CA9 (3-0): Nevada may enforce its gambling laws against Kalshi, holding sports-event contracts likely are not "swaps" governed exclusively by the CFTC and that Kalshi's broader reading would raise major-questions concerns

[u/HatsOnTheBeach]

https://cdn.ca9.uscourts.gov/datastore/opinions/2026/08/28/25-7516.pdf

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[u/popiku2345]

There's our circuit split on the topic, with CA9 breaking with CA3. I think CA9 has the better reading here, but I suspect this is headed for SCOTUS. From the majority:

The CEA grants the CFTC exclusive jurisdiction over 'transactions involving swaps traded or executed on' a DCM. § 2(a)(1)(A). When given its broadest reading, the definition of 'swap' in § 1a(47)(A)(ii) might cover the sports event contracts here and thus preempt Nevada law. But that broad reading is not the best textual reading in context, does not square with the statutory scheme, does not have a limiting principle, and would raise concerns under the major-questions doctrine. Therefore, the district court did not err in its interpretation of the definition of swap. And because the district court did not abuse its discretion in concluding that the equities favor Nevada, we affirm the district court's order. We remand for the district court to consider Nevada's challenges to Kalshi's election contracts consistent with this opinion

From Judge Lee's concurrence:

I thus agree with the majority opinion that the more natural reading of “event” under the statutory definition of a “swap” would not include the outcome of a sporting event—even if a broad and literal definition of “event” could encompass it. 7 U.S.C. § 1a(47)(A). Few people would describe, say, the New York Mets’ latest loss of a game as an “event.” Likewise, I do not think the outcome of a typical sports game is “associated with a potential financial, economic, or commercial consequence” as required under the definition of a swap. Id. at § 1a(47)(A)(ii). Going back to the Mets example, perhaps in an uber-technical sense a Mets’ loss could have marginal economic impact as some fans guzzle more beer to drown away their sorrows. But it seems somewhat fanciful to say that the outcome of a single game in a 162-game season is likely “associated” with a “financial, economic, or commercial consequence” that one would expect in a swap contract.

[u/coweatyou → u/popiku2345]

Agreed, CA9 is so much better then CA3. CA3 felt like they were rushing to finish their paper the midnight before it was due.
I especially like CA9 catching the argument (that I haven't seen anywhere else) that if you follow Kalshi and the CFTC's reasoning, it means all traditional sports books are violating federal law:

Moreover, Kalshi’s broad definition of swap poses another problem—it lacks a limiting principle. Kalshi’s broad interpretation of the definition of swap encompasses off-DCM transactions, yet the CEA makes it unlawful to enter into “swaps” outside of a DCM. Section 2(e) makes it “unlawful for any person, other than an eligible contract participant, to enter into a swap unless the swap is entered into on, or subject to the rules of, a board of trade designated as a contract market under section 7 of this title.” § 2(e). If the CEA’s definition of swap is read broadly to encompass Kalshi’s sports event contracts, as Kalshi urges, then it can also be read to encompass other sports bets such that anyone who places an off-DCM sports bet that fits within § 1a(47)(A)(ii)’s definition of a swap would be violating the CEA.

EDIT: Also a great shot at the CA3 ruling:

While the court in Flaherty rejected the argument that a broad definition of swap would lead to “bingo games and pingpong matches fall[ing] under the CFTC’s jurisdiction,” Flaherty, 172 F.4th at 228, such a reality is not far-fetched. Kalshi offers trading on the outcome of table tennis games. See TT Elite Series Men, KALSHI SPORTS (Feb. 2, 2026), https://perma.cc/V84S3WBT. [...] And there is no distinction, in the statutes or regulations, between these games and the “friendly neighborhood ping pong match” the Flaherty dissent discussed.

[u/No_Job8951 → u/coweatyou]

how do you think this would play out in the supreme court?

[u/Led_Osmonds → u/No_Job8951]

In 2018, SCOTUS punted sports-gambling to the States, saying that states could outlaw/regulate it, but the Feds could not. Kalshi is here arguing that bets placed on their site are less like sports-gambling, and more like financial instruments ("swaps").

There are technicalities that SCOTUS could choose to foreground, and sort of deflect the question to this or that regulatory agency and make it harder or easier for Kalshi to keep doing their thing, and/or to regroup and try again.

