The Robinhood and Fanduel of the Gray area use to bring sports betting closer and actions
The worlds of sports betting and action exchanges have never been more closely connected.
And gathering these two industries is a key product: event contracts.
In mid-August, Robinhood (Hood) announced that it would begin to deploy event contracts for university and professional football. A day later, the giant of sports betting Fanduel (FLUT) said that he would soon offer his users event contracts on financial products ranging from actions and Bitcoin (BTC-USD) to oil and gold.
Event contracts provide users with a binary choice yes or not on a defined event. For example: who will win the match between the Cowboys of the Eagles of Philadelphia and Dallas on September 4? Will the price of gold close above or less than $ 3,500 ONCE tomorrow? And so on.
Products operate in a gray area, as they are considered no bets or investments, and experts have told Yahoo Finance that legal and regulatory landscapes leave companies in various ways to approach the market.
“The product you will see on the prediction markets is already evolving very quickly and what you see this season could be completely different by the next NFL season, if not earlier,” said Joel Simkins, a research analyst in long -standing shares and founder of the advisory company of the XST Capital Group. “You have to ask yourself, where does it stop?”
Event contracts are regulated by Future Trading Commission commodities (CFTC). Bets, on the other hand, are regulated by the State Game Commissions, while exchanges and investment fall under the Securities and Exchange Commission (SEC).
At the American Gaming Association, the most eminent commercial group for the game industry, event contracts on sports are indeed a form of game and must be regulated as such, instead of being authorized to operate thanks to what the president and chief executive officer of AGA, Bill Miller, described as “financial gaps”.
The main sports leagues have also expressed their concern, the NBA competing itself in a letter of May at the head of the acting CFTC Caroline Pham than “the risks of integrity posed by the sports prediction markets are more important and more difficult to manage than those presented by the legal regulated sports game”.
And legal battles are already emerging.
On the same day, Robinhood announced the deployment of its new products, the brokerage platform continued its game managers in Nevada and New Jersey, which houses the Las Vegas and Atlantic City play hubs, respectively, for having pretended to block Robinhood event contracts in their states.
“If the States could regulate certain entities but not all the entities relevant to these transactions, such a regulation would relate to the exclusive jurisdiction of the CFTC and that the congress intended to be a uniform set of regulations for future and exchange of goods,” said Robinhood complaints.
