iGaming Daily

Jessica Welman (00:12.054)
Event contracts have been dominating conversation not just within gaming, but within financial institutions, governments, and the mainstream media in the US these days. What started as election betting with Cal-Sheet this past fall has quickly spiraled into something much, much bigger. At the start of the year, Crypto.com announced it will be offering CFTC-regulated sports betting contracts, but an inquiry from the regulator could shut that down just days after getting started.

We've got the scoop on event contracts in today's episode of iGaming Daily. iGaming Daily is brought to you by OptiMove, the number one CRM marketing solution for the iGaming market. I am Jessica Wellman, the slightly under the weather editor of SBC Americas, if you cannot tell, and media manager Charlie Horner is joining me purely because it's the internet and I can't get him sick.

Charlie Horner (01:00.867)
Yeah, absolutely. Yeah, I'm hoping that you're feeling better a little bit soon, Jess. I am, yeah. Yeah, the...

Jessica Welman (01:02.518)
I would stay miles away from me otherwise, Charlie.

Jessica Welman (01:08.822)
Are you going to ice? So this time next week, or two weeks from now, you'll be the sick one. That's just how it works.

Charlie Horner (01:15.267)
Exactly, yeah. Yeah. I'll take it in turns.

Jessica Welman (01:19.566)
Well, enjoy your ice trip, have a pleasant and productive week. Guys, reach out if you want to connect with Charlie in Spain. Charlie, I think this one might be more for you than for me because it's just such a, it's become such a thing so quickly here, this whole, we're calling it election betting, but it's, as we've seen from the crypto.com news and sports betting contracts and these sort of things.

what I would call event contracts have kind of quickly spiraled out of control. And I'm pretty sure you're just like, this seems like gambling. Why are you allowed to do this? I believe was your question.

Charlie Horner (02:00.965)
Yeah, well, this news first dropped, I think it was a couple of days before the Christmas shutdown, or it might have been the day of Christmas shutdown, and I just popped it in our sort of editorial meeting group, and it was like, meh, Crypto.com doing sports betting, and they're not doing it with a license, this sounds interesting. And I just recall talking just a few weeks ago about, you know,

In 2023, the big topic of the day was DFS 2.0. Last year, it was sweepstakes. And we were thinking, we could still be talking about this in January 26. Or will we be talking about election and event contract betting? Because this has quickly dominated the conversation.

Jessica Welman (02:55.008)
Yeah, what's funny about event contracts is this isn't new, the concept. So I was explaining it to you offline a bit. For people who are just like, I don't even understand what this is, because I get on my team's case on Justin and Tom, I'm like, we can on occasion in stories kind of and in titles to convey.

You can call it election betting, but it's technically not election betting, as technically does a lot of heavy lifting in all of these like ancillary market stories, right? So event contracts have been a thing in the US for, I believe when I was researching this morning, I double-tracked 150 years. People used to buy like positions in how well a particular crop would do.

in a given year. If you've seen the big short, the credit derivative swaps and stuff, these kind of fall into these alternative markets that the Commodities Future Trading Commission, CFTC, oversees where people are kind of betting or putting money and investing in the position of an outcome that will happen, which, mean, conjecturally is betting, you know?

There's, it's again, this, gets back to that big question, like is stock, is the stock market gambling? And yeah, sure. I believe it is conceptually, but technically that's what this is. You know, people used to like invest, have event contracts on the weather so that they could hedge their positions in crops. So it's like, if they had a bunch of holdings in wheat,

Charlie Horner (04:20.282)
Sounds like betting to me.

Jessica Welman (04:48.75)
And in Kansas, there's a chance of a drought. You would then invest in an event contract on the drought to be able to recoup some of your potential losses on the weed and that kind of thing. That's where this all came from. And then it became bigger and bigger. And it started becoming about geopolitical events, big movements in the world in terms of

you know, like Brexit and stuff and other things that impact companies. Like the concept's the same, right? That if you hold stock in a company and a country decides to delist something or switches administrations or things like that, that's gonna impact your position. So they create contracts on this. And then it just kind of got extrapolated out further and further. Important other thing to note about the CFTC is that

cryptocurrency and Bitcoin does fall under them as an unregulated security, essentially, or a security rather, because you're essentially trading on the position, I think, of how much value the world thinks these coins has. So that's kind of what the whole concept is and why you can maybe hopefully see

how all of these things that seem very different are falling underneath it. But do you have more questions for me?

Charlie Horner (06:20.778)
Well, I think my main question is, you know, we understand now that event contracts are on different events, know, geopolitics, elections, etc. Where is the line between event contracts and sports betting and where does Crypto.com's announcements sort of fit into this? Because...

From the outside, from over in the UK, it kind of seems like betting, therefore I would, and I think a lot of listeners might also think that this would fall under the jurisdiction of the states and that crypto.com should be a licensed betting exchange.

