Hearings to examine betting, focusing on protecting sports integrity in America.
Open Hearing•Senate Commerce, Science, and Transportation Subcommittee on Consumer Protection, Technology, and Data Privacy•May 20, 2026 · 10:00 AM
Summary
Senate Commerce, Science, and Transportation Subcommittee on Consumer Protection, Technology, and Data Privacy held an open hearing on May 20, 2026 at 10:00 AM in Russell Senate Office Building, Room 253.
Record
The meeting has its transcript on the record.
Transcript
The transcript runs to 5,775 lines and 334,990 characters, as the Government Publishing Office printed it.
1[Senate Hearing 119-511]2[From the U.S. Government Publishing Office]34 S. Hrg. 119-51156 NO SURE BETS: PROTECTING SPORTS7 INTEGRITY IN AMERICA89=======================================================================1011 HEARING1213 before the1415 SUBCOMMITTEE ON CONSUMER PROTECTION,16 TECHNOLOGY, AND DATA PRIVACY1718 of the1920 COMMITTEE ON COMMERCE,21 SCIENCE, AND TRANSPORTATION22 UNITED STATES SENATE2324 ONE HUNDRED NINETEENTH CONGRESS2526 SECOND SESSION27 __________2829 MAY 20, 202630 __________3132Printed for the use of the Committee on Commerce, Science, and Transportation3334 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3536 Available online: http://www.govinfo.gov3738 ______3940 U.S. GOVERNMENT PUBLISHING OFFICE414264-426 PDF WASHINGTON : 20264344 SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION4546 ONE HUNDRED NINETEENTH CONGRESS4748 SECOND SESSION4950 TED CRUZ, Texas, Chairman5152JOHN THUNE, South Dakota MARIA CANTWELL, Washington,53ROGER WICKER, Mississippi Ranking54DEB FISCHER, Nebraska AMY KLOBUCHAR, Minnesota55JERRY MORAN, Kansas BRIAN SCHATZ, Hawaii56DAN SULLIVAN, Alaska EDWARD MARKEY, Massachusetts57MARSHA BLACKBURN, Tennessee GARY PETERS, Michigan58TODD YOUNG, Indiana TAMMY BALDWIN, Wisconsin59TED BUDD, North Carolina TAMMY DUCKWORTH, Illinois60ERIC SCHMITT, Missouri JACKY ROSEN, Nevada61JOHN CURTIS, Utah BEN RAY LUJAN, New Mexico62BERNIE MORENO, Ohio JOHN HICKENLOOPER, Colorado63TIM SHEEHY, Montana JOHN FETTERMAN, Pennsylvania64SHELLEY MOORE CAPITO, West Virginia ANDY KIM, New Jersey65CYNTHIA LUMMIS, Wyoming LISA BLUNT ROCHESTER, Delaware6667 Brad Grantz, Republican Staff Director68 Nicole Christus, Republican Deputy Staff Director69 Lila Harper Helms, Staff Director70 Melissa Porter, Deputy Staff Director7172 ------7374 SUBCOMMITTEE ON CONSUMER PROTECTION,75 TECHNOLOGY, AND DATA PRIVACY7677MARSHA BLACKBURN, Tennessee, Chair JOHN HICKENLOOPER, Colorado,78JOHN THUNE, South Dakota Ranking79DEB FISCHER, Nebraska AMY KLOBUCHAR, Minnesota80JERRY MORAN, Kansas BRIAN SCHATZ, Hawaii81TODD YOUNG, Indiana EDWARD MARKEY, Massachusetts82JOHN CURTIS, Utah TAMMY BALDWIN, Wisconsin83SHELLEY MOORE CAPITO, West Virginia BEN RAY LUJAN, New Mexico84CYNTHIA LUMMIS, Wyoming LISA BLUNT ROCHESTER, Delaware8586 C O N T E N T S8788 ----------8990 Page91Hearing held on May 20, 2026..................................... 192Statement of Senator Blackburn................................... 193 Prepared statement of Hon. Catherine Cortez Masto, U.S.94 Senator from Nevada........................................ 495 Letter dated May 19, 2026 to Hon. Marsha Blackburn and Hon.96 John Hickenlooper from the Southeastern Conference: Barry97 Evans, University of Alabama; Romani Thurman, University of98 Arkansas; Braden Augustus, Louisiana State University; and99 Cade Phillips, Texas A&M University........................ 5100Statement of Senator Hickenlooper................................ 2101Statement of Senator Cruz........................................ 42102Statement of Senator Curtis...................................... 48103Statement of Senator Baldwin..................................... 50104Statement of Senator Schatz...................................... 52105Statement of Senator Cantwell.................................... 56106Statement of Senator Rosen....................................... 58107Statement of Senator Lujan....................................... 62108109 Witnesses110111Bill Miller, President and Chief Executive Officer, American112 Gaming Association............................................. 7113 Prepared statement........................................... 8114Mary Beth Thomas, Executive Director, Tennessee Sports Wagering115 Council........................................................ 13116 Prepared statement........................................... 14117Scott Sadin, Co-Founder and Co-Chief Executive Officer, Integrity118 Compliance 360................................................. 19119 Prepared statement........................................... 20120Hon. Patrick McHenry, Senior Advisor, The Coalition for121 Prediction Markets............................................. 24122 Prepared statement........................................... 26123Dr. Harry Levant, Director of Gambling Policy, Public Health124 Advocacy Institute............................................. 27125 Prepared statement........................................... 29126127 Appendix128129Derek Longmeier, President of the Board of Directors, National130 Council on Problem Gambling, prepared statement................ 69131Letter dated March 5, 2026 to Hon. Michael Selig, Chairman,132 Commodity Futures Trading Commission from Jack Reed, United133 States Senator and John Hickenlooper, United States Senator.... 73134Letter dated May 18, 2026 to Hon. Michael Selig, Chairman,135 Commodity Futures Trading Commission from John Hickenlooper,136 United States Senator and Jack Reed, United States Senator..... 74137Response to written questions submitted to Bill Miller by:138 Hon. Maria Cantwell.......................................... 76139 Hon. Ben Ray Lujan........................................... 77140Response to written questions submitted to Scott Sadin by:141 Hon. Amy Klobuchar........................................... 78142 Hon. Ben Ray Lujan........................................... 79143Response to written questions submitted to Hon. Patrick McHenry144 by:145 Hon. Maria Cantwell.......................................... 79146 Hon. Amy Klobuchar........................................... 80147 Hon. Ben Ray Lujan........................................... 81148 Hon. John Hickenlooper....................................... 82149150 NO SURE BETS: PROTECTING SPORTS151 INTEGRITY IN AMERICA152153 ----------154155 WEDNESDAY, MAY 20, 2026156157 U.S. Senate,158 Subcommittee on Consumer Protection, Technology,159 and Data Privacy,160 Committee on Commerce, Science, and Transportation,161 Washington, DC.162 The Subcommittee met, pursuant to notice, at 10 a.m., in163room SR-253, Russell Senate Office Building, Hon. Marsha164Blackburn, Chair of the Subcommittee, presiding.165 Present: Senators Blackburn [presiding], Cruz, Curtis,166Hickenlooper, Cantwell, Klobuchar, Schatz, Baldwin, Lujan,167Blunt Rochester, and Rosen.168169 OPENING STATEMENT OF HON. MARSHA BLACKBURN,170 U.S. SENATOR FROM TENNESSEE171172 Senator Blackburn. Good morning. Welcome to everyone.173Senator Hickenlooper is close at hand, so we are going to go174ahead and begin so that we stay on time this morning. And I175want to welcome each of you for being here today, and thank176you.177 This is a hearing that we have wanted to get to and it is178an important hearing. I've heard about this issue quite a bit179in Tennessee, whether it's Saturdays in Neyland Stadium, to180nights at the Bridgestone Arena watching the Predators.181Tennesseans--and I think I can include all Americans in this--182love their sports. They love cheering for their teams. Sports183bring our families together. They unite people. They teach184young people about teamwork, discipline, sacrifice, and fair185play.186 And American sports are not just this Nation's pastime.187They're a global symbol of competition watched by hundreds of188millions of people around the globe. When Americans watch their189favorite sports team, they don't want to worry about the game190being rigged. They don't want to worry that their favorite191player missed a free throw to make an extra buck on the side.192Unfortunately, though, there have recently been some high-193profile examples of match-fixing at the NBA and MLB.194 What this does is to challenge Americans' trust in the195integrity of sports. And this has all been inflamed by the196rapid explosion of legal sports betting across our entire197country. What was once limited to a handful of locations is now198available in almost every single corner of the country. It is199carried with you night and day. It is right there on your200mobile device. Americans can now place bets instantly during201games, on individual plays, on college athletes, and it is all202done with a single touch of the screen. And the introduction of203sports event contracts on prediction markets has exposed more204people to sports betting.205 While prediction markets represent financial innovation206across many sectors, there are real concerns that they function207much like traditional sports betting without the enforcement of208State regulators and attorneys general. While sports betting is209often a source of entertainment for responsible adults, it does210have its risk.211 Like I mentioned, we have seen scandals involving212professional athletes, referees, and suspicious betting213activity. College athletes are reporting harassment and threats214from angry bettors, and Americans, including young people, are215being inundated with advertisements on social media. Their216favorite influencers and sports figures are introducing minors217to betting. Our young men are in crisis, with over one-third of218boys between the ages of 11 and 17 admitting to gambling last219year. Sixty percent of those who have been gambling and have220seen this gambling content online said they had it surface221through their social media algorithms. It was served up to222them. They didn't search for it. This is not safe. It needs to223stop. And advertising to minors is disgusting.224 As we look to protecting the integrity of American sports225and protecting the most vulnerable, like our young people and226those with addiction risk, it will take all of us working in227good faith, from State regulators like Ms. Thomas, who is with228us today, the integrity monitors, and the prediction markets229and online sportsbooks.230 So we're going to dive into this hearing today. It is one231that we have worked to assemble. We have a great--we're very232grateful to our witnesses for joining us as we begin to build233our book of workaround this topic. And at this time, I turn to234the Ranking Member for his opening statement.235236 STATEMENT OF HON. JOHN HICKENLOOPER,237 U.S. SENATOR FROM COLORADO238239 Senator Hickenlooper. Thank you, Madam Chair. It has been a240pleasure working with you on this issue and others. And looking241at the--as you describe it--the inappropriately regulated242betting markets, specifically and particularly the recent243explosion of prediction markets posts everyday.244 I come at this from a different point of view, but I share245your frustration. I don't talk about this all the time, but my246father got sick when I was--when I was 5 years old and died247when I was 8. It was my mother's second husband who passed248away, so I was the youngest of 4 kids and I didn't do very well249in those early years. And I was vulnerable in elementary250school, but especially in middle school and high school where I251had real challenges and I wasn't equipped to handle them. I252wasn't ready. If I'd been faced with this landscape--I was253impulsive. I kind of was attracted like many people to gambling254and to chance. I believe there was a beam of light coming down255from heaven that was touching me.256 We got to get this right. 