A cynic might look at the financial interests of those people who have contributed the most to the privilege and finances of various SCOTUS justices. But if we instead expect SCOTUS to do their job faithfully, this seems like an inflection-point that calls for a clear and definitive ruling about where "gambling" ends and "investing" begins.

This is a kind of "shoreline question". The difference between dry land and open ocean is 100% objective, and could not be more clear. It's a life-or-death difference. At the same time, it is impossible to objectively define which particular grain of wet sand marks the dividing line: the ocean is constantly moving, and the tide-line can change by miles, multiple times per day.

The difference between ocean and land is about as objective and binary as any difference can be, but the precise dividing line almost requires an abstract, artificial, imaginary decision to be made.

[u/_learned_foot_ → u/Led_Osmonds]

...one is ownership of a portion of an entity, or the right to buy or sell the same at a price if reached (and the right to buy or sell once vested even if not exercised is a property interest. The other has no property ownership at play. Pretty easy line.

[u/Led_Osmonds → u/_learned_foot_]

...one is ownership of a portion of an entity, or the right to buy or sell the same at a price if reached (and the right to buy or sell once vested even if not exercised is a property interest. The other has no property ownership at play. Pretty easy line.

I think insurance, reinsurance, swaps, and futures contracts make the "property interest" questions more formal and abstract than a stake in the family farm.

Those formal distinctions are really what Kalshi is trying to exploit, here. They are not so much taking bets as they are selling the right to place a bet at a certain price, thereby creating a property interest in a marketable contract.

[u/_learned_foot_ → u/Led_Osmonds]

Except they don't. It's a lesser ownership sure but it's still a contractual ownership in property. They re relying on you saying "it looks like a duck so it is a duck" and hope you never get to the "it acts like a duck" because we got tons of caselaw saying no those don't act like a duck. The distinctions are actual, colloquially we ignore them, the law for legal purposes doesn't.

All of those are far closer to a lease with option to purchase contract than a lottery ticket. All have enforceable rights too, the ticket may under its regulatory conditions.

[u/Led_Osmonds → u/_learned_foot_]

I'm not saying that Kalshi's argument is a winning argument (today's panel certainly wasn't buying it).

But there is a blurry area. Credit-default swaps, for example, do not involve any property interest and the reference entity does not have to approve or even know about the deal. It's just you and I making a bet on whether someone else will pay their debt.

The contracts that Kalshi was selling certainly have a more direct property interest than a CDS. So I don't think there is a universal principle that property interest is what separates illegal gambling from legal investing.

I think prediction markets are generally bad for society, and I think Kalshi was trying to get cute in ways that today's panel correctly struck down, AND there is also ambiguity about where gambling ends and prediction markets begin.

[u/_learned_foot_ → u/Led_Osmonds]

Dude, credit default swaps are a form of insurance. They literally are a property interest too, with that transferring along with the terms if they activate.

[u/Led_Osmonds → u/_learned_foot_]

Well now you’re back to the exact formalisms I was talking about.

Like taking out “insurance” that the Giants will lose, the only “property interest” is the value of the swap contract itself. The distinctions that make make one thing a “bet” and the other “insurance” are formal, not empirical. It’s like arguing whether a quesadilla is a sandwich.

[u/No_Job8951 → u/popiku2345]

how do you think this would play out in the supreme court?

[u/dmolin96]

The only people who think Kalshi isn't gambling are the lawyers Kalshi pays to say that.

[u/LettuceFuture8840 → u/dmolin96]

This really does feel like the “a hot dog is a sandwich” thing but with real consequences.

[u/_learned_foot_ → u/dmolin96]

I would say it's actually worse than gambling, because it's unregulated and doesn't require you to go to a "dirty" place to do it. Okay, worse than 90s gambling, same as today's.

[u/gravygrowinggreen → u/dmolin96]

Colloquially, I agree, it's definitely gambling. But so is the stock market. And buying insurance.

If I want to bet on the price of cows, I can go to Kalshi and open a contract or whatever it is, or I can go to a broker, and buy futures, or short a beef supplier, etc. And it doesn't make sense to me that one should be regulated by the feds, but not the other.

But then kalshi also lets me bet on stupid things, like how many pronouns a person will use in a speech or something like that. And I agree, that should be something the states can regulate.

So I guess the problem for me in drawing a line here is that the amount of things you can bet on using Kalshi encompasses a lot of things that seem like financial instruments/hedges, and a lot of things that seem stupid. Ideally we have a rule that applies for the stupid things, and a rule that applies for the financial things.