Jessica Welman (07:08.544)
So with sports contracts, they've actually existed for a little while. I believe Cal-She has been doing them on their site for some time. And again, because in most of the United States, you can wager on sports. They just haven't really drawn up that much interest or been that popular. Robinhood, I believe, announced something about doing more sports contracts.

maybe six weeks ago, I believe we wrote about it, but like, it's interesting that they're getting into it, but that piece of it isn't kind of the groundbreaking part. What makes the crypto.com one different is that these Cauchy and Robinhood ones are event contracts with US dollars, and the crypto.com contracts are contracts funded through cryptocurrencies. And so the CFTC is like,

We have some questions about this press release and they are looking into kind of whether or not crypto.com can. I'm so, it's usually I am not a lawyer today, it's I am not a banker. Like I never trust me for any sort of financial advice.

But I think the issue here is less that it's a sports contract and more that it's a sports contract funded through a cryptocurrency and we're getting into like subcontracting of things. And that is where the CFTC has concerns. The CFTC also challenged the Kalshi election betting. If you recall, I'm going to...

Charlie Horner (08:40.085)
Mm-hmm.

Jessica Welman (08:51.778)
break the fourth wall for viewers here. We are taping this Friday morning and we're about 20 minutes out from oral arguments in the DC District Court of Appeals on the Kalashie case that the CFTC, like they right now under the Biden administration do not want this kind of proliferation of contracts like this. And they think this is kind of reaching the limits of what event contracts should be. And they are pushing back on it.

you re the courts upheld that Cal she could do this election betting was kind of just like side note. The CFTC okayed, I believe it was the university of Iowa and another school in Victoria, Australia to do extremely limited election event contracts in like 15 years ago, like a substantial amount of time ago purely is just kind of a

thought exercise and a learning lesson to see if These numbers kind of helped us learn more about the political system and stuff and I think one of the interesting side notes of election betting is That it seemed to actually predict the outcomes a little better than polling did Just how accurate it had been on certain things. So that's why They're pushing back on this stuff a bit is it's getting too big

But I think because they've let these little things happen and they've let crypto happen, they've now kind of taken the lid off of something they can't put back.

Charlie Horner (10:28.321)
Yeah, yeah, I mean, it is an extraordinarily complex case adding the crypto element into it and you can understand why the CFTC is pushing back. Are there any sort of other court cases then that could change what happens in this case?

Jessica Welman (10:46.69)
The Cal-Shewn is the big one we're looking at. We haven't had any sort of suits filed in relation to Crypto.com yet. We've obviously spoken a bit about just the limits of what cryptocurrencies should be allowed to do. We've got the pending DraftKings Rainmakers case in terms of...

And it is somewhat similar that you are investing in an NFT that is then being used to like execute a sports contract. So that could overlap a little bit. We'll see where this goes and these court cases are pending. But normally you guys, again, peeking behind the curtain, our editorial chat, I cannot tell you how many times the Brits are like,

Charlie Horner (11:19.851)
Mm-hmm.

Jessica Welman (11:35.756)
What does Trumping president mean for this? And 95 % of the time, my answer is nothing. Like it has absolutely nothing to do with gambling. It's a state issue. But like the day is here, Charlie. The day is here where finally we're talking about something that the president's switching parties in a couple of weeks will actually make a big difference on this.

Charlie Horner (11:59.587)
Yeah, this is interesting because obviously the CFTC leadership is presumably going to change with the new administration coming in. Is this a case of what we were talking about with the federal sports betting hearing a few weeks ago before the Christmas break where this is a body making murmurs about something happening but ultimately nothing's going to happen because of the change?

Or is the Trump administration going to come in and shake things up even more? What do you think is going to happen after Monday?

Jessica Welman (12:36.366)
So in terms of the court cases, the Draft Kings one, these are private parties. Nobody's going to slow that down and the judges are in place. That's really not going to be affected. Whether or not the CFTC say they lose this DC Circuit appeal that's happening today, it's entirely possible that under the Trump administration, whoever comes in to run the CFTC next says, it's not worth our time to appeal this to the Supreme Court.

because it will be on them if they lose to appeal to the next step. If they win...

than election betting off the table and less than, know, cal she appeals to the Supreme Court, which is entirely possible. And we'll see how ardent a defense they put up on this one. What really is interesting, know, Trump has been very vocal in, I mean, I think in the past 24 hours, even he has spoken about how he wants the United States to

to be more embracing of cryptocurrencies under his administration, which has not been the case under the Biden administration. So I think the CFTC could have a very rapid shift in its stance on these sorts of things. So this crypto.com inquiry that is getting started, what are we at? Like four days out from the inauguration?

might not go anywhere because the person in charge is leaving. So that is kind of where the chips lie on this. There are certain things, the mechanisms have already been triggered, nothing's gonna stop them, but there are several big things on the crypto.com front and on the Caulsey front that depending on how things go, the regulatory body can just very easily say like this, we don't care about this anymore.

