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We might be heading for a sportsbook versus regulator showdown in the United States as the furor over prediction markets continues. After Fanjul announced its intentions to get into the prediction market sector, the Ohio Casino Control Commission warned all of its licensees to tread lightly when it comes to the controversial product vertical. But it isn't just Fanjul contemplating getting into events contracts. After an SBC America scoop found that several operators are registering with the National Futures Association. So, to put it lightly, are we heading into a full blown civil war? Welcome back to iGaming Daily. iGaming Daily is supported by OptiMove, the creator of positionless marketing and the number one player engagement platform. If you're heading to an SBC Summit in Lisbon, mention iGaming Daily when you visit OptiMove at stand A555 and get your first month for free. Joining me, Charlie Horner, to dig into all of this is SBC Media Managing Editor Jessica Wellman. and SBC America's senior journalist, Tom Nightingale. This is a nice quiet one for us to dig into. uh Jess, how are doing? Well, I mean, as managing editor of SBC Media and editor of Prediction of Markets America, just cranking out the news about this vertical that I really wish wasn't even considered gaming in the first place. It's nonstop. It's every day. Yeah, it sounds like a lot of fun. Tom? How are you finding things reporting on this day in day out? Yeah. mean, remember when sports betting was sports betting? That was good. We were sweet summer children, weren't we? Until this year. Yeah. I mean, the news just never stops, it? eh even by those standards, the last week, week and a half has been pretty noteworthy. It's not super surprising though, given timing. Like, Charlie, you know, from working on SBC America, this is the time when all of the football announcements come. And so we are just getting all of these, but with a prediction market bent to them. Yeah, all hands on deck in the US news desk. It feels like a lifetime ago, but actually it wasn't that long ago that Fanjul announced that it is getting into the prediction markets game. So Jess, maybe you could give us a bit of an overview of what's going on here. What's the story and why is this so big? You know what? I'm going to throw this one to Tom since he's the one who wrote about it. But yeah, they partnered with the Chicago Mercantile Exchange, which I enjoy because they wear funny yellow jackets on the floor when they trade. So that's cool. And Fandool has a lot of yellow and gold and blue in its color palette. So that makes sense. But Tom, you can offer real insight. Yeah, it's a match made in heaven based on color schemes. Yeah, the CME group. mean, they they style themselves as the I think the largest prediction markets operate or the world's leading derivatives marketplace, I think is the terminology they actually use. And while it's CME group, it's Chicago Mercantile Exchange, they actually operate like a bunch, the New York Mercantile Exchange, Commodity Exchange. It also owns 27 % of Dow Jones indices, which is something that I had no idea about until I looked into this. But yeah, mean, we, know, FANJUL. I think I wrote in the intro when I wrote this story, like we'd heard a lot of whispers about sports books getting into this sort of stuff, but Fanjul were the first to kind of stand up and shout it from the rooftops, which again, shouldn't really be a surprise, particularly to anybody who listened to Flutter's earnings calls in the last three months, because Peter Jackson pointed multiple times to the fact that there's the Betfair exchange over in Europe and the fact that they feel pretty well positioned to take this step. Uh, and so essentially it sounds like what they're going to do is Fangil and CME group will off operate what's called a non clearing futures commission merchant. And what essentially that does is it facilitates access to event based contracts through Fangil. So they'll form a sort of new joint venture company. Um, but it sounds like they'll sort of kind of integrate it so that through the Fangil platform, you can get access to this marketplace and offer. Well. offer trading on financials and that sort of stuff. Currently as of right now offer no sports, but I mean, let's just put a pin in that and not pretend that this isn't something that they've seriously considering for the future. They have said as much. I am going to defend them a little bit here. So like when we say that CME group does the same stuff that CalSHE does, they have the same licensure. They're trading like You know, like, is the Dow gonna close up or down five? They're still doing the very traditional idea of what event contracts are in the financial scheme of things. They have not ventured into this, like, we'll just get out of the left side of the bed or the right side out of the bed this morning level of minutia. So I think the pride of partnership is there is a quality. situation there that I think is important to highlight. I don't think Fandl does anything where they are gonna just be like, we partnered with Kelce, you know, like they're gonna pick somebody that is reputable. But Tom is right, they do these things. And they have admitted sports is something they're going to consider. To me, I'm curious, Tom, if you agree or disagree. I think when they say sports is something we're going to consider, it's the same way DFS is something that we do. In Texas, Georgia, places like this where we are not beholden to a regulator, we might geo-fence and allow these things. We're not going to do it anywhere. And