com is technically the first mover, but is also kind of hanging out under some palm trees on Kalshi Island, letting them take the heat and offering a less-comprehensive sports betting product. Crypto.com also has a fine business without sports betting.
Robinhood, meanwhile, has one foot on Kalshi Island and one foot still in the ocean. It lists some sports markets via Kalshi, but nowhere near all of them. And again, Robinhood has a great business absent sports betting.
While Kalshi might have a fine business without sports betting, its path to growth is much bigger with it.
Here’s where it can go well for Kalshi:
Everyone starts using Kalshi to list sports event contracts, a la the Robinhood deal. That’s a great world for Kalshi, where it’s the conduit for all of this activity.
When there’s a tipping point on legal clarity (don’t ask me when or how that tipping point is reached), Kalshi becomes an attractive M&A target. It probably already is.
I did the positive stuff first, because people say I am too negative. So here’s how it can go sideways:
Kalshi Island is a good place to be right now, precisely because of the lack of legal clarity. If it were 100% obvious that sports event trading is here to stay and also get bigger, you’d see FanDuel, DraftKings, etc. doing it tomorrow.
As soon as other entities think it’s open season, watch out. I don’t think everyone is going to be happy just going through Kalshi to offer these markets into perpetuity. They will likely have to at the start. But there are certainly companies — both in sports betting and not — that will (and do) believe they can compete with Kalshi and take their lunch, eventually.
Now, that might be easier said than done; it’s not like you can snap your fingers and suddenly become a CFTC-regulated prediction market (well, maybe, see below). What Kalshi has built was not easy to build.
In any event, the sooner the “legal clarity” clock strikes midnight, the sooner entities start looking to displace Kalshi. And it wouldn’t shock me to learn if such plans were already afoot. Let’s remember that DraftKings was building a sportsbook a full year before the fall of the federal ban, for instance, when expanded legal sports betting wasn’t yet considered a no-brainer.
We’ve kind of seen the first domino falling here, as a state-regulated sports betting exchange, Sporttrade, is seeking a green light from the CFTC to go nationwide. More from Sportico (paywall). You can also see Sporttrade’s recently published comments to the CFTC on this:
“Instead, we would ask the CFTC to apply discretion given the extraordinary unique circumstances to provide no action relief towards Sporttrade given our track record of operating a compliant event contract exchange under the regulatory scrutiny of multiple state gaming regulatory bodies. We would expect that such relief would require evidence that Sporttrade can satisfy all CFTC reporting requirements and Core Principles, which is something we are prepared to do. In a gap analysis to understand our current regulatory obligations versus what would be required of a DCM, we believe there is a significant overlap. No other venue outside of Sporttrade could reasonably request similar relief.
At the time of writing, Sporttrade is preparing a formal no-action relief request that in effect will demonstrate that Sporttrade can satisfy all Core Principles and reporting requirements to list a small, select set of sports contracts that we can demonstrate are within public interest. The CFTC has numerous times in the past granted no action relief to exchange venues to accept trades on event contracts without formal federal registration, most notably with Iowa Electronic Markets and Victoria University of Wellington.”
Whole thing:
At the end of the day, Kalshi may get the legal clarity it is fighting (and spending) for. But that legal clarity would also usher in a brave new world of sports betting in the United States where the stakes will be astronomical for everyone. So while Kalshi wants to win, it might be better if the winning slows down.
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Gambling news roundup
ICYMI yesterday, I broke this news:
Family owners of Bet365 weigh up potential £9bn sale of gambling empire (The Guardian): “The billionaire Coates family behind Bet365 are weighing up a sale of their online gambling empire that could value the business at £9bn, the Guardian has learned. The company, headed by Denise Coates, has held talks with Wall Street banks and US advisers in recent weeks about a full or partial sale, sources familiar with the matter said. Informal discussions explored options for a potential sale, including a medium-term plan to float the business on a US stock exchange.”
