‘This is an all-out war’: Inside the casino industry’s fight to stop prediction markets
This Is an All-Out War: Vegas vs. Prediction Markets
Earthguardiansonline.com – This is an all out war, and the Ninth Circuit just handed the casino side its biggest victory to date. In a unanimous decision issued Friday, the federal appellate panel backed Nevada regulators and a bloc of Strip operators, confirming that states may classify prediction platforms as gambling enterprises and subject them to conventional gaming oversight. The ruling lands a direct blow to Kalshi, Polymarket, and a growing roster of event-contract venues that have ballooned from a data-nerd pastime into a multibillion-dollar economy covering sports, elections, pop culture, and even meteorology.
The timing is no accident. Las Vegas resorts are already absorbing a tourism slump worsened by repeated 115-degree heat events, and analysts point to broad consumer-spending strain rather than any single rival as the primary drag. Still, the gaming establishment has framed the prediction-market surge as an existential threat and is spending accordingly to shut the sector down.
How a Federal License Sidesteps State Tax Codes
The platforms’ structural edge traces to a regulatory pathway blessed under the current administration. Instead of filing with state gaming commissions as casinos or sportsbooks, firms like Kalshi and Polymarket register as financial trading venues under a little-known federal commodity regulator. They then issue so-called “event contracts,” a classification that exempts them from state gambling tax regimes. That distinction matters enormously: state gaming taxes collectively delivered close to $18 billion to state treasuries last year, money that funds schools, highways, and public-safety programs. For legislatures that lean on that revenue, the gap is concrete, not theoretical.
The Casino Lobby’s Rhetoric and Spending
Derek Stevens, owner of three Las Vegas casinos and operator of Circa Sports with sportsbooks in seven states, has become the industry’s most visible voice against the newcomers. His language toward prediction-market founders is blunt.
“A couple nerds came up with this idea to want to avoid paying taxes. Just because they’re shrewd doesn’t mean they should be exempt from the law. These are thieves. They’re pirates. They’re marauders.”
Stevens’s peers are backing the rhetoric with money. The gaming lobby has logged more than $3.3 million in federal lobbying this year alone, and its pressure has helped shape a congressional agenda: five new bipartisan bills were introduced this summer to constrain the prediction sector, joining a dozen-plus proposals already pending in committee.
Industry Defenses and Counter-Narratives
Advocates of prediction markets counter that the casino lobby is recycling a playbook it has deployed against every prior gaming innovation, from tribal casinos to online poker. Former Nevada Senator Dean Heller, a Republican who now serves as a paid adviser to Kalshi, frames the clash as ordinary competitive friction.
“This is the game that’s played, and I’ve been part of that game for 30 years. This is no different than what we’ve seen. It’s how gaming responds to competition. They don’t like it. They want to have a monopoly.”
Employees at Kalshi and allied platforms have pushed back on the narrative that opposition is merely the lobby speaking through proxies. One source close to a prediction-market company told reporters that the name-calling signals genuine financial pain on the casino side.
“If the gambling lobby is resorting to name-calling, that tells you this is really starting to hurt their wallets.”
Polymarket declined to comment. A Kalshi spokesperson stressed that the company pays state taxes like any other business and cited North Carolina’s recently enacted 6 percent tax on prediction platforms as proof that states can regulate the sector while respecting federal law and funding public services.
A Broader Coalition Raises the Stakes
The regulatory push extends well beyond the Strip. Forty-four of fifty state attorneys general, dozens of Indian tribes, consumer-advocacy organizations, and addiction specialists have all weighed in favor of tighter oversight. On Capitol Hill, the bipartisan contingent advocating limits has grown steadily through the summer. The core concern is straightforward: if prediction platforms continue to operate outside state tax codes, the fiscal and consumer-protection frameworks that have governed gaming for decades will erode from the top down.
Frequently Asked Questions
What exactly did the Ninth Circuit decide? The panel unanimously affirmed that states retain authority to treat prediction markets as gambling and regulate them under existing gaming-oversight statutes. The ruling did not ban prediction markets outright but removed a key federal preemption argument the platforms had relied on.
How do Kalshi and Polymarket avoid state gambling taxes? They are licensed as financial trading venues by a federal commodity regulator and issue “event contracts” rather than wagers. Because the product is classified as a commodity derivative, state gambling tax codes do not apply to the spread or fees they collect.
What is North Carolina’s 6 percent tax on prediction platforms? North Carolina recently enacted a statute imposing a 6 percent levy on prediction-market transactions conducted within the state. Kalshi has pointed to the law as evidence that states can tax the sector without conflicting with federal licensing.
How much is the gaming industry spending on lobbying? The casino and sports-betting lobby has logged more than $3.3 million in federal lobbying expenditures this year, with five new bipartisan bills introduced this summer and a dozen-plus additional proposals already pending in Congress.