24/7 access to online sports257betting has increased these risks to consumers in a manner that258I think far outweighs the traditional brick-and-mortar gambling259facilities. This is especially true in the prediction markets.260Sports betting makes up 40 percent of the trades on Palaris261Market and a staggering 90 percent on Kalshi. Online262sportsbooks like FanDuel and DraftKings have started their own263prediction markets to in some way bypass or negotiate State264laws.265 Prediction markets have been in the headlines recently for266permitting government officials to have inside information to267place bets on events relating to the death of Iranian leader268Khamenei, abduction of President Maduro. These are clear risks269to our national security when there's inside information being270leaked out. This shouldn't be happening. We've introduced the271BETS OFF Act to ban wagering on government actions, on war,272terrorism, and assassinations by people with inside273information. Similar inside trading issues exist in sports274betting prediction markets.275 Is there a bet on a specific player's actions? Are they276going to miss that foul shot? Is that somehow going to be a way277to make a quick $10 on a wager? That's nuts. That's nuts. The278very fact that we're betting on that, which is clearly a--279should be a random outside event, the fact that so many people,280especially young people, especially young men, are wagering on281this, there's got to be a real concern.282 Prediction markets claim that their sports event contracts,283which pose the same risk to consumers as online sports betting,284they say that they're investments and not subject to State or285tribal gambling laws. The CFTC--you know, if they're not286subject to those laws, then they are--the regulator is the287Commodity Futures Trading Commission--but the CFTC has288literally no experience in regulating sports betting.289 Even worse, CFTC has failed to use the authority it does290have to protect sports bettors from insider trading, market291manipulation, predatory advertising, and financial instability.292This workaround is merely a way for prediction markets to skirt293State consumer protection laws.294 I think prediction markets fail to protect young people who295are particularly vulnerable to gambling addiction. We have a296lot of young men, especially, that are vulnerable to this, and297we're doing nothing. Gambling addiction is at the additional298risk of being a silent illness. Unlike alcohol and drug299addiction, the financial and psychological harms that come with300gambling addiction are hard to see. And gamblers unlikely,301rarely share when they've lost. But of course, when they've302won, they're telling all their friends. So there's that sense303that gets translated in our virulent social media that it's304great, that it's positive, it's going to be a good thing.305 Many states, including my home state of Colorado, prohibit306sportsbooks from advertising to minors under 21, restrict307advertising to those who are already struggling with gambling308addiction. However, the CFTC does not currently apply the same309protections to prediction markets. One study found that between3102018 and 2023, the amount of money that people spent on311gambling--on sports gambling, rose while their net investments312fell nearly 14 percent. In other words, they don't have the313money to invest because they're spending it on gambling. That's314the inescapable reality of that.315 To really bring this home, I'll share that back in the days316of my restaurant owner days, we had a bartender and a waiter--a317waitstaff member, and she and he fell in love. It was, for the318whole restaurant, a wonderful moment. They were going to get319married, and he decided he wanted a bigger down payment for the320house they were going to buy together with their--with their321monies being commingled. Sure enough, he lost everything. Their322relationship, their love, their marriage--their future marriage323was destroyed.324 When you see that firsthand, how in an instant someone's325life can be damaged probably forever, you see the seriousness326of this. And that's one story that I saw personally. This has327been happening by the thousands, the hundreds of thousands. I328mean, I'm not saying--and I'm a supporter, it's a victimless329crime. I'm not sure we--I was not in favor of sending people to330prison for gambling, but to let the hounds of hell, the331incredible power of mass marketing and social media, to let332that untethered prey on our young people, I think is333unconscionable. I think it's irresponsible.334 I yield back to the Chair.335 Senator Blackburn. I thank the Ranking Member. I know that336Chairman Cruz and Ranking Member Cantwell had wanted to make337statements today, and we will insert them when they're able to338get here. I do have two letters to submit for the record and339will ask to do so. Senator Cortez Masto had a statement she340wanted to make for the record, and then the SEC, that is in341Southeast Conference, the best conference, by the way. Go Vols!342They have a letter they wanted to submit for the record.343 [The information referred to follows:]344345 Prepared Statement of Hon. Catherine Cortez Masto,346 U.S. Senator from Nevada347 I want to thank Consumer Protection Subcommittee Chair Blackburn348for holding this hearing, as well as Subcommittee Ranking Member349Hickenlooper, Committee Chair Cruz, and Committee Ranking Member350Cantwell.351 I also want to thank the hearing witnesses, especially Bill Miller,352who I had the pleasure of speaking to about this exact topic just a few353weeks ago in my hometown of Las Vegas.354 In Nevada, we know how to do gaming. We're the gold standard of355regulated, well-run gaming. And that includes our sportsbooks.356 When sports bettors operate within the legal system, the entire357state of Nevada benefits.358 But as this hearing is intended to discuss, prediction markets that359are claiming to be federally regulated are threatening the gaming360industry, not just in Nevada but across the country.361 These companies are trying to weasel their way around state and362tribal gaming regulations by calling ``gambling'' by different names.363 Let's be clear: calling it ``prediction markets'' or ``events364contracts'' doesn't change what these gambling operations are--illegal.365 They're offering their users illicit sports wagers that have366essentially no limits. They don't have the same minimum age367restrictions, so 18-year-olds who otherwise couldn't gamble in Nevada368can make an account on Kalshi or Crypto.com.369 Unfortunately, the current administration's Commodity Futures370Trading Commission is refusing to enforce its own rule to prohibit371gambling in event contracts. In fact, the CFTC has been doing the372opposite and endorsing these illegal prediction markets. They currently373have an amicus brief in the Ninth Circuit backing crypto.com and Kalshi374in Nevada.375 There's bipartisan consensus that this is wrong. That's why Senator376John Curtis of Utah and I have pushed the CFTC to follow its own rules377and ban sports gaming on CFTC-regulated exchanges.378 Senator Curtis and I, along with Senator Adam Schif of California,379also have a bill, the Prediction Markets are Gambling Act, to prohibit380any CFTC-registered entities like Polymarket and Kalshi from listing381any event contract that resembles a sports bet or casino-style game.382 And as we know, the Senate just unanimously passed a rule barring383Senators and their staff from betting on prediction markets. That's a384good start--we need to make sure no one in a position of power is using385insider information to gain an unfair advantage.386 I'm grateful we have a bipartisan consensus on protecting legal,387regulated gaming--because standing up for our gaming industry and the388tens of thousands of workers it supports is a priority for me.389 Lastly, I want to recognize Chair Cruz for working with me to pass390our FULL HOUSE Act, which would fix an erroneous change in the391Republican tax bill that capped the amount of wagering losses able to392be deducted at 90 percent, creating a tax on non-existent income.393 I'm going to continue to work with my colleagues on both sides of394the aisle to stand up for the industry and consumers on this issue.395396 Southeastern Conference397 Birmingham, AL, May 19, 2026398399Hon. Marsha Blackburn,400Chair,401Subcommittee on Consumer Protection, Technology, and Data Privacy,402Committee on Commerce, Science, and Transportation,403United States Senate,404Washington, DC.405Hon. John Hickenlooper,406Ranking Member,407Subcommittee on Consumer Protection, Technology, and Data Privacy,408Committee on Commerce, Science, and Transportation,409United States Senate,410Washington, DC.411412Dear Chair Blackburn and Ranking Member Hickenlooper,413414 On behalf of the Southeastern Conference Student-Athlete415Advisory Committee (SAAC), we urge you to pass legislation that416protects student-athletes like us, now and in the future, from417the growing use of proposition (``prop'') betting in college418athletics and the threat it poses to student-athletes.419 In today's age of technology, fans of college athletics420have never been closer to student-athletes through social421media. This has created opportunities for student-athletes to422build their personal brands and increase their marketability,423contributing to the current era of Name, Image, and Likeness424(NIL). While these developments have created valuable425opportunities, they have also introduced new risks for student-426athletes.427 With increased accessibility, some individuals are using428these platforms to express frustration directly toward student-429athletes. Harassment via social media has become a common430challenge for many. Student-athletes often receive negative431comments after competitions, as well as direct messages432containing criticism and even threats tied to their433performance. The level of harassment is further intensified434when gambling is involved.435 Beyond social media, individuals are now using payment436platforms such as Cash App and Venmo to demand money from437student-athletes when bets do not succeed. This is largely438driven by prop betting, which focuses on individual and team439performances.440 There is also growing concern about the integrity of441college athletics. When bets are tied to individual statistics442or specific plays, it can create pressure and suspicion443surrounding student-athletes' performances. Eliminating prop444bets would help safeguard the integrity of college sports and445reduce these external pressures.446 Student-athlete welfare and the pursuit of the highest447level of collegiate competition are central priorities of the448SEC. However, the growing pressures associated with gambling449further endanger student-athletes' well-being. These pressures450can hinder performance and prevent student-athletes from being451fully present and developing to their fullest potential, not452only in academics and athletics, but also as young men and453women preparing to contribute meaningfully to society.454 In light of the rising threats facing student-athletes, we455respectfully ask that you support national legislation to456protect both student-athletes and the integrity of college457sports. Specifically, we urge you to pass legislation that458would eliminate prop bets on student-athletes. Thank you for459your leadership and continued commitment to student-athlete460welfare. We would welcome the