Last week, Coinbase (NASDAQ:COIN) revealed that it had filed suit in the states of Michigan, Illinois, and Connecticut. The company is battling state gaming commissions that are miffed with Prediction Markets being regulated at the federal level by the Commodity Futures Trading Commission (CFTC).
The battle lines are being drawn as state regulators and gaming firms see their influence and business prospects wane, as Prediction Markets have emerged as an effective and straightforward way for individuals to “bet” on event-driven outcomes.
Coinbase GC Palu Grewal noted that being regulated by 50 states is a killer for innovation, as it creates an almost insurmountable hurdle for change and opportunities for the population. Grewal states:
“Prediction markets are fundamentally different from sportsbooks. Casinos win only if you lose and set odds to maximize their profits. Prediction markets are neutral exchanges, indifferent to price, that match buyers and sellers.”
The actual filing sent to the courts is viewable here.
The momentum is clearly on Coinbase’s and others’ side in the Prediction Markets. This may be an opportunity for gaming firms to join them, as they probably won’t be able to beat them. Regarding state gaming commissions, they will always guard their empires. In the end, the decision will be made based on what benefits the populace, and not gaming commissions’ power (and budgets).