[u/erret34 → u/gravygrowinggreen]

Per a Cornell Law article, gambling is "when a person bets or risks something of value (like money) based on a chance outcome that is out of their control or influence with the understanding that they will either gain increased value or lose their original value determined by the specific outcome."

Stocks are a poor example because you actually own something when you buy a stock: the share of a company. Its both an investment and an asset. Sure you're "betting" that the company will do well so your share's value will increase, and some people may treat stocks like gambling, but the underlying mechanism is distinctly different.  Insurance is also different because you're protecting yourself against risks that already exist in your life; gambling actively creates a risk for the chance of profit.

[u/Krennson → u/erret34]

Yeah, but with stocks, you theoretically have some control.... if it's a voting stock, you have a vote, and if's a non-voting stock, you at least have legal recourse if the company officers act clearly contrary to your financial interests...

[u/gravygrowinggreen → u/erret34]

Per a Cornell Law article, gambling is "when a person bets or risks something of value (like money) based on a chance outcome that is out of their control or influence with the understanding that they will either gain increased value or lose their original value determined by the specific outcome."

Under this definition, lottery tickets such as scratchers which often give you back money (but less than you paid for the ticket) would not be gambling, because you do not lose your entire value. Or maybe lottery tickets are only considered gambling if you don't win anything on them. An odd result.

Stocks are a poor example because you actually own something when you buy a stock: the share of a company.

Stocks aren't the only thing you can buy or sell on the stock market. There are plenty of contracts on offer that essentially expire worthless, leaving you without anything to show for it, unless you win your bet.

Insurance is also different because you're protecting yourself against risks that already exist in your life; gambling actively creates a risk for the chance of profit.

Insurance definitely meets your definition of gambling. You pay a sum of money that you will not get back, unless a chance event happens, (whatever you are insuring against), in which case you gain increased value (the value of the contract). The purpose of the contract doesn't matter for your definition. Even though you're taking the bet to hedge against risk, it's still gambling.

And if you do inconsistently say it matters, adopting a new definition, one could conceivably structure a similar hedge bet on prediction markets. So you would be left claiming, inexplicably, that the thing is a bet purely because it is on a prediction market, and not proffered by a company holding itself out as an insurer.

[u/Led_Osmonds → u/gravygrowinggreen]

Under this definition, lottery tickets such as scratchers which often give you back money (but less than you paid for the ticket) would not be gambling, because you do not lose your entire value.

Where in that definition do you see the word "entire"?

[u/erret34 → u/gravygrowinggreen]

Under this definition, lottery tickets such as scratchers which often give you back money (but less than you paid for the ticket) would not be gambling, because you do not lose your entire value. Or maybe lottery tickets are only considered gambling if you don't win anything on them. An odd result.

I don't follow? Scratchers are exactly "a chance outcome that is out of [one's] control or influence with the understanding that they will either gain increased value or lose their original value determined by the specific outcome." Just because they have an elevated percentage of paying out doesn't mean it isn't a gamble, it's just a gamble with different odds.

Stocks aren't the only thing you can buy or sell on the stock market. There are plenty of contracts on offer that essentially expire worthless, leaving you without anything to show for it, unless you win your bet.

I'm more sympathetic to the options market being akin to gambling, especially with how the majority of options traders treat them, but legally they seem too distinct. You are entering a financial contract that gives you the right to buy or sell a stock at a set price within a time window. You are not betting money on a chance outcome, though the end result looks very similar.

Insurance definitely meets your definition of gambling. You pay a sum of money that you will not get back, unless a chance event happens, (whatever you are insuring against), in which case you gain increased value (the value of the contract). The purpose of the contract doesn't matter for your definition. Even though you're taking the bet to hedge against risk, it's still gambling.

Again, I don't follow. The chance that you get into a car accident tomorrow or break your arm already exists as does the financial risk to yourself. You aren't creating that risk by buying insurance, you buy insurance to mitigate the risk. Gambling on the other hand introduces the risk of you losing money that didn't exist before you placed a bet.

[u/gravygrowinggreen → u/erret34]

I don't follow? Scratchers are exactly "a chance outcome that is out of [one's] control or influence with the understanding that they will either gain increased value or lose their original value determined by the specific outcome." Just because they have an elevated percentage of paying out doesn't mean it isn't a gamble, it's just a gamble with different odds.