opportunity to discuss this issue461further or provide additional information. Please do not462hesitate to contact me directly at (229) 460-4400 or via e-mail463at beevans2@crimson.ua.edu.464 Kind regards,465466Barry Evans467Men's Track & Field468The University of Alabama469NCAA Student Athlete Advisory Committee Representative470471Romani Thurman472Volleyball473The University of Arkansas474SEC Student Athlete Committee Chair475476Braden Augustus477Football478Louisiana State University479SEC Student Athlete Committee Vice Chair480481Cade Phillips482Men's Basketball483Texas A&M University484SEC Men's Basketball Representative485NCAA Men's Basketball Oversight Committee Representative486NCAA Student-Athlete Engagement Group Representative487488cc: Greg Sankey, Southeastern Conference Commissioner489The Honorable Ted Cruz, Chairman, Committee on Commerce,490Science and491Transportation, United States Senate492The Honorable Maria Cantwell, Ranking Member, Committee on493Commerce, Science494and Transportation, United States Senate495496 Senator Balckburn. Our witnesses today. Our first witness497is Mr. Bill Miller, President and Chief Executive Officer of498the American Gaming Association. He's led the AGA for seven499years, and over that time, the organization has experienced500expansive growth of sports gambling in the U.S.501 Our second witness is Mary Beth Thomas, who serves as the502Executive Director of the Tennessee Sports Wagering Council.503She is an experienced gaming regulator and lawyer who works504closely with other State regulators to strengthen consumer505protections on legal gambling. She is also a native506Nashvillian, and I have known her since she was 3 years old.507She is really a great regulator.508 Our third witness is Mr. Scott Sadin. He is the Co-founder509and Chief Executive Officer at Integrity Compliance 360, with a510background in financial market compliance. He created one of511the leading sports integrity monitoring firms in the United512States. And I thank you for your time yesterday.513 Our fourth witness is my good friend, former Congressman514Patrick McHenry, who I think was the best Chief Deputy Whip515that the House ever had, because I was one of those Deputy516Whips. He is currently serving as the Senior Advisor for the517Coalition for Prediction Markets. During his 20 years in the518House of Representatives, Congressman McHenry served on the519House Financial Services Committee for many years, including as520Chairman, and we welcome him back to Capitol Hill.521 Our final witness today, Dr. Harry Levant. Dr. Levant is an522internationally certified gambling counselor and currently523serves as Director of Gambling Policy at the Public Health524Advocacy Institute. He is also a recovering gambling addict525himself and advocates for policies he believes will help more526addicts recover and avoid relapsing.527 I want to welcome each of you. At this point, we will begin528your time for testimony. Each of you will have five minutes,529and then we will begin our rounds of questioning. Mr. Miller,530you're recognized for five minutes.531532 STATEMENT OF BILL MILLER, PRESIDENT AND CHIEF EXECUTIVE533 OFFICER, AMERICAN GAMING ASSOCIATION534535 Mr. Miller. Thank you, Madam Chairman. Chairman Blackburn,536Cruz, Ranking Members Hickenlooper and Cantwell, members of the537Subcommittee, thank you for the opportunity to be here today on538behalf of the legal, State, and tribal regulated gaming539industry, one of the most highly regulated industries in the540United States. We are an essential part of the American541economy.542 The legal gaming industry supports 1.8 million American543jobs. We have more than 1,000 casinos, tribal and commercial,544across 42 states, suppliers, manufacturers, and sports betting.545Our industry has created economic vitality in areas left behind546by other industries. We generate more than $100 billion in547employee wages. We deliver $18 billion annually in State and548local taxes to fund critically important community projects549like education, infrastructure, and public service.550 The legal gaming industry, our regulators, and sports551leagues are aligned on our shared mission to protect sports552integrity. Together, the industry monitors, flags, and reports553suspicious activities and threats to that integrity. Since554PASPA was reversed in 2018, 40 states and the District of555Columbia have thoroughly worked to build sports betting556frameworks centered around integrity, consumer protection,557responsible gaming, and accountability. Other states like Utah,558Texas, and Georgia have chosen not to legalize sports betting,559yet there continues to be a robust offshore illegal market that560provides consumers no protections while receiving about $700561billion in American bets. And now gaming integrity frameworks562are being undermined by so-called prediction markets who are563evading State, local, and tribal authorities.564 The legal State and tribal regulated gaming market has565proven safeguards. More than 8,400 State and tribal regulators566who oversee our industry. Licensed sportsbooks operate under567strict rules regarding age verification, AML compliance,568geolocation, integrity monitoring, responsible gaming,569advertising standards, and flagging suspicious activity.570Prediction markets, they don't comply with most of these571important regulatory protections, and they allow 18-year-old572teenagers to bet on sports.573 And although a vast majority of their business is in the574sports base, prediction markets have also drawn attention for575offering death markets and other odious bets that threaten our576national security. We market ourselves accurately. We're part577of the entertainment economy. These so-called prediction578markets are deceptively calling sports betting financial579contracts and investing.580 Despite messaging designed to beguile policymakers and the581public, they are increasingly being exposed as backdoor sports582betting operations. We know it, they know it, and the American583people know it. As Senator Hickenlooper said, nearly 90 percent584of Kalshi's wagers revolve around sports betting. They585advertise it themselves: sports betting legal in all 50 states.586 A bipartisan coalition of 41 State attorneys general agree:587so-called sports events contracts are actually sports betting,588and the states must regulate them. We believe that prediction589markets are evading State and tribal authorities, and it has590cost those states and tribal authorities close to $1 billion in591lost tax revenue that would otherwise go to social services.592 In closing, so-called prediction market platforms593jeopardize the integrity of sports. States, tribes, regulators,594leagues, and operators are working together to improve consumer595protections to reinforce responsible gaming. Our process596protects the integrity of sports. Why the prediction markets597don't want to play by these rules, it's for them to explain.598 The CFTC was created to regulate markets critical to the599functioning of the Nation's economy, not to regulate Monday600Night Football. In 2024, Kalshi stated this in Federal court.601As the legislative history directly confirms, Congress did not602want sports betting to be conducted on derivative markets. And603just a few months later, they were offering an overwhelming604menu of sports bets from the NFL playoffs to the Super Bowl to605March Madness. Prediction markets, aided by a rogue CFTC, are606making a mockery of congressional intent. The prediction607markets are running national sportsbooks, and it's time to hold608them accountable in the same way we are.609 Thank you for having us here today and look forward to our610conversation.611 [The prepared statement of Mr. Miller follows:]612613 Prepared Statement of Bill Miller, President and CEO,614 American Gaming Association615 Chairman Blackburn, Ranking Member Hickenlooper, and Members of the616Subcommittee:617618 Thank you for the opportunity to testify today on behalf of the619American Gaming Association (AGA). As the national trade association620representing the legal, state-and tribal-regulated gaming industry, our621members include commercial and tribal gaming operators, suppliers, and622stakeholders committed to maintaining safe, transparent, and623responsible gaming environments across the United States.624 The legal gaming industry supports 1.8 million jobs nationwide--625more than the populations of Denver and Nashville combined. The626industry directly employs more than 700,000 Americans and generates627$104 billion in wages.628 Since the Supreme Court overturned the Professional and Amateur629Sports Protection Act (PASPA) in 2018, states and tribal governments630have thoughtfully built legal sports betting frameworks grounded in631consumer protection, integrity monitoring, robust geolocation632compliance controls, responsible gaming, and regulatory accountability.633Today, the $329 billion legal gaming industry exists because states and634tribal governments made intentional policy decisions on whether and how635to legalize and regulate this activity within their jurisdictions.636 While the state-and tribal-regulated framework has long been637challenged by competition from illegal and unregulated forms of638gambling--both offshore and domestic--it is now also being severely639eroded by prediction market platforms offering sports event contracts640nationwide under the ``authority'' of the Commodity Futures Trading641Commission (CFTC).642 These products function as sports betting in every meaningful643sense. Consumers are betting money on the outcome of sporting events644and player performances. Sports betting is being repackaged as a645financial product bypassing the consumer protections, responsible646gaming standards, and the state and tribal regulatory systems647established after PASPA.648 In 2024, sports-related activity on Kalshi represented just649$227,000 in volume. Today, sports betting accounts for approximately 86650percent of their business, and has already generated more than $47651billion in trading volume this year alone. At the same time, crypto,652traditional financial, agriculture, and economic contracts--the types653of markets the CFTC was actually created to oversee--have collapsed654from more than 93 percent of their volume in 2023 to less than 1655percent today.656 Even the companies offering these products have marketed them as657sports betting. Kalshi launched its national marketing campaign last658year boasting ``sports betting legal in all 50 states'' through its659platform. The public agrees, with recent polling finding that 81660percent of Americans say betting on sports through prediction markets661is gambling. Forty-one bipartisan state attorneys general from across662the country have challenged sports event contracts, and Nevada Gaming663Control Board Chairman Mike Dreitzer recently said it best: ``make664whatever word salad they want, but it's gambling.''665The Right Regulatory Framework666 Following the repeal of PASPA, 39 states plus DC have taken a667deliberate and thoughtful approach to building sports betting668frameworks centered on consumer protection, integrity, accountability,669and law enforcement cooperation.670 Legislatures, regulators, law enforcement, tribes, leagues, public671health experts, and operators spent years building systems designed to672balance consumer demand with strong protections and accountability.673Today, more than 8,400 state and tribal gaming regulators across the674country oversee legal gaming operations and enforce those standards675every day.676 Over the last eight years, states have established