Rotten

How to play Rotten

Then there are the financial implications, namely new revenue streams. Prediction market operators typically pay media companies to integrate their data while some outlets also earn referral commissions for driving new business to yes/no exchanges.

At least one well-known cable network has a financial stake in a major prediction market operator.

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How to play Rotten

Just eight years after the state of New Jersey successfully petitioned the US Supreme Court to repeal the Professional and Amateur Sports Protection Act, which opened the floodgates of sports betting expansion across the country, the Garden State has again petitioned the high court, this time to defend its sports betting jurisdiction against the rise of prediction markets and sports event contracts.

On Wednesday, New Jersey Attorney General Jennifer Davenport announced that her office had filed a petition for writ of certiorari following an appeals court verdict from earlier this year that went in favour of prediction markets. That 2-1 verdict from the Third Circuit Court of Appeals was handed down in April, and New Jersey had until Thursday to petition the high court.

The petition poses the question of whether the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted in 2010 in the aftermath of the Great Recession, “preempted states from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission”. Prediction markets have argued that their event contracts are financial derivatives regulated by the CFTC whereas many states contend that they are simply sports bets by another name.

What is Rotten?

The contrast with land-based gambling is striking. Casinos in Morocco and Egypt operate within recognised frameworks and, in Morocco, attract international investment. Private online betting remains outside the legal market.

The scale of that unlicensed market is unclear. MDJS’ own estimate of about MAD3.5 billion a year is the only figure available. No comparable public estimate exists for Tunisia or Egypt.

Without a licensing route, these markets remain difficult to measure, tax or supervise. Blocking and criminalisation may disrupt operators, but they do not remove demand. Governments are left trying to suppress offshore betting rather than bring it within a regulated market.