we'll talk about Ohio, Nevada. We won't do this anywhere where we have a license to jeopardize. But it is an option for us in states where we have DFS, where we have skill games, where we are willing to go because we don't have somebody we're going to piss off. Yeah. I mean, absolutely. That would seem to be the logical approach, wouldn't it? Because I mean, particularly while um there is no sweeping, heavy handed statement on prediction markets not being allowed, while it's still the regulatory gray area or whatever you want to refer to it. Like the appeal of suddenly having, you know, nationwide access to, you know, if it walks like sports betting and it talks like sports betting, it's sports betting. Yeah, exactly. That's a pretty huge appeal, isn't it? If I had to hazard a guess where they maybe push the envelope, I'm a little jealous. Tom is in Ontario and gets FanDuel Canada where there are bets on like goofy pop culture stuff. I assume it's like here, like with Oscars and stuff, that it is relatively low limits. It's largely just like for funsies, kinds of amounts of money. But they've established this reputation for doing that stuff in Canada. They have the skill games. They lean into lifestyle a lot with their partners like Gronk and stuff. That if we start seeing like, you know, uh Does Ariana Grande win the Oscar next year? Maybe not that one because it is like a direct tie to sports betting, but like, you know, does Ariana Grande wear a pink dress to the Wicked 2 premiere? That is like not something a sports book would ever offer. To me, these are the ones that I can see them being like maybe in states where there is sports betting. We offer for funsies stuff like this, but I might be misreading the tea leaves. This says a lot, it, about the fact that we're what? We're three minutes into this podcast and we're already kind of speculating wildly on where this will end up. Yeah, no, I mean, it's all speculation at this point in time. There's nothing else to do, is there, really, about it? Yeah. This is why it's so interesting because the only thing we know so far is that there is no sports for now, though I'm sure that this will come into things later down the line. One thing I am interested in, and we've touched on it a little bit, is the CME Group, because I have to admit, not somebody who'd come across my radar before hearing of this You don't trade corn? Cotton markets? don't trade corn. No, it's not something I do in my spare time, unfortunately. um So why is Fanjul partnered with this specific body? And what role will they bring to this partnership? So to me, the biggest advantage is... It gives them a massive head start over everybody else to get a group that already has everything in their ducks in a row to offer these things and have simply not offered them to date. When we talk about kind of the other groups in a minute and the National Futures Association, the things that everybody else is doing is step one of, Tom is working on the story of this, step one of like, what, 3,411? Yeah, roughly. And Fandals coming in at step 3000. So that's the advantage of partnering with a group like this. And like I said, this is a group that is an extremely reputable organization with a very sterling reputation to go with it, which helps as well. Yeah. Tom alluded to it uh earlier on as well. But Flutter leadership were very bullish on this when, when in their last earnings call without outright announcing the deal. CEO Peter Jackson did heavily refer to prediction markets. They would explore all opportunities uh and they were very confident that they had the capability to do this with the betfair exchange that they operate globally. So it all points towards that there's an air of confidence about Fanjul. They're very confident. They want to come out the traps and make this move. So why do you think they are just coming out the traps and doing this way before anyone else? Like you say, Jess, They're at step 3000 and everyone else is making the first baby steps. Yeah, I mean, they said, didn't they? You said, know, Peter Jackson on the last earnings call, even before the last earnings call on the previous one in whenever that was, don't know, like, I guess, April, May. Peter Jackson said at that time that they had even gone as far as to take the step to move staff over from the Betfair exchange over to Fanjul. So it's, you know, even back then they were going one beyond not just exploring it, but I guess actively looking into the practicalities and the logistics of doing something like this. And think to Jess's point, like the reputation of the CME group and the fact that um this is a kind of ready-made platform for a company that is already the US market leading sports book to jump in with both feet. The fact that they said they're going to start with financial stuff and they're not going to start with sports isn't surprising to me at all because it's... call it whatever you want, a soft launch or you can sort of step into that, test the water, wait to see maybe how things continue to develop. We'll get onto the regulatory side of things in a minute. For me, it just comes down to, I think we talked about this on the previous part, think talking about Fanjul, like why would they not be confident of being able to make a splash in this? It's not like their game plan is just some off the beaten path. They're doing something different than everybody else game plan. It's the game everybody wants in. step 3000. Nobody wants in. It's step one. They just haven't gotten it done. You know, like we've seen the rumors that DraftKings was going to acquire Railbird, which is one of the newest DCMs