rigorous677regulatory systems governing virtually every aspect of legal sports678betting, including:679680 Licensing, suitability reviews, and reporting requirements,681682 age and identity verification,683684 anti-money laundering compliance,685686 geolocation requirements,687688 integrity monitoring and suspicious activity reporting,689690 responsible gaming protections,691692 advertising and marketing standards, and693694 ongoing regulatory oversight and enforcement.695696 Importantly, not every state has chosen to legalize sports betting.697Some have made the intentional decision not to offer it at all, while698others have adopted in-person wagers only, limits on types of bets,699strict advertising standards, and other decisions they believe are700right for their jurisdictions. That is exactly how the system is701designed to function. States should retain the right to determine for702themselves whether sports betting is permitted within their borders703and, if so, under what terms, protections, and regulatory safeguards.704 The legal market has generated meaningful economic benefits for705states and local communities. Since PASPA's repeal, legal sports706betting has generated more than $12 billion in state tax revenue707supporting critical priorities like education, infrastructure, economic708development, and responsible gaming programs. Those revenues are the709direct result of legal operators participating in transparent,710regulated systems subject to state oversight and taxation.711 Furthermore, the current sports betting framework supports tribal712sovereignty under the Indian Gaming Regulatory Act. For decades, tribal713governments have negotiated compacts and built gaming frameworks714designed to reflect the priorities and needs of their own communities.715Those systems are intentionally structured to protect their people,716preserve regulatory authority, and ensure gaming revenues support717essential tribal government services, economic development, healthcare,718education, and long-term self-determination.719 For many tribal governments, gaming revenue is a critical source of720funding. In 2025, tribal gaming operations provided more than $16721billion to support tribal governmental programs and investments,722helping address gaps in Federal funding for Indian programs.723 That framework is now being undermined by prediction market724platforms attempting to use Federal commodities law to offer what are725functionally sports bets across all 50 states, including in726jurisdictions that expressly chose not to legalize sports betting.727These platforms are also bypassing the taxes and regulatory obligations728legal sports betting operators abide by, potentially depriving states729of an estimated $1 billion of sports betting tax revenue.730 Congress never intended for Federal financial market regulation to731override Federal and state law, tribal sovereignty, or the carefully732constructed gaming frameworks built over decades. Those state-specific733frameworks also ensure compliance with the Wire Act prohibition on734interstate sports wagering. Prediction market operators are doing the735complete opposite: offering interstate sports wagering under the guise736of a futures trade.737 The success of the legal market should be measured by the consumer738protections, integrity safeguards, responsible gaming investments, and739transparency that now exist--protections that were absent in the740illegal market prior to PASPA's repeal and that don't exist in the741commodities markets today.742Responsible Gaming is Central743 The legal state-and tribal-regulated gaming industry understands744that with legalization comes responsibility.745 Responsible gaming is foundational to maintaining consumer trust746and the long-term sustainability of sports betting in the United747States. Legal sportsbooks operate under extensive responsible gaming748requirements established by state regulators and reinforced by industry749standards. These protections include self-exclusion programs, deposit750and time limits, employee training, age and identity verification,751responsible gaming messaging, and ongoing monitoring designed to752identify potentially problematic behavior.753 The gaming industry also invests more than $500 million annually754into responsible gaming programs, consumer education, research,755employee training. More than $123 million of state gaming tax revenue756is devoted to state problem gambling intervention and treatment757programs.758 In addition, the AGA's Responsible Marketing Code for Sports759Wagering establishes standards around advertising content, target760audiences, and promotional activity. In 2023, the industry strengthened761those standards further by prohibiting sportsbook partnerships with762colleges and universities that promote sports wagering activity and763banning NIL agreements with amateur and college athletes.764 These are concrete standards adopted by a regulated industry that765recognizes the unique responsibilities associated with offering legal766sports betting.767 In 2025, the AGA launched Play Smart from the Start, a research-768backed responsible gaming initiative designed to make responsible769gaming messages relevant to all players and remind them that gambling770is entertainment. The campaign is promoted by legal operators, sports771leagues, and industry partners nationwide to encourage informed play772and reinforce the industry's commitment to responsibility.773 Prediction market platforms operate outside many of these same774safeguards. Most states require customers to be at least 21 years old.775Prediction market platforms permit participation by 18-year-olds776nationwide while offering products that are functionally777indistinguishable from sports betting. Recent polling found that 81778percent of Americans view sports betting on prediction markets as779gambling, while 77 percent expressed concern that allowing 18-year-olds780to bet on sports through prediction markets could increase gambling-781related harm among young adults, compared with sportsbooks that require782users to be 21.783 These platforms are aggressively marketing sports event contracts784using language that blurs the line between investing and gambling--785promoting concepts like ``building generational wealth,'' ``paying786rent,'' or ``sports betting legal in all 50 states.''787 Legal sports betting advertising volume has decreased 27 percent788across all channels since its peak in 2021, while prediction market789sports advertising has exploded in the early months of 2026. Nearly790half of all digital sports betting ads impressions now come from791prediction markets--none of which include responsible gaming messaging792required of legal operators.793 These findings reinforce the predatory nature, consumer confusion,794and underlying risks associated with what they call ``sports event795contracts.''796Integrity and Consumer Protection Depend on the Legal Market797 Protecting the integrity of sports is fundamental to the success of798the legal gaming industry. Legal sportsbooks actively monitor betting799activity, share information with regulators and leagues, and utilize800sophisticated analytics to identify suspicious wagering patterns and801potential misconduct. Those safeguards exist because integrity threats802are taken seriously throughout the regulated market.803 Legal sports betting gives consumers clear recourse. If something804goes wrong, state and tribal gaming regulators can investigate805complaints, enforce rules, and hold licensed operators accountable.806Prediction markets blur that accountability. Seventy-eight percent of807sports event contract bettors incorrectly believe state gaming808regulators can help resolve disputes involving these products--when in809reality, consumers have nowhere to go. If a prediction market bettor810has a concern, there is no comparable state regulatory structure to811turn to.812 Recent investigations involving athletes, coaches, and suspicious813betting activity are concerning and should worry everyone in the room.814But they also demonstrate why the legal market not only matters, but is815working. In these high-profile cases, suspicious activity was816identified because regulated operators were monitoring the market,817flagging irregular wagering patterns, and coordinating with leagues,818regulators, and law enforcement. The activity occurred within819transparent and accountable regulatory frameworks.820 The contrast with illegal and unregulated markets is stark. Illegal821and offshore sportsbooks continue to pose serious risks to consumers822and competition integrity. Operating entirely outside of U.S. law,823these companies evade taxes, ignore responsible gaming requirements,824and provide no consumer protections. Americans currently wager nearly825$700 billion annually with illegal and unregulated operators, and some826analysts estimate prediction markets alone could ultimately approach $1827trillion in annual trading volume.828 The case involving Shohei Ohtani's former interpreter illustrates829exactly what happens when gambling activity takes place outside830regulated systems. Thousands of wagers were placed over an extended831period through an illegal bookmaker because there were no meaningful832safeguards, reporting obligations, or oversight mechanisms in place.833Competition integrity is foundational to the legal gaming market's834existence. Consumers will only participate in sports betting if they835trust the games themselves are fair. That is why legal operators invest836heavily in integrity monitoring systems, compliance programs, anti-837money laundering controls, and partnerships with leagues and838independent integrity monitors.839 Prediction market platforms pose many of the same integrity risks840associated with sports betting while operating outside the regulatory841frameworks specifically designed to identify suspicious activity,842protect consumers, and preserve confidence in competition. We have843already seen the serious risk in other markets: a U.S. soldier charged844with using classified information to profit from prediction market bets845tied to the operation targeting Nicolas Maduro, and suspiciously timed846trades linked to the Iran conflict and military action markets. Given847that more than 90 percent of the volume is sports, a match fixing case848on prediction markets is just a matter of time. The CFTC is allowing849operators to self-certify and police themselves through rushed,850voluntary guardrails that do not come close to the state-and tribal-851regulated framework built for sports betting.852 Don't just take it from me, earlier this year CFTC Chairman Michael853Selig stated: ``The CFTC is not a merit-based regulator--we do not854decide what people should be able to trade. Nor are we going to855regulate through enforcement.''856Conclusion857 The legal state-and-tribal regulated sports betting market has858created robust consumer protections, rigorous responsible gaming859safeguards, strong integrity oversight, and real regulatory860accountability--and states, tribes, regulators, operators, leagues, and861law enforcement continue to work together every day to strengthen those862systems and address emerging challenges responsibly.863 Congress can help further strengthen this system by considering the864following actions:865866 Reaffirming the longstanding principle that sports wagering867 is subject to state and tribal gaming law. Recent bipartisan868 legislation introduced by Senators Schiff and Curtis--the869 Prediction Markets Are Gambling Act--to prohibit sports event870 contracts reinforces that principle and would help prevent