Bet365 being a possibility for a sale has been the scuttlebutt in the industry for a while, but this is an escalation. If this happens, it will obviously be a massive deal, with the potential to shape the future of the US online gambling industry.
Florida bill would criminalize online sports betting for bettors?: Senate Bill 1467 is a gambling package does a lot of things; you can read the bill here, read some backstory here, and the latest here. One interesting thing is that the bill appears to criminalize online sports betting not done via Hard Rock, the state’s monopoly operator. From the bill:
“A person who plays or engages in Internet sports wagering commits: (a) For a first offense, a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. (b) For a second or subsequent offense, a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.”
Of course, the will to enforce this will probably low or non-existent, but it seems beyond the pale to create specific criminal penalties for bettors.
The earnings calls
Caesars CEO says digital spin-off still possible as iGaming revenue soars (SBC Americas): “Caesars CEO Tom Reeg said on Tuesday that spinning off Caesars Digital into a standalone publicly traded company is still on the table as the interactive arm of the business enjoys strong growth. ‘Our job is to deliver the numbers that we laid out starting in ’21,’ Reeg told investors and analysts on a Tuesday earnings call. ‘We’re well on that path. The goals are in our windshield now as we approach them. And we’ll see where we’re at when we get there in terms of are we getting value for what we’ve created. If the answer is we’ve hit our goals and we’re just not seeing it in the equity, we will look at any and all options to create value for shareholders.’ Reeg was speaking on an earnings call after Caesars Digital reported a 19% rise in net revenue to $335 million during the first three months of 2025. Adjusted EBITDA grew to positive $43 million. Sports betting net revenue grew 9%, while online casino net revenue surged 53%, following last year’s first-quarter growth exceeding 50%.”
BetRivers Parent Reports Strong US Growth; Colombian VAT Continues (Legal Sports Report): “Rush Street Interactive hit revenue and EBITDA records in the first quarter as BetRivers grew revenue in 15 of its 16 North American markets. CEO Richard Schwartz lauded RSI’s sports betting and online casino success despite results heavily impacted by the Philadelphia Eagles winning the Super Bowl and bettor-friendly March Madness results. ‘We continue to achieve strong results by prioritizing innovation and the quality of our player experience, while at the same time excelling in the efficient acquisition and retention of high-value players,’ said the CEO on the BetRivers parent company’s first quarter earnings call.”
The sweepstakes section
Sweepstakes casinos and sportsbooks are having a bad run. H/t to Sweepsy, which follows all of this granularly:
Louisiana Senate Unanimously Passes Bill Banning Sweepstakes Gambling (Covers): “In a 39-to-0 vote, the Louisiana Senate approved a bill on Tuesday that would ban sweepstakes gambling and penalize operators, affiliates, suppliers, influencers, and investors. If signed into law, Louisiana SB 181 would go into effect on Aug. 1. Compared to other state bills targeting sweepstakes gambling, Louisiana’s proposed penalties are particularly stiff, with fines up to $100,000 per occurrence and prison terms up to five years.”
Montana House Passes Sweeps Ban Bill, Now Awaiting Governor’s Signature (Sweepsy): “A bill effectively booting sweepstakes gaming sites out of Montana has passed both chambers of the state legislature and is just a Gov. Greg Gianforte signature away from becoming law. It was returned from enrolling Monday and will land on Gianforte’s desk soon. … It doesn’t directly mention sweeps gaming in any way, actually. However, its just-vague-enough language is seen as a catch-all by industry observers and legal experts that encompasses sweepstakes casinos. That means, of the flurry of states that have considered sweeps ban bills this legislative session, Montana’s is the first to pass.”
Committee Passes Second New York Sweeps Ban Bill, Moves It To Assembly Floor (Sweepsy): “In a unanimous decision, the New York Assembly Racing and Wagering Committee passed Assembly Bill 6745, a measure that bans online sweepstakes games. It will now be placed on the Assembly calendar. Carrie Woerner, the chair of the committee, referred to online sweepstakes as “the on-ramp to youth gambling” as she introduced the agenda item for discussion and a vote on Wednesday morning during a public committee meeting. No discussion took place among assembly members, who had vetted the bill earlier this month. It passed unanimously.”