Charlie Horner (14:42.364)
Yeah, it's really interesting, sort of, few weeks and months that we're going to have with this, but... And it will be interesting to see what the new administration does, but do you think the fact that Crypto.com announced this after Trump had won the election, but before the inauguration, means that they're coming into it with a certain level of confidence? Maybe they've had a word that this might go down...

Jessica Welman (15:10.798)
can't tell what, you know, I don't know their access to the administration. I would, you wouldn't have gotten this PR in October. Let me put it that way. Like even though you had the election betting and things moving, when you have the assurance that someone who is just very vocally more supportive of what you're doing is going to be in charge of the country, you feel a lot more comfortable taking shots. So that.

Charlie Horner (15:14.515)
Mm-hmm.

Jessica Welman (15:39.874)
doesn't surprise me at all. The level of conversations that I'm less sure of. Crypto is one, know, we could have gotten Ted O.C. back on this one to maybe help talk a bit more about positioning of that going forward, but I think Trump is just a very pro-business, pro-commerce type of president. Republicans generally are more into open markets and that sort of thing.

that I can see this rapidly growing, but I also, you know, you're kind of creating, as we were talking about, a situation where it's just like, well, why are people getting regulated sports books anywhere? If I can go on a sweepstakes site or I can go on crypto.com or I can do all of these other things and it doesn't matter. I think these Super Bowl contracts that crypto were doing, I think there's literally two of them. So it's not like it's gonna be

coin flips and Gatorade and all of this stuff. they're, they are dipping their toe versus going all out, but who knows like how big it could get. but it does just kind of create a rare conflict of federal versus state who kind of has control over these issues and gets into the very minutia of the argument. Where does investing stop and gambling start?

Charlie Horner (17:05.736)
Mm-hmm. Yeah, it's a fascinating one and I'm sure this will all play out in the courts and with the new administration coming in. Jess, thanks a lot for walking us through this.

Jessica Welman (17:18.498)
For sure, keep an eye, we'll have later today, Justin will be, Justin Byers will write up what's going on with those oral arguments. In a somewhat similar kind of case, I just want to draw attention, something that caught our eye this week that I personally find super interesting, the Michigan Gaming Control Board, who is very, very trigger happy with their cease and desist, sent out cease and desist to advanced deposit wagering apps.

in their state. So, Twin Spires, Vanduul Racing, NYRA bets saying we have no more racetracks in Michigan. You no longer have a license to offer what is essentially just online horse racing. And everybody left except Churchill Downs who owns Twin Spires. They were like, no, no, no, my friend, you don't get to choose this. We are governed by the federal government and this law. So, they have sued them and this lawsuit is moving forward.

One, I find it very interesting to see somebody fighting back against these cease and desist because we kept saying someone will eventually. And two, it is kind of what I just said, state laws trying to kind of have their handle on gambling, which we've said, 10th Amendment, this is kind of what they're supposed to be doing. But there is this federal horse racing act that the late Jimmy Carter signed in the 70s that

may trump it. So that's another court case we'll be following on SBC Americas that I think somewhat relates to our conversation today and keep a lookout for that. Charlie, you've had some stuff going up. I shared this on Twitter this week. We have the top 10 like live dealer games in the US on SBC Americas. That was a great feature that came out for those of us that I just don't know that world nearly as well as I should. So that was really illuminating. What else have you?

kind of put up in the past week that's worth checking out.

Charlie Horner (19:18.328)
Yeah that was a really really good bit of research from our friends at Casino Rank who put together that research. One other thing I'd like to highlight is a feature that's gone out on iGaming Expert this week. As listeners will know, we launched the site.

earlier on in the week and one of the first big features to go out was with Blueprint Gaming who are a games developer based in the UK and Joe Purvis who is the Director of Marketing PR and Events has been talking about the use of intellectual property in their games specifically about the video game character King Kong so if there are any video game fans out there and you like those kind of characters in your games be sure to check that one out on iGamingXpert

Jessica Welman (20:05.3)
Awesome. And then of course, go find Charlie on the floor at ICE. Check out everything going on at SBC America's everything in the SBC network. And as Charlie mentioned, Casino Beats is now iGaming expert and they team over there has put a lot of hard work and effort into this pivot to a new site and the rebrand the new site. I'm jealous. I'm like, I want our site to look like this. It's so pretty. So check that out. They'll have us content, content from around the world, just everything you need to know about iGaming.

And keep tuning in to iGaming Daily for everything you need to know about gaming in your ears. And I promise I will sound better next week. Thanks for listening.