the871 continued illegal expansion of sports betting through Federal872 financial markets.873874 Working with the Administration to ensure the Department of875 Justice and other Federal agencies prioritize enforcement876 against illegal and offshore operators attempting to evade U.S.877 law while avoiding consumer protections and regulatory878 safeguards legal markets provide.879880 Revisiting outdated policies like the Federal excise tax on881 legal sports wagering, which continues to disadvantage882 regulated operators competing against illegal and untaxed883 markets.884885 Strengthening Federal penalties for match-fixing as an added886 deterrent to protect the integrity of sports.887888 Sports betting must occur within the transparent, accountable889state-and tribal-regulated systems specifically designed to oversee it890responsibly. Backdoor betting operations undermine the work and891expertise of 8,400 industry regulators, consumer protections embedded892in state and tribal law, and the will of voters across the country.893 Thank you again for the opportunity to testify today. I look894forward to your questions.895896[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]897898 Senator Blackburn. Ms. Thomas. You're recognized for five899minutes.900901 STATEMENT OF MARY BETH THOMAS, EXECUTIVE DIRECTOR, TENNESSEE902 SPORTS WAGERING COUNCIL903904 Ms. Thomas. Chairman Blackburn, Ranking Member905Hickenlooper, and members of the Subcommittee, it is an honor906to be here today, especially in front of my U.S. Senator. Thank907you for the opportunity to speak on the Tennessee Sports Gaming908Act and the priorities in place that we have to protect909consumers and to regulate previously unlicensed sports wagering910activity through formal oversight.911 In Tennessee, it is a taxable privilege to offer sports912wagering pursuant to a license issued by our council. Since913sports betting went live in 2020, Tennessee has collected close914to $450 million in privilege taxes from licensed sportsbooks,915with 5 percent of that, or close to $23 million, dedicated to916problem gambling prevention and treatment.917 Tennessee recognizes that gambling is risky and can become918problematic for some players if the right procedures are not919enforced. To that end, our law prohibits individuals under the920age of 21 from wagering. It requires sportsbooks to make921available and enforce exclusionary measures for those who do922not wish to access gaming platforms or receive marketing923materials.924 In support of this requirement, our State agency manages a925statewide self-exclusion program to ensure communication of926these exclusions across every licensed sportsbook in our state,927no matter where the exclusion originated. Our law prohibits928credit card deposits and the extension of credit and requires929sportsbooks to provide the ability for players to set limits on930time and money deposited. After all, sports betting in931Tennessee is viewed as a form of entertainment for adults, not932a way for college kids to pay the rent.933 Importantly, our law respects the concerns of teams,934schools, leagues, and players about particularly risky wagering935markets by prohibiting individual college player prop bets,936live team prop bets for any college sport, and any types of937wagers on injuries or penalties. Our law also allows teams,938leagues, and schools to prohibit other types of wagering939markets that may--excuse me, to ask the council to prohibit940other types of wagering markets that may be contrary to the941public interest or that could impact the integrity of a942particular sport.943 Sportsbooks are required, and they do cooperate with944investigations by our office, sports governing bodies, and law945enforcement. And also importantly, our agency is empowered946under our law to investigate and fine unlicensed sportsbooks947who choose to operate in our state unregulated. Our council has948promulgated extensive rules to further support our statute's949consumer protections, which we have strengthened over time as950technology has advanced.951 Those include strong know-your-customer regulations, to952identify players and prevent access by minors and other953prohibited players; secondary identity verification954requirements to prevent identity theft and proxy betting;955multi-factor authentication requirements to prevent bad actors956from taking over accounts; robust geolocation checks at957multiple points in time and access; and required account958suspension and reporting related to minors and prohibited959players.960 A sportsbook's internal controls, which we approve and961regularly audit, must have procedures to immediately notify our962office of unusual or suspicious wagering activity. And this963reporting obligation goes far beyond money laundering or fraud.964It includes anything that could indicate match fixing, event965manipulation, or the misuse of inside information.966 In many ways, our sportsbooks do act as the first line of967defense, but you cannot describe their reporting as self-968certification. As State regulators, we proactively identify and969work to correct gaps in sportsbook compliance with multiple970checks during the term of their licensure. We review all971material technological and operational changes, as well as all972changes to house rules and terms and conditions prior to973implementation. We require our sportsbooks to undergo annual974third-party operational and security assessments that are975reported directly to us for review.976 Sportsbooks are also required to perform their own internal977audit and report findings and remedial measures to us. We audit978compliance with financial requirements and player-facing979technical components, as well as wagering catalogs to see980whether impermissible markets are being offered. We review981incident reports related to operational issues, which helps us982not only ensure compliance but helps keep us up to date on983issues that we might hear from a player, because we also serve984as the resource for the resolution of all player complaints in985Tennessee.986 Although it may seem like there has been a growth of cases987regarding athlete manipulation or information sharing, my988experience has been that legal and regulated sports betting has989greatly increased the volume of data available, which has led990to a higher number of incidents being reported and addressed.991Any criminal behavior can be difficult to completely prevent,992but it can often be detected, investigated, and enforced with993the right tools and collaboration.994 Thank you very much.995 [The prepared statement of Ms. Thomas follows:]996997 Prepared Statement of Mary Beth Thomas, Executive Director,998 Tennessee Sports Wagering Council999 Chairman, Ranking Member, and Members of the Subcommittee: My name1000is Mary Beth Thomas, and I serve as Executive Director of the Tennessee1001Sports Wagering Council. Thank you for allowing me the opportunity to1002testify before you about how the State of Tennessee has structured the1003regulation of sports betting and how the Tennessee Sports Wagering1004Council works to ensure the integrity of sport.1005A. Gambling in Tennessee1006 The Professional and Amateur Sports Protection Act, known as PASPA,1007effectively outlawed sports betting nationwide with only a few1008exclusions. PASPA was judicially overturned in 2018 when the Supreme1009Court held that it infringed on state power in violation of the anti-1010commandeering doctrine enshrined in the Tenth Amendment to the U.S.1011Constitution. Since PASPA was overturned, state legislatures have1012considered whether to prohibit or permit sports betting in their own1013states, and if permitted, the terms under which sports betting would be1014allowed. Today, 39 states and the District of Columbia allow retail1015sports betting, online sports betting, or both.1016 Tennessee has a unique history with respect to gambling and games1017of chance. Importantly, the Constitution of the State of Tennessee1018provides that the Legislature has no power to authorize lotteries for1019any purpose, other than a state lottery to provide financial assistance1020to Tennesseans to attend post-secondary educational institutions. The1021Legislature may not authorize games of chance associated with casinos,1022including, but not limited to, slot machines, roulette wheels, and the1023like.1024 The Legislature has traditionally adopted a restrictive policy1025approach in authorizing even those games where chance is an element but1026skill is the dominant factor, in part due to the long shadow cast by1027Operation Rocky Top. Operation Rocky Top was an FBI and TBI undercover1028investigation in the late 1980s into corruption related to charity1029bingo, which led to over 50 convictions on assorted bribery and1030corruption charges. The Tennessee Legislature subsequently passed1031legislation creating the Tennessee Gambling Act, which provides that1032``gambling'' is ``contrary to the public policy of this state and means1033risking anything of value for a profit whose return is to any degree1034contingent on chance.'' The Tennessee Gambling Act criminalizes both1035gambling and gambling promotion. Accordingly, apart from the Tennessee1036Education Lottery Corporation and until fantasy sports contests and1037sports betting were authorized as games where skill is the dominant1038factor and statutorily removed from the definition of ``gambling,''1039there has been no other commercial gaming in Tennessee--no racetracks,1040no online casinos or brick and mortar casinos, and no other retail1041gambling locations.1042B. The Tennessee Sports Gaming Act1043 Given that history, the Tennessee Sports Gaming Act, effective July10441, 2019, has provisions that are unique to Tennessee and address1045concerns and priorities specific to our State. As presently enacted,1046the Tennessee Sports Gaming Act creates our nine-member council called1047the Tennessee Sports Wagering Council, which is authorized to hire an1048Executive Director and other staff to carry out the day-to-day1049responsibilities of licensing, compliance, investigation, and other1050obligations under the statute. In Tennessee, it is a taxable privilege1051to offer sports wagering pursuant to a license issued by the Council.1052Accordingly, I may refer to licensed Tennessee sportsbooks as Licensees1053or Operators. The Tennessee Sports Gaming Act permits only online1054sports betting. There are no brick-and-mortar locations where wagers1055may be placed, and there are no wagering kiosks permitted in the State.1056 The provisions of the Tennessee Sports Gaming Act emphasize an1057effort to protect consumers from the predatory illegal market and to1058put previously unlicensed wagering activity under formal oversight. To1059that end, the Tennessee Sports Gaming Act empowers the Council with the1060authority to investigate unlicensed sportsbooks and issue fines against1061persons or entities accepting wagers without a license. Additionally,1062the Tennessee Sports Gaming Act requires the Council, Licensees, and1063registered Vendors to cooperate with investigations conducted by sports1064governing bodies and law enforcement agencies, including providing1065account-level betting information and data files relating to persons1066placing wagers.1067 As some of you may well know, the University of Tennessee1068Volunteers are a prominent and successful sports program in the SEC1069conference, and Nashville has historically been called the ``Athens of1070the South'' because of its number of colleges and universities. In line1071with our State's proud emphasis on college education and