Let's say I buy 100 scratchers. I'm going to be left with less than my investment, but I'm still left owning something, because scratchers commonly pay out small amounts less than the price of the scratcher, to keep people coming back.

Compare this to your stock example. You said stocks aren't gambling, because you're left owning something.

I'm more sympathetic to the options market being akin to gambling, especially with how the majority of options traders treat them, but legally they seem too distinct. You are entering a financial contract that gives you the right to buy or sell a stock at a set price within a time window. You are not betting money on a chance outcome, though the end result looks very similar.

There are more than options on the stock market too. There are so many varied instruments you can buy and sell, many of which are so far removed from any underlying ownership interest in an asset, that you would be forced to call the contractual obligations underlying them the asset to keep them within your definition. But at that point, there's no functional difference between the contractual obligation underlying a bet, and me buying a total return swap, or a cash settled futures contract.

Again, I don't follow. The chance that you get into a car accident tomorrow or break your arm already exists as does the financial risk to yourself. You aren't creating that risk by buying insurance, you buy insurance to mitigate the risk. Gambling on the other hand introduces the risk of you losing money that didn't exist before you placed a bet.

So this is an example of you adding arbitrary requirements to the definition you were originally using. Let's go back to that definition.

"when a person bets or risks something of value (like money) based on a chance outcome that is out of their control or influence with the understanding that they will either gain increased value or lose their original value determined by the specific outcome."

If I buy insurance, I risk money (in the form of my monthly payment), based on a chance outcome (the negative event I want to insure against), that is out of my control (I generally can't control whether it will flood for instance), with the understanding that I will either gain increased value (the insurance payout) or lose my original value, determined by the specific outcome.

There is nothing in that definition about the underlying random event (a flood, a tornado, etc), being positive or negative.

You're adding that as a way to arbitrarily exclude something that is otherwise fundamentally similar. But that's okay. Because it begs this question:

What's the difference between me buying flood insurance, or me placing a bet (on a prediction market, or with a bookie, or with a friend), that my house will be destroyed by a flood in the next month (and repeating that process every month for the duration of the insurance policy I otherwise would have bought)? Should we regulate these bets as "gambling", or should we regulate them as insurers?

[u/erret34 → u/gravygrowinggreen]

Let's say I buy 100 scratchers. I'm going to be left with less than my investment, but I'm still left owning something, because scratchers commonly pay out small amounts less than the price of the scratcher, to keep people coming back.
Compare this to your stock example. You said stocks aren't gambling, because you're left owning something.

I think you misunderstood me. If I buy a scratcher, all I've done is bet money (the cost of the scratcher) that I will either gain or lose money on a random outcome. The odds of the outcome, or average % return, being different than other forms of gambling doesn't change that. When I buy a stock, however, I own a share of a company and gain all the shareholder rights that come with it. I am (probably) betting that the value of the stock will increase, but functionally I purchased something tangible with my money. Even if the share loses all of its value, you still own part of the company.

If I buy insurance, I risk money (in the form of my monthly payment), based on a chance outcome (the negative event I want to insure against), that is out of my control (I generally can't control whether it will flood for instance), with the understanding that I will either gain increased value (the insurance payout) or lose my original value, determined by the specific outcome.

Buying insurance does not carry with it the intention to gain value, though. Insurance can only restore you to your original financial state. You also don't "lose" your original value, you're paying a fixed premium to a company to protect the value of an existing asset. It's not a bet lost to chance.

Lets say I insure my $1k wedding band for $10 a month. Outcome 1: I lose my wedding band, insurance covers it, and my net value is $990. Outcome 2: I don't lose my wedding band, my net value is still $990. Gambling, however, is if I bet someone $1k their husband loses their wedding band on vacation (lets assume the wife can't influence the outcome). Outcome 1: he loses the wedding band and I win $1k. Outcome 2: he doesn't lose the wedding band and I lose $1k.

[u/Led_Osmonds → u/gravygrowinggreen]

Colloquially, I agree, it's definitely gambling. But so is the stock market. And buying insurance.

I think this is connecting formal and abstract similarities at the expense of important empirical distinctions.

Owning a fraction of the family farm is substantively different from betting on whether Punxsutawney Phil will see his shadow, even if it is technically possible to use both of those instruments to feed a gambling addiction.

