The United States gaming sector has always been associated with a rather patchwork set of regulations. These are often determined by individual states, although the federal government is still able to maintain a sense of control in terms of the broad strokes. However, the sheer growth of the online community in recent times signifies that “business as usual” may soon need to be redefined.
A recent legal action taken by New Jersey in relation to prediction markets illustrates just how complicated things have become. However, this argument may soon be making its way to Capitol Hill in a move that could eventually lead to a landmark ruling that affects far more than prediction markets alone.
What are Prediction Markets?
Prediction markets often represent a rather broad concept. However, the basics are simple. They are essentially any type of online platform that allows users to open a futures contract based on the predicted outcome of a specific event. Some examples of typical prediction markets include:
It is also important to mention that prediction markets, while they may appear the same, are actually quite different from standard futures contracts. Prediction markets require users to choose one of two (yes/no) outcomes associated with a certain event. Futures instead represent agreements between two parties to sell an underlying asset at a predetermined price at a later date.
Where Does New Jersey Fit In?
The main takeaway point here is oversight. Unlike other types of online gaming, United States prediction markets are entirely managed by the federal government. New Jersey legislators have chosen to argue that, in essence, prediction markets are no different from online gambling. They instead feel that states should be able to decide which policies to enact by adopting a bipartisan approach.
In other words, proponents of state-centred regulations state that prediction markets are essentially governed by similar principles to other pastimes where outcomes are not known. In terms of online casinos, this could equate to the latest mines game, a crash title that requires players to press their luck in the hopes of scoring a high multiplier, or (specifically) placing wagers on sporting events. What is interesting about this latest appeal by New Jersey lawmakers is that it is supported by Democrats, and Republicans. This is likely one of the reasons why it has grabbed the attention of the United States Supreme Court.
The Proposal
Why does New Jersey seem to have such a vested interest in prediction markets? This is, in fact, one of the few states which have legalised digital gambling. Online casinos, virtual sportsbooks, and similarly regulated platforms have generated a significant amount of revenue, and most experts believe that New Jersey is searching for yet another way to augment this income. As opposed to leaving oversight to the federal government, New Jersey lawmakers want to implement a bipartisan system capable of addressing issues unique to the state. This is what makes the proposal so interesting from a political perspective (considering the fractured nature of contemporary American politics).
States’ Rights, Online Gaming, and Future Legislation
There are several reasons why any type of Supreme Court ruling could dramatically impact the online gambling market across the country. First, it should be highlighted that prediction markets are actually quite popular with casino players who happen to be located outside the United States. These options tend to be included alongside other standard casino features such as games, sports wagers, tournaments, and bonus offers. American-based casinos clearly see that if prediction markets are overseen by the states, brands will be more likely to have a say in how the local industry is regulated.
Beyond Prediction Markets
At the time of writing, only eight states have chosen to legalise real-money online gaming. This has come to represent a problem when we consider how prevalent the virtual gambling community has become throughout other regions of the world. Simply stated, America has fallen well behind the competitive curve.
Let us now assume that the Supreme Court chooses to rule in favour of New Jersey. This would likely cause other states to follow a similar course of action; perhaps even leading to looser federal restrictions on virtual gambling in general. Many experts now feel that this outcome is inevitable, even if it will not occur overnight. Online gaming represents a massive industry, and its appeal is undeniable.
Why deprive the population of an exciting pastime, and would it not make more sense to allow individual states to leverage another means of generating taxable income? Although this is a sound argument, we have yet to see if the Supreme Court will take any type of decisive action. Until then, betting enthusiasts from all walks of life will be keeping a close eye on any late-breaking news.