college1072sports, the state Legislature prohibited any wagers on individual1073player prop bets for any college sports at any time and also prohibited1074live or in-game team prop bets for any college sports. Other types of1075wagers prohibited by statute are wagers on injuries, penalties, or1076elements of chance in any sport. Recognizing the need for additional1077prohibitions could arise that should not be delayed by the legislative1078calendar or the rulemaking process, the Tennessee Sports Gaming Act1079provides that a Licensee, sports team, sports league or association, or1080institution of higher education may submit to the Council in writing a1081request to prohibit a type or form of wagering or to prohibit a1082category of persons from wagering as contrary to public policy, unfair1083to consumers, or as affecting the integrity of a particular sport or1084the sports betting industry. The Council will grant a request with good1085cause.1086 Speaking of prohibited persons, our Sports Gaming Act provides that1087sports betting is only available to persons who are 21 and up. The1088Sports Gaming Act also lists persons and categories of persons who are1089ineligible to directly or indirectly wager or bet on a sporting event1090in Tennessee. This includes members and employees of the Sports1091Wagering Council, certain persons associated with Licensees or Vendors,1092and any persons prohibited by the rules of a governing body of a1093collegiate sports team, league, or association, among others. Violation1094of this ineligible person statute is a misdemeanor crime.1095 Our statute also provides for a voluntary state-wide self-exclusion1096list, which is managed by the Council and shared with all Licensees. A1097person who places their name on this list must be treated by Tennessee1098sportsbooks as a prohibited participant. Their account must be1099suspended, and the self-excluded person may not receive marketing or1100advertising. All Licensees must also make available to players a1101licensee-specific self-exclusion list and provide players with options1102for limits on time spent betting and on amounts wagered.1103 Another protection within the Sports Gaming Act is that it is a1104misdemeanor crime for a licensed sportsbook to offer, accept, or extend1105credit to a bettor. A bettor may only fund their account through a1106method that it initiated with cash, such as electronic bank transfer or1107debit cards. Sportsbooks are prohibited from accepting credit cards in1108Tennessee.1109 Before I end our discussion on the framework of Tennessee's1110statutory environment, I'd like to discuss how the State of Tennessee1111taxes Operators and how that funding is used. In Tennessee, we tax 1.851112percent of an Operator's handle, which means a percentage of the value1113of all wagers placed. We are unique in the country by taxing handle but1114have found that it eases &financial auditing requirements because of1115its straightforward calculation. The handle tax includes promotional1116wagers so free play offered by an Operator to players does not reduce1117an Operators state tax liability. In addition, the State's revenue1118stream does not rise or fall with betting outcomes like it would with a1119revenue tax. In this way, the State of Tennessee does not succeed when1120players lose.1121 The majority of taxes from sports betting in Tennessee support1122various educational programs; however, since the original enactment of1123the Tennessee Sports Gaming Act, 5 percent of the tax supports the1124State of Tennessee's Department of Mental Health and Substance Abuse1125for Services to oversee grant programs with organizations to provide1126treatment services for individuals to address problem gaming and1127gambling disorders and to establish prevention initiatives to reduce1128the number of individuals with problem gambling or gambling disorders.1129These grants have supported The Gambling Clinic, which is the oldest1130gambling-focused treatment center in the United States and is operated1131by the Tennessee Institute for Gambling Education and Research (TIGER)1132at the University of Memphis. Collected taxes support research that1133continues to build the reputation of Tennessee as a national and1134international leader in the science related to preventing and treating1135gambling harms. The amount available to the Department of Mental Health1136to fund these grant programs from life to date is over $22 million.1137C. Rules of the Tennessee Sports Wagering Council1138 The Tennessee Sports Gaming Act also provides the Council with1139authority to promulgate rules. We have issued three sets of permanent1140rules over the last four years with a goal of strengthening and1141streamlining our rules over time to effectively protect consumers,1142promote responsible gaming, and safeguard integrity. A uniform1143requirement for minimum internal controls, operational standards, and1144security protections provides a consistent regulatory framework for all1145our Operators, providing an even playing field for offering sports1146betting within the state.1147 Some of the revisions to our rules have included updating identity1148verification and account security requirements. We have detailed ``Know1149Your Customer (KYC)'' requirements so that there is no anonymous1150account activity. We have added and strengthened requirements for1151secondary authentication of identification requirements to prevent1152identity theft and the creation of proxy accounts. Multifactor1153authentication is required to login with a new device, or every two1154weeks with a known device, and also when a debit card is added, which1155works to prevent account takeovers by bad actors.1156 In addition, our staff reviews and approves operator minimum1157internal controls, which address risk management procedures, event1158offerings, technology requirements, and segregation of duties. For1159example, a requirement in our most recently revised rules is for1160Operators to segregate internal trading and risk management functions1161from their marketing team functions.1162 Within their minimum internal controls, Operators must have1163procedures for ensuring that wagers are only offered on sporting events1164approved by the Council. Under our rules, any entity may petition for a1165new sporting event. After Council staff receive a complete and detailed1166description of the sporting event, evidence of that sport's governing1167body rules and regulations, or its independent integrity monitoring1168information, our staff assesses several factors, including whether1169wagers on that sporting event are compatible with the public interest.1170Our staff also discusses certain proposed sporting events with other1171regulators and participants in the industry to consider issues that1172others may have encountered.1173 An Operator's approved minimum internal controls must also have1174procedures to prevent wagering by prohibited participants. All1175Operators must require players to acknowledge that they are not a1176prohibited participant during account creation and must provide further1177specifics on how the State of Tennessee defines prohibited participants1178in their Terms and Conditions or House Rules. To prevent minors from1179wagering, Operators are required to suspend accounts when they have1180actual knowledge that a payment method linked to an account belongs to1181a person under 21. Account suspension is also required when a1182sportsbook identifies a prohibited participant wagering in violation of1183the Sports Gaming Act. Each Operator has different procedures to1184identify wagering by prohibited participants. Some Operators have1185relationships with the leagues and regularly check the athlete and1186employee information they provide. Other Operators use services from1187integrity monitoring providers, such as IC360s ProhiBet product.1188 Last, Operator internal controls must have procedures to1189immediately notify the Council, either directly or through an integrity1190monitoring provider, of unusual or suspicious wagering activity.1191Unusual wagering activity and suspicious wagering activity are defined1192in our rules and include wagering indicative of match-fixing, event1193manipulation, or the misuse of inside sports information or other1194prohibited activity. Operators and their required integrity monitors1195watch for spikes in the total amount of wagers placed on a market, the1196volume of wagers placed, unusual geolocation changes between logins,1197rapid wager placement, the creation of new accounts that immediately1198place specific wagers, or large prop bets. Our staff has access to the1199real-time back office for each licensed sportsbook so that our staff1200can conduct our own analysis of wagering activity when unusual or1201suspicious wagering activity is flagged. Licensed Operators must also1202report this information to the relevant sports governing body.1203D. Regulatory Compliance in Tennessee1204 The regulatory framework established by the Tennessee legislature,1205and the rules promulgated by the SWC, create a multi-pronged system of1206checks and balances to ensure that Operators are set up to detect,1207report and address a wide range of issues. Rather than a self-1208certification process, it is one of collaboration, discussion and1209ultimately, approval or disapproval of an Operator's license on the1210merits of its application, followed by ongoing review and auditing of1211an Operator's compliance with the law.1212 Prior to licensure, Tennessee Sports Wagering Council staff conduct1213an extensive review of documents submitted by prospective Operators.1214These include extensive background checks of key personnel; a review of1215player-facing legal documents, like terms and conditions and house1216rules; a review of internal controls; and a review of annual third-1217party testing of operational and security systems to ensure those1218controls work as stated. During the licensing process and before a1219license is deemed complete, we correspond with Operators about1220remediating issues identified by our staff. Because an app-based1221online-only sportsbook includes a stack of technological processes1222which operate together, our staff also confirm that the components of1223this technology stack are filled by vendors who are separately1224registered with the Council, particularly for sensitive components like1225player account management, geolocation, and know-your-customer1226services. We closely examine and analyze the substance and the merit of1227these filings.1228 The state's regulatory function does not end with the approval of1229an Operator's license. Rather, our team proactively identifies any gaps1230in Operator compliance with multiple checks on Operators during the1231term of their license. We require all Operators to have an internal1232audit plan, with resulting reports submitted to our staff to review.1233Our staff regularly reviews required numerical reporting, incident1234reports, and player complaints to identify potential compliance issues.1235We conduct monthly audits within our office on various financial1236requirements and player-facing technical components. We review any1237amendments to internal controls, terms and conditions, and house rules.1238We review suspicious activity reports, not only to investigate and1239refer identified crimes, but also to identify gaps in identity1240verification and geolocation, which may have allowed a bad actor to1241carry out that suspicious wagering activity. We review wagering1242catalogues and conduct random audits of offered markets during high1243volume