on CFTC that got approved. mean, you saw like Polymarket is coming back in and based on documents we've seen on the website of the site they've acquired, it could be as soon as next month. And they're just ready to go because they just acquired somebody. Everybody on the sports side was looking at who can we buy, who can we involve ourselves with to get to this point. And Fandle just, think, kind of on the flip side, has the reputation and the pedigree, the blue chip status that somebody like a CME is willing to take that step with them. where maybe if you're, you know, prize picks or fanatics or somebody that doesn't have, not even that they have a bad reputation, but they just don't have as big a reputation, it's harder to get that deal done. Great. Jess, Tom, we've heard one side of the story. It's very positive, but at the top of the show, I promised a showdown and potentially civil war. So we'll go to a quick break and we'll come back and hear the other side of the story. Welcome back to iGaming Daily. We're talking all things prediction markets once again on the show. I'm joined by managing editor Jessica Wellman and SBC America senior journalist Tom Nightingale. Now, Fanjule are getting into the prediction markets game. Others are looking at the opportunity as well, but regulators are not very happy about this. And the latest to make a move was the Ohio Casino Control Commission. What did they have to say about this? So. OCCCC sent a letter to sports gaming operators yesterday, or well, Monday. We're taping on a Tuesday, if you can't tell, saying, listen, we hear you've been going around with some people. We want to let you know how we feel about them, which is what they are doing in our state is patently illegal. They have sent a cease and desist to Cal-She. I was actually in Columbus last week for the monthly meeting. kind of said like what's, it seems like it's kind of just detente until the other um lawsuits get settled that OCCC is like, we're not gonna make you get out, but we're watching these other lawsuits and let us know we don't like you. You can hang out for now, but like, if we get a chance to tell you to get out, we're gonna tell you to get out. And that's what this letter says is like, if you do anything with these people that are doing this in Ohio, You are running the risk of losing your master sports betting license in this state. And I know like people kind of think Ohio is a flyover state. It is a massive, massive market. It's like, you know, top five usually in terms of monthly handle. So they also said, and if you think that just geo-fencing this crap out of Ohio is going to be sufficient. Just let you know if your partnership geo offenses it out, but your partner is still doing stuff. That's not going to fly either. It was very regulator, nice talk, but also with a very clear. You do not want to wade too deep in these waters. We will get very upset. It's not, I'll let Tom do the Nevada discussion. Cause that was just overt. I haven't seen that much overt just like. y'all are crazy, right? The kill most tone, but it was very direct. Yeah, it's not like, you know, with all the greatest respect, it's not a small market. It's not like a Delaware or a Connecticut. It's Ohio. This is a huge one. So I don't think operators are going to want to get on the wrong side of them. Talking of regulators that you don't want to get on the wrong side of, Tom, Nevada, they are also not too pleased with this either. Do want to tell us about this one? Yeah, well, mean, was obviously the first thing to, you know, the Nevada gaming control board has, you know, I think they described it as we're in a we're in a sensitive spot, which is just a marvelous understatement considering multiple lawsuits with Koushi and Robin Hood and all this stuff. appropriate euphemism for pending litigation. But sure. But I mean, it was interesting because from the outset, the commissioner brought, you know, commissioner brought it up. was Flutter's general counsel and Fangel, I think like an SVP of uh Fangel. Fox, the one who does like RG and compliance. And, you know, it started with the Nevada regulators sort of saying, you know, what's the, what's the deal here? And then it really quickly by the end descended into sort of like a bit of a standoff and there were sort of very thinly veiled, sort of half joking references to potential future litigation. Like the Nevada, the Nevada, the chair of the Nevada gaming commission at the end was basically sort of like, so you're not going to, you know, we're not going to get embroiled in a lawsuit. Right. And Fandral were like, that's not the plan. And then everyone just sort of laughed and carried on. um The obvious, the sort of serious undercurrent of this is that um While the Flutter's general counsel said, I don't think the company is quite going that far. It was quite clear to me at least watching on that when Fangil said things like when we, if we consider adding sports, we will run it by the Nevada gaming control board first. That's pretty much what they mean is it sounded like they will tell the Nevada gaming control board. They are intending on doing this and may well go ahead and do it anyway. Cause then you bring in the whole debate about CFTC. federal regulation, does it supersede? Obviously that's the big issue that's in the courts at the moment. Fanjul and Flutter were very, they were sort of purporting to be generous by saying, we will consult with you. But it sounds to me very much like they will make their own decisions and then they will do Nevada the courtesy of letting them know that this is happening. It's important to note too, in Nevada, Flutter