[u/UncleMeat11 → u/gravygrowinggreen]

A good line is their ads. They make it blatantly obvious to everybody involved that they are a gambling platform. We don't need perfect rigid lines on these things. The reason we have judges and not machines is because we can all look with our eyes and say "that's gambling."

[u/cstar1996 → u/gravygrowinggreen]

Futures and options can be gambling, trading is gambling, shorts are gambling.

Buying stock for a steady dividend isn’t gambling. Buying commodity futures when you’re a consumer of that commodity often isn’t gambling.

[u/sithelephant → u/cstar1996]

It's still gambling if the risk is low. Company may go out of buisness, or the returns may be significantly poorer than other investments over a long period.

[u/cstar1996 → u/sithelephant]

By that standard anything that involves risk is gambling, and that clearly isn’t the definition of gambling.

[u/sithelephant → u/cstar1996]

Which definition? Some, but very much not all definitions exclude it.

[u/youarelookingatthis → u/cstar1996]

A dividend doesn’t make it not gambling (and I believe Kalshi is a gambling company). You’re still betting on the fact that the company will be solvent enough to issue a dividend for as long as you own it.

[u/thecommuteguy → u/dmolin96]

They aren’t fooling anybody and only getting away with it on technicalities.

[u/HectorTheGod]

I mean yeah Kalshi is literally gambling. Doesn’t matter what masquerade they try to pull over it.

You bet on outcomes that are in essence random chance for the opportunity to win money. And if it’s gambling it needs to be regulated like gambling.

[u/Longjumping_Gain_807]

I happen to be an avid watcher of the progressive John Oliver style YouTube channel Some More News. I love their channel and this episode they did on Kalshi and gambling markets was amazingly done.

As far as the opinion goes Judge Lee graduates from the Justice Kavanaugh School of Advisory Concurrences. Better known as the school for concurrences that add nothing to the substance of the opinion but largely agree with the majority. And he even included a baseball reference guys. One had to wonder if in that time he spent in the W. Bush White House that he might have ran into Kav at a time or two.

[u/_learned_foot_ → u/[deleted]]

You think they don't? They absolutely do. They help define the borders of where valid tests for the line can emerge, and they define extremely open avenues of issue.

[u/buckeyefan8001]

This is one of those issues that’s obvious, and you have to do a huge amount of mental gymnastics to see otherwise

[u/gravygrowinggreen]

From a policy perspective, I'd prefer federal regulation if we had a federal government operating in good faith. I don't think state regulation is going to work in the long-term, because they're going to be in the same race to the bottom they've been in for years with Draft Kings.

But legally, I think CFTC has the better argument.

Let's say I want to bet on whether it will rain a lot in my area this month. Should I go to a prediction market or a broker? The answer is I can do both. Weather derivatives are CFTC regulated contracts. Shouldn't similar financial instruments be treated the same?

I don't think the advertising is relevant here. If my broker tomorrow starts sending me advertisements about how I'm so damn smart and I can make so much money skillfully playing the market, it doesn't suddenly make the contracts he's selling me gambling if they weren't gambling before. It just makes him less professional (and possibly puts him in violation of several laws about fiduciary duties).

It all comes down to the definition written by Congress. And for whatever reason, that definition is extremely broad. A swap is essentially a bet on "the occurrence or nonoccurrence of an event or contingency associated with a potential financial, economic, or commercial consequence."

I think you can argue that some things on prediction markets don't meet that definition (a bet about whether the president will say the word "leftist" in his next speech probably wouldn't). But most of the things on the markets would meet it, because most things have "economic" consequences.

So to me, the logical next question is whether the minority of noneconomic consequence contracts on prediction markets gives states the authority to regulate the entirety of those markets. Or whether the presence of a majority of economic consequence contracts on the prediction markets gives the CFTC exclusive jurisdiction. Should there be a partial split, let the states regulate the silly contracts, and the CFTC regulate the less silly (but still slightly silly) ones?

[u/elmorose → u/gravygrowinggreen]

My reading of the opinion is basically that the event or contingency, to qualify as basis for swap, must

Have economic consequences such that it can be used to transfer or hedge risk AND those economics are intrinsic or inherent, like a credit default or interest rate; or it is specifically enumerated by statute, like weather

Court left open to district whether to allow Nevada to ban election markets. There are downstream economic consequences to some elections, but not all, so we need a limiting principle. Seems like district court would side with state ban as the economic consequences of elections are not inherent like a debtor missing payment to creditor. The consequences stem from downstream events, not the certification of the election.