times to see whether impermissible markets are offered. Where we1244identify any compliance issues, we work together with our licensed1245Operators to remediate that issue and issue letters of warnings or1246fines where appropriate.1247 Tennessee Sports Wagering Council staff also serve as a resource1248for education and outreach to the public. We have traveled to colleges1249and universities and talked to their athletic coordinators. When an1250Operator identifies a minor is using a parent's information to create1251an account and place wagers, we send a letter to that parent alerting1252them to the account use and providing responsible gaming information,1253as well as the information for The Gambling Clinic. We have received1254responses from many parents who expressed gratitude for being made1255aware that their children were gambling without their knowledge and for1256providing resources that they could discuss with their children.1257 Although not the explicit topic of this hearing today, it is1258important to note that our team conducts extensive investigations into1259illegal sportsbooks, which have limited identity verification, no or1260different age requirements, and allow the use of credit, among other1261harms to consumers. We have made significant efforts to identify1262illegal sportsbooks, demand that they cease and desist operations in1263Tennessee, and issue fines where operations continue. The Tennessee1264Sports Wagering Council has issued over $800,000 in fines against1265illegal sportsbooks. Seven illegal sportsbooks have left our state. In1266addition, we have taken steps to stop these illegal sportsbooks from1267mailing print publications into Tennessee, advertising on Tennessee-1268based podcasts or radio stations, or otherwise promoting illegal1269gambling within Tennessee. Those illegal sportsbooks are ultimately a1270black hole of information where accounts cannot be monitored and1271unusual and suspicious wagering activity that can identify integrity1272issues cannot be detected.1273E. Integrity Investigations in Tennessee1274 Specific to gaming integrity investigations, our licensed Operators1275have requirements for reporting unusual and suspicious wagering1276activity to the Tennessee Sports Wagering Council and suspending1277accounts as I described above. We also receive alerts directly from1278integrity monitoring providers, law enforcement, and the leagues. Over1279the last four years, we have received hundreds of these reports from1280integrity monitoring providers We will occasionally receive subpoenas1281or requests for information from law enforcement with respect to1282integrity issues, which our statute requires us to assist with by1283providing account data and wager-level information.1284 As of May 14, 2026, the Tennessee Sports Wagering Council has1285investigated 35 potential prohibited participant cases, with 10 of1286those cases referred to a local District Attorney or other law1287enforcement for their own assessment of criminal prosecution. When a1288case is not criminally referred by our office, it is typically because1289our investigation team found that the athlete or employee information1290checked by the Operator was stale, meaning that an athlete or member of1291athletic staff had been released from a team, graduated, or changed1292jobs and was no longer under restrictions by a league or governing body1293at the time a wager was placed. Our office makes that determination1294after discussion with the league or school.1295 As of May 14, 2026, the Tennessee Sports Wagering Council has1296investigated 25 potential integrity cases where suspicious wagering1297activity occurred in Tennessee that could indicate the use of inside1298sports information. While a few cases are currently pending, 17 are1299closed and have been referred to the sports governing body or law1300enforcement, including 13 that were referred to the FBI. Where an1301integrity matter is not criminally referred, it is sometimes because1302sharp (or ``expert'') wagering action has been flagged as a potential1303integrity issue. In other words, a patron has placed a wager on what1304would otherwise be an obscure betting line, but investigation indicates1305the player has made that wager using their own analytics of a sport on1306which they tend to place wagers.1307 In reviewing newsworthy integrity matters in preparation for this1308hearing, I noted that many of these matters were initially identified1309as potential proxy wagering or unlawful information sharing matters by1310licensed sportsbooks and integrity monitoring providers long before the1311media learned of the investigations. In many matters, suspicious1312wagering activity was identified prior to a game, and accounts were1313immediately suspended or suspended after the result was known. These1314suspicious wagers were then reported to the leagues, sports governing1315bodies, and law enforcement for investigation.1316F. Conclusion1317 Although it may seem that there has been an increase in cases of1318athlete manipulation or unlawful information sharing, our experience is1319that legal and regulated sports betting has increased the volume of1320data available, leading to a higher number of incidents reported and1321acted upon. This subcommittee may support our office and fellow state1322regulators in investigating and prosecuting illegal sportsbooks. From1323my perspective, that would have the greatest impact on ensuring the1324integrity of sport by removing avenues for anonymous betting, betting1325without locational information, and betting without analytics to1326identify proxy wagering. Any criminal behavior can be difficult to1327wholly prevent, but it can be detected, identified, and enforced.1328 With the grants of authority given to our Council by the Sports1329Gaming Act, our rules, which we continue to strengthen, the efforts of1330our staff, and our strong partnerships with law enforcement, I believe1331that Tennessee's current framework amply addresses attempts by bad1332actors to rig outcomes on sporting events which may be wagered on in1333Tennessee. I welcome your questions.13341335 Senator Blackburn. Mr. Sadin, you're recognized.13361337 STATEMENT OF SCOTT SADIN, CO-FOUNDER AND CO-CHIEF EXECUTIVE1338 OFFICER, INTEGRITY COMPLIANCE 36013391340 Mr. Sadin. Thank you, Chairman Blackburn, Ranking Member1341Hickenlooper, and members of the Subcommittee. Thank you for1342the opportunity to appear before you today.1343 My name is Scott Sadin, and I'm the Co-Founder and Co-CEO1344of Integrity Compliance 360, known as IC360. We are a1345regulatory technology and compliance services firm specializing1346in comprehensive integrity solutions for stakeholders across1347sports, sports betting, and prediction markets. We work closely1348with both collegiate and professional sports leagues, licensed1349sports betting operators, prediction market exchanges, State1350regulators, and law enforcement across the United States and1351abroad.1352 In these few minutes, I want to highlight two core1353principles I believe about today's existing integrity1354monitoring ecosystem. First, the integrity infrastructure that1355protects American sport is not theoretical. Since the Supreme1356Court's 2018 decision in Murphy v. the NCAA, a robust framework1357has developed across leagues, operators, regulators, law1358enforcement, and integrity providers like us.1359 That framework has identified, investigated, and resolved a1360meaningful number of integrity matters, from suspicious1361wagering patterns to the misuse of insider information to1362active match-fixing inquiries. The infrastructure exists and it1363has worked. But just like any vertical within a complex1364industry, the integrity ecosystem has room to improve and1365mature as the space around it develops and evolves.1366 Second, the sports betting and prediction market ecosystems1367involve, as mentioned, a wide range of stakeholders, and I1368believe that no single participant can address its integrity1369challenges alone. The integrity of competition depends on the1370connective tissue between those participants. The quality of1371information sharing, the depth of collaboration, and the1372consistency of transparency.1373 IC360s mission is direct: to assist the successful1374maturation of the regulated sports betting and event contracts1375ecosystems through products and services that help protect the1376integrity of sport. We work closely with many of the1377stakeholders I have just mentioned, and that breadth of our1378partner network is, in our view, a precondition for credible1379integrity work. We regularly see the specific and often unique1380integrity challenges that each group is facing.1381 That cross-participant visibility allows us to identify1382patterns, risks, and emerging vulnerabilities. And one of our1383central responsibilities is to bring those insights back to1384relevant partners who may have been impacted by a circumstance,1385assist in investigating the issue, and then collaborate to1386mitigate any remaining areas of risk. In short, we endeavor1387every day to embody the very connective tissue necessary for1388cross-stakeholder integrity success.1389 I'd like to highlight three lines of work that help us play1390that role. The first is integrity monitoring. Our system and1391team of dedicated resources conduct 24-hour-a-day surveillance1392of regulated markets for potentially suspicious activity. We1393maintain a vast distribution network that allows operators to1394expeditiously disseminate and respond to circumstances of1395potential risk. Integrity alerts often come either from us or1396directly from an operator themselves. This alerting structure1397affords stakeholders holistic and actionable insight quickly1398and efficiently.1399 I'd also like to highlight an IC360 product called1400ProhiBet. Most sports leagues maintain a population of1401individuals: athletes, coaches, officials, and other personnel,1402who should be prohibited from wagering on their own sport1403because of regular access to inside information and the ability1404to exert undue influence. ProhiBet is the secure infrastructure1405through which those designations move from governing body to1406sportsbook operators and prediction markets, allowing1407participating platforms to automatically permission accounts1408before a prohibited transaction ever takes place. In our1409experience, this level of proactivity is incredibly1410consequential in preserving market and competition integrity.1411 Last, I want to touch on the significance of education. The1412prohibited patron population I described in the context of1413ProhiBet is also the population I believe most vulnerable to1414approach, pressure, and targeting by bad actors. Their1415awareness regarding the threats they may face, the rules that1416apply to them, and the reporting pathways available when1417something feels wrong, are significant contributing factors in1418maintaining the integrity of sports. IC360 has delivered1419hundreds of presentations and has reached hundreds of thousands1420of athletes, coaches, and administrators, and we look forward1421to continuing that work in close partnership with sports1422leagues.1423 I'd like to close by reiterating the importance of1424collaboration and the connective tissue between industry1425stakeholders. Integrity monitoring is only effective because1426operators report information, leagues share intelligence, and1427regulators share casework. ProhiBet only works because1428governing bodies designate, operators screen, and the1429infrastructure between them is trusted. Education is