Anti-Sweeps Bill Gaining Momentum In Connecticut Senate (Sweepsy): “A bill that would ban online sweepstakes casinos in Connecticut is gaining momentum in the Senate. Last week, Senate Bill 1235 passed the Senate Committee on Judiciary by a unanimous 37-0 margin. In March, it passed the Joint Committee on General Law by another unanimous vote — 22-0. Now, it has already been assigned for review by the Office of Legislative Research and Office of Fiscal Analysis on Monday, May 5.”
Funzpoints, One Of The More Established Sweeps Brands, Pulls Out Of New York (Sweepsy): “Another major name in the sweepstakes gaming industry has pulled out of New York. Funzpoints, owned by Canada-based Woopla Inc., has added New York to its list of excluded states, per its latest terms and conditions released April 24. New York joins Nevada, Idaho, Louisiana, Michigan, and Montana as territories where “purchases, use of the games and participation in the Sweepstakes Promotions” are not permitted at Funzpoints.”
The rest of the news
Fanatics Casino Launches with $2 Million FanCash Drop (press release): Today, Fanatics Betting and Gaming announced the launch of Fanatics Casino on iOS and Android in Michigan, New Jersey, Pennsylvania and West Virginia. Fanatics Casino is also launching a web version today in New Jersey and West Virginia with Michigan and Pennsylvania coming soon. To celebrate the launch of the fastest-growing online casino in America, all Fanatics Casino customers can enter a sweepstakes for a chance to win a share of $2 million in FanCash. Fanatics Casino customers can wager $10 on their favorite casino games for an entry into the sweepstakes. Every Thursday in May and June, Fanatics will draw winners and drop a share of $250,000 in FanCash into their accounts. Each week, one winner will take home the top prize of $25,000 in FanCash.
A sweepstakes, you say? Sorry, had to say something.
Layup Aims to Tackle Sports Betting in the U.S -- By Making Every Fan A Winner (press release): “If everyone likes to win money, then why don't most people gamble? The founders of Layup—a groundbreaking new fintech startup—think it comes down to more than fear of losing money. The incentives that power the gaming industry also push people away. Inspired by Prize Bonds in Ireland, the founders' native country, Layup flips the incentives, redefining what it means to play—and win. Layup is a sports game built for every U.S. sports fan, not just gamblers. The app generates daily sports picks for users, similar to a parlay, but instead of betting their deposit, they save it. Every pick earns a chance to win real cash prizes, but their principal always stays safe. ‘We think we're offering something that no one else in the U.S. is, and we've more than doubled our active users over the past month,’ said Owen Monagan, co-founder and CEO of Layup. ‘I think the message behind our product is resonating. It's a sports game where all of the outcomes are good. You either win money or save money. If we're doing our job right, you'll do both.’”
Alberta Sports Betting Bill Continues to Progress in Committee (Sports Betting Dime): “Alberta sports betting legislation continues its march forward, as the Committee of the Whole discussed the provincial sports betting legislation for the first time this week. Members of the New Democratic Party proposed a number of amendments to change the responsible gaming elements of Service Alberta Minister Dave Nally’s Bill 48: the iGaming Alberta Act, all of which were defeated by a 38-16 vote.”
Cunningham snuffs out unregulated gambling at Dave & Buster’s (Illinois Senate Democrats): “State Senator Bill Cunningham advanced a measure to ban unregulated wagering at arcades like Dave & Buster’s. ‘We have been extremely careful with how we regulate gambling in Illinois, whether that is on sports, table games or video poker,’ said Cunningham, a Democrat who represents portions of Chicago and the Southwest Suburbs. ‘Arcades marketed as family fun shouldn’t be in the business of exposing minors to gambling.’ Last year, the family amusement company Dave & Buster’s announced it would begin allowing adult rewards customers to bet against each other in arcades.”