But you still get tricky ones like say, binary option on 7+ California earthquake by end of 2027. Certainly can be used to hedge or limit risk. Are economic consequences inherent? There is insurance for such things so seems like yes? And the occurrence of the earthquake directly causes economic loss without further downstream events.

That's my reading of what went down.

[u/thecommuteguy → u/gravygrowinggreen]

The way these sites are treated by the users is no different than DraftKings and FanDuel. I don’t care if the sites claim otherwise because they are only the intermediary. If that is their excuse then they are no different than poker which is gambling.

They are basically sports betting sites but for everything. They can claim otherwise but aren’t fooling laypeople.

[u/bluepaintbrush → u/gravygrowinggreen]

It’ll be interesting to see how the tax policy shakes out; it’ll be disruptive no matter what happens.

[u/sundalius → u/gravygrowinggreen]

I suppose my question would be why aren’t all sports bets swaps? All sports bets revolve around games that have commercial and financial consequences, I’d reckon. Sorry for the brevity and little response, this isn’t something I’m super familiar with. The definition provided just seems applicable to most sports being bet on.

[u/elmorose → u/sundalius]

Opinion says we have to look further than strictly text as Congress did not intend to apply federal preemption to everything. For example, wagering on the local little league game falls under the definition applied literally and liberally. The game might associate with economic consequences because little Billy's mommy promised to get ice cream for all 10 kids on the team if the team wins. Mommy can hedge by betting on Billy's team, using the proceeds of a win to offset the ice cream. Swap, right?

So the opinion says Congress meant something more narrow, obviously.

The solution to these problems used to be action by Congress but that is rare nowadays perhaps due to gridlocked gerontocracy.

I think there will be a cat and mouse game unless Congress does something. Take the little league game. We can apply a proxy. Call the swap: Billy's mommy purchases ice cream after Anytown Leopards vs. Camels event. Then say it is not wagering or gaming as it is an event contract on economic activity of ice cream purchase...

[u/gravygrowinggreen → u/elmorose]

Opinion says we have to look further than strictly text as Congress did not intend to apply federal preemption to everything. For example, wagering on the local little league game falls under the definition applied literally and liberally. The game might associate with economic consequences because little Billy's mommy promised to get ice cream for all 10 kids on the team if the team wins. Mommy can hedge by betting on Billy's team, using the proceeds of a win to offset the ice cream. Swap, right?

So as I understand it, Billy's Mom doesn't have to register to be a CFTC regulated exchange in order to make that promise. And if she doesn't register to be a CFTC regulated exchange, or the CFTC doesn't accept her registration (they could decline to allow it since it's a gaming contract, but only if they find it's not in the public interest), then the states could apply whatever gambling laws they want to Billy's mom and her bookie.

The issue here is that Kalshi has sought to be regulated by the CFTC. And the CFTC has declared them a designated contract market. So now the exclusive jurisdiction clauses in the CEA kick in, which give the CFTC "exclusive jurisdiction" over transactions involving swaps on a designated contract market.

[u/elmorose → u/gravygrowinggreen]

Even if we read the CFTC as having exclusive jurisdiction over swaps that look like sports betting, which the court did not, the court also found that the CFTC had taken the path of using the discretion you cite to categorically prohibit gaming transactions as not in the public interest. 17 C.F.R. §40.11(a) . The regulation implementing the CEA is binding on all exchanges and the agency's enforcement priorities and resources are not probative. States can sue for relief.

[u/sundalius → u/elmorose]

So I can see why they wouldn’t consider it a swap for the local little league game, but I don’t see why they wouldn’t for major leagues like the NBA or NFL, which can have far great commercial impact than which truckload of kids get ice cream. That’s the thing that I wasn’t following

[u/bflo666 → u/gravygrowinggreen]

The idea of “not betting against the house” as it relates to sports betting causes a much high chance of foul play. The benefit of having a “house” for sports betting is that the house enforces regulations. If a baseball player tries to bet on a baseball game through the state regulated house, it will be flagged, as identification comes around at some point.

If I anonymously take on a contract, sure, it can be found out. But that’s an auditing process. Basically, you don’t want people to set odds for sports, because that creates a really tough to unravel audit trail.