has a license, but it's a supplier license. They like power a Boyd sports, retail sports book or something like that. Nevada is a state that because of the ways kind of the laws were written and the power of casinos, people who don't like own casinos in Nevada really can't come in with sports betting. So Draft Kings and FanDuel are not there. They've never been there. So there's a little less at stake for FanDuel in Nevada than again, say Ohio. Like I doubt... the tone of the conversation would sound like this had this meeting taken place in Columbus. know, Flutter and Fangil did, you they said they were talking about that Boyd, you know, the sort of Boyd deal they have in Nevada and they made pains to stress that those licenses, that license in Nevada and elsewhere in the US, you know, remain paramount and the primary focus of business, which I'm sure, you know, I'm sure that they do remain paramount, but It's quite clear that the path that we seem to be going down here and what was particularly interesting was Commissioner Krulicki, I think Brian Krulicki, just straight out came and said, know, if we're, I think because Fletcher said something like, know, we'll try and, you know, we'll look to adhere to state and federal laws and regulations. And this Commissioner Krulicki just came out straight away and said, well, to try to reconcile complying with both federal and state matters. that's not possible today. So there, you know, the line is very clearly drawn that there is going to be a conflict. And I think really the summary of the message from Nevada to Fangel was that if you continue to go down this path, we might quite quickly get to a point where you have to pick a side, you have to pick federal, you know, the argument of federal regulation of sports contracts, or you have to pick the state regulation and the state license that you have in Nevada. So I don't want to say watch this space because it's such a cliche, but honestly, by the time this podcast comes out, God knows what's going to have happened. is the showdown that we- Yeah, this is as showdown as it gets, sadly. Gloves often in a regulatory concept is usually just a little sarcasm. I don't think by the time we post the pod, Fandul makes a decision. I think all of this, and based on my conversations with operators, all of this is- to use a financial term, hedging. I don't think they want to do this. It's just, if you're gonna open this door and it's exclusively for the states where they can't do it the way they like to do it, we're gonna set it up so that maybe this is something we're able to take advantage of and FanDuel's getting the brunt of it because they're so far ahead. Everybody's doing this. Like we had the story on SBC Americas that Draft Kings, Fanatics, Underdog, Prize Picks, all have entities being registered with the NFA, which is again, kind of step one on obtaining the licenses and permissions you need to offer this stuff. This isn't like a for sure thing to me, from what I'm hearing, like, you know, Tom is right. They're just like, well, I mean, if we're gonna do this, we're not doing it to offer corn, you know, we're gonna look at what we can offer, but I don't think any of them are. are super keen to pull the trigger. Yeah. Look, we talked, you've just mentioned it there, that there's plenty of operators registering with the NFA. We don't have loads of time to delve into this too deeply, but could you just give us a bit of an overview about what this is, what it means, and are we effectively about to have sports betting in 50 states? I've repeated it every podcast. say it as I cry into my pillow before I go to sleep every night. We are two years away from a decision on this. And in this murkiness, you know, again, to get a DCM, which is kind of, I'm using that as the state, it's much more complicated than that. um To get what you need to, to be Kal-Shee, you need a couple of years. Is my understanding Tom, that's about the timeline, isn't it? Yeah, I believe so. think I saw about 18 months thrown out as a typical sort of. So like truly starting today or is these NFA dated ones have been like May or whatever. You're setting yourself up for like, this is like the long con, you know, you're setting yourself up today for 2027. And that's what this registration with the NFA is. And the thing is, and when I was kind of calling operators and being like, I see you on this thing, the tone was very much, this is just there if you want it. You know, like, we're not necessarily, this doesn't mean we're all in, this doesn't, know, Fandual is a little more we're in, you know, you don't sign a business deal with money involved. This is truly just registering your interest. oh It's kind of like signing up for like a pamphlet about something like, it seems interesting, send me a pamphlet is kind of the level of where this process is compared to Fandl being like, okay, we're taking the oath and getting sworn in now and we're going to go to a couple of meetings and see how we feel. I think that's kind of the layman's way of expressing the difference here. Jess, Tom, we've unfortunately run out of time. We could ramble on about this all day. I'm sure we'll have some reason to talk about it next week. Don't worry. It's never ending. Indeed. yeah, if our listeners want to keep up to date with all of this, then please do head over to sbcamericas.com because we've got so much coverage about all of this and more from the US sports betting and online casino industry. And please do come back to iGaming Daily tomorrow because we'll come back with another story from the global em online sports betting and online casino industry.