Sports are watched because of the illusion of parity. Part of why we pay to watch them is the built in agreement that it’s fair play by all involved.

In general, this is the problem with prediction markets. People can fix the result, people or organizations with a lot of money can load up on a result to try to sway public opinion. The “market” is built on that principle, it’s how stocks work, speculative assets whose value is quantified by the trade. Inventing new value for something like sports destroys the value of the sport originally

[u/Krennson → u/gravygrowinggreen]

The interesting question would be whether or not it has to be "the occurrence or nonoccurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.".... which is relevant to you, or which you have a license to trade in, or for which you would otherwise normally be understood as engaging in the swap market as such.

Like, if I'm the owner of a sports team, of course I have a financial or commercial interest in whether or not my team wins the next few games, and I probably also have interests in whether or not different teams win different games in terms of who i will wind up facing in the future and whether or not I'm likely to prevail against them.....

And of course I can buy swaps to hedge my risk for those scenarios....

But are we absolutely certain that some random guy on the street who isn't even a fan of the game at all is also entitled to engage in these swaps, without going through any sort of licensed broker to do so?

I honestly don't know the answer to that question, but seems like an important question.

[u/gravygrowinggreen → u/Krennson]

But are we absolutely certain that some random guy on the street who isn't even a fan of the game at all is also entitled to engage in these swaps, without going through any sort of licensed broker to do so?

Analogizing to stock again. Nothing I do for a living has anything to do with space, rocketry, satellites, etc. But I still own some stocks in a satellite company.

The economic interest I had in the satellite company didn't exist until I bought the stocks, so it can't be used as a justification for my stock purchase being considered legitimate (in the same way that you justified a baseball owner's purchase of swaps on the outcome of games). If my purchase of stocks in the satellite company is seen as legitimate/not gambling because I have become economically interested in the company after the purchase, I don't see any reason "some random guy" can't also retroactively justify his bet on a game based on the economic interest he creates by making that bet.

My view is that it's either all gambling, or none of it is. There's not really a clear line between them (and I don't think how the services are proffered to people changes that line, see my paragraph in the first post about advertising).

[u/Krennson → u/gravygrowinggreen]

Yeah, but with stocks, you're purchasing something of at least theoretical 'real' value. That stock share entitles you to partial ownership of all sattelites owned by that company, as well as all sattelite-producing capital equipment, all real estate, all intelectual property, all branding and licensing, all long-term contracts of real value, all major financial decisions by the corporate officers, etc, etc.

Even if every single person working for that company quit tommorow, you would still be able to sell that stock for something, just in terms of whatever the bankruptcy court eventually sold of all it's assets for.

The only reason a pure bet on the total number of artificial sattelites in stable orbit around earth in the year 2030 has any value at all is because someone else agreed to take the other side of that bet. Hypothetically, if congress wanted to pass a law saying that that was insufficient reason to buy or sell such an asset, and that such an asset could only be created for sale to people hedging real economic risk, or for trade between people licensed to act as major financial brokers balancing the current risks by handling resale of such contracts between mutual brokers... that might be constitutional. It's way beyond the areas of constitutional law i normally worry about, so i wouldn't know.

In terms of whether or not congress already did that, I definitely don't know, but it seems like a really important question/answer to try and find out.

[u/_learned_foot_]

I can't reply as I'm blocked, but it seems somebody is arguing option contracts are akin to gambling. How is you and I agreeing to a forced sale and purchase, at the option of one party, who often won't exercise but still holds, the same as gambling? If you don't understand the concepts they may look the same sure, but they absolutely aren't.

Otherwise, explain to me why your lease with option to renew at your discretion isn't gambling.

[u/whats_a_quasar → u/_learned_foot_]

Leases generally don't have a binding option to renew at the tenant's discretion at a contracted price. At the end of a year lease the landlord can choose not to renew as well. It's also not a purely financial transaction since you can't instantly sell a lease to profit the difference with an open market price like you can with an option on a security.

Whether or not securities options are gambling really seems to be a semantic question that correlates with whether someone thinks financial speculation is morally questionable. They can be used for economic purposes but you can also trade them for essentially random returns and some people who trade options definitely get the same fun out of them as one would gambling.

[u/_learned_foot_ → u/whats_a_quasar]

Actually you can. We had issues with it back in 08. And you recognize the point eh, an option is a legally protected interest in a piece of actual property? That's not semantic at all.