only1430impactful because leagues and institutions invest the time and1431attention of the people closest to competition. The value we1432believe IC360 brings is helping to make the collaborative work1433of integrity possible at the scale and speed that the1434contemporary market requires.1435 I appreciate the Subcommittee's attention to these issues,1436and I welcome your questions and conversation. Thank you.1437 [The prepared statement of Mr. Sadin follows:]14381439 Prepared Statement of Scott Sadin, Co-Founder and Co-Chief Executive1440 Officer, Integrity Compliance, 360 Inc.1441I. Introduction1442 Chairman Cruz, Ranking Member Cantwell, Chair Blackburn and Ranking1443Member Hickenlooper, and Members of the Subcommittee, thank you for the1444opportunity to appear before you today. My name is Scott Sadin and I1445serve as Co-Founder and Co-Chief Executive Officer of Integrity1446Compliance 360 Inc., known as IC360, a global regulatory technology and1447compliance firm specializing in comprehensive integrity solutions for1448participants in sports, sports betting and daily fantasy, gaming,1449iGaming, and prediction markets. As an independent sports integrity1450firm, we work with professional leagues, collegiate conferences and1451member institutions, state regulators, licensed sports betting1452operators, event contract platforms and other stakeholders across the1453integrity ecosystem.1454 I am grateful to the Subcommittee for its sustained attention to1455this important set of issues and for the opportunity to be here on1456behalf of IC360. The legalization and expansion of regulated sports1457betting and event contracts on sports in the United States has created1458meaningful opportunities and new challenges for those of us focused on1459the integrity of competition. My intent today is to describe who IC3601460is, the participants in the integrity ecosystem with whom we work, and1461the products and services through which we contribute to protecting the1462integrity of sport.1463 The views expressed in this statement are my own and reflect my1464experience through my tenure at IC360. They do not represent the views1465of any leagues, regulators, operators, or institutions with whom we1466work. I welcome the Subcommittee's questions and the opportunity to1467provide any additional information that may be useful as it continues1468its work on these issues.1469II. My Background1470 I serve as Co-Founder and Co-Chief Executive Officer of IC360. I1471have had the privilege of building IC360 from an early-stage company1472into what it is today--one of the most extensive independent integrity,1473compliance, and regulatory technology firms operating in the U.S.1474sports and gaming space. IC360 offers over a dozen products and1475services and has more than two hundred partner organizations globally.1476 My path to this work began in financial services. Earlier in my1477career, I held compliance and surveillance roles at registered1478investment advisers and alternative investment managers, including1479Apollo Global Management and MSD & BDT Partners. The discipline of1480trade surveillance--building systems that detect anomalous patterns1481across vast data sets in real-time and investigating those patterns1482with care and consequence--translated directly to the work of1483monitoring legal sports betting markets when that opportunity emerged.1484 What has kept me in this field, and what I hope comes through in1485these remarks, is a personal conviction about the importance of our1486commitment to this work. I have been on the front lines of dozens of1487sports integrity investigations over the years--matters that have1488touched professional and collegiate athletes, officials, coaches, and1489at times the broader public--and I have seen, at close range, the value1490IC360 has brought in both identifying and investigating integrity-1491related circumstances. I am personally committed to ensuring that the1492integrity infrastructure protecting competitions and events keeps pace1493with the market that has matured around it, and that commitment is the1494lens through which I offer the observations that follow.1495III. Core Concepts1496 Before I provide detail about IC360s products, I felt it important1497to emphasize the following two core concepts with respect to the1498integrity monitoring ecosystem:14991500 1. In the years since the Supreme Court's 2018 decision in Murphy v.1501 NCAA, a functioning and comprehensive framework has developed1502 across sports leagues, regulators, licensed operators, and1503 independent integrity providers. That framework has identified,1504 investigated, and resolved a meaningful number of integrity1505 matters--from suspicious wagering patterns and the misuse of1506 insider information to active match-fixing inquiries--and has1507 done so in ongoing coordination with state and Federal1508 authorities, and law enforcement where appropriate. The1509 infrastructure exists and it has been effective. The1510 conversation before the Subcommittee today, in my view, should1511 be framed not as a question of whether such an infrastructure1512 should exist, but as a question of how it should continue to1513 mature, evolve and improve.15141515 2. One core principle has remained constant throughout the evolution1516 of regulated sports betting: no singular sports league,1517 sportsbook operator, regulatory body, or supplier can1518 successfully tackle the complex and nuanced sports integrity1519 landscape alone. It requires strong engagement, collaboration1520 and transparency across those differentiated stakeholders to1521 combat bad actor innovation. Any improvement to the existing1522 sports integrity framework should focus on increasing the1523 connective tissue between those market participants.15241525 Everything we do at IC360 is informed by these core principles. We1526recognize that the work of maintaining proactive monitoring requires1527sustained investment in new detection capabilities, new data sources,1528new analytical methods, and new forms of cross-stakeholder1529coordination. That is a permanent and evolving feature of this work,1530not a phase of it.1531IV. About IC360--Who We Are, Whom We Serve, and Why This Work1532 Matters1533 At IC360, our mission is direct and durable: to assist the1534successful maturation of the regulated sports betting and sports event1535contract ecosystem through products and services that protect the1536integrity of sport. Everything we do is in service of that mission.1537 We work with more than 200 organizations globally. Our client base1538includes each of the seven major United States professional sports1539leagues, a growing list of emerging professional properties, and 121540Division I collegiate conferences, including each of the Power 41541conferences. We also work with more than 125 licensed sports betting1542and daily fantasy sports operators, 14 prediction-market exchanges, and1543numerous regulators and law enforcement agencies across the United1544States and abroad.1545 The breadth of that client base is, in our view, the precondition1546for credible integrity work--and it confers a particular vantage point1547on the issues before this Subcommittee. We see, on a regular basis, the1548specific and often unique integrity challenges that each category of1549stakeholders are facing. That cross-stakeholder visibility, handled1550with care, allows us to identify patterns, risks and emerging1551vulnerabilities. One of our central responsibilities is to bring those1552insights back to the stakeholders best positioned to act on them. Our1553positioning as an independent integrity provider affords us the1554opportunity and responsibility to assemble a picture from across the1555ecosystem, route the right information to the right party, and assist1556in converting the resulting signals into action.1557 A key differentiator for IC360 is that we operate conflict-free.1558IC360 does not offer trading, odds creation, risk management, or any1559product whose interests could be affected by the outcome of an1560integrity matter we are monitoring. Our products exclusively work to1561enhance the compliance and integrity ecosystem. That posture matters1562not because the operators, leagues, and regulators with whom we work1563are anything less than fully committed to integrity--they are, and many1564invest substantial resources of their own in these endeavors--but1565because the credibility of the picture we produce depends on the1566absence of competing interests in producing it.1567 This approach allows us to function as the connective tissue across1568the integrity ecosystem. We often sit between leagues and operators on1569credible suspicious-betting alerting. We work closely with governance1570bodies and operators on prohibited bettor and trader identification. We1571collaborate with regulators and licensed platforms when circumstances1572warrant further investigation. The strength of the integrity1573infrastructure in this country is a function of how well that1574connective tissue holds--how much information flows through it, how1575reliably, and how comprehensively. The more engagement, collaboration,1576and transparency among leagues, operators, integrity providers,1577regulators and law enforcement, the more protected the integrity of1578competition is.1579V. IC360s Products and the Value They Bring1580 With that framing in mind, I want to briefly describe the three1581principal lines of work through which IC360 contributes to the1582connective tissue I have described.1583A. Integrity Monitoring1584 Integrity monitoring refers to the twenty-four-hour-a-day1585surveillance of regulated betting markets globally for indications that1586something has occurred, or is occurring, outside the normal patterns of1587wagering, event contracts and competition. It is the work most often1588associated with our category, and it is the work that has produced many1589of the integrity outcomes the public has come to expect of a well-1590functioning regulated market.1591 The picture we build rests on four principal categories of data,1592and our analytical method rests on identifying correlated anomalies and1593emerging trends across them.15941595 1. Market odds and pricing. Movements in betting odds and event1596 contracts are the most immediately legible signal that1597 something in a market may warrant further investigation.1598 Significant, unexplained movement--particularly in directions1599 inconsistent with publicly available information--can often be1600 the first indication that an alert is appropriate.16011602 2. Bet-level detail. IC360 ingests bet-level data directly from a1603 meaningful subset of licensed sportsbooks covering wagering1604 activity on their platforms. This level of detail is essential1605 to identifying coordinated activity, repeat patterns, and1606 platform-specific anomalies that aggregate market odds and1607 price data alone cannot reveal.16081609 3. Availability information. We track news and other open-source1610 data related to the availability of impactful athletes and1611 coaches--injuries, absences, and other status changes.1612 Significant market movement in advance of the public release of1613 availability information on an impactful figure can indicate1614 the misuse of inside information, a circumstance that warrants1615 close investigation.16161617 4. Officiating statistics. We collect publicly available data on1618 officiating performance and use it to develop behavioral1619 profile patterns on as many officials as we can. A meaningful1620 deviation from their established behavioral norm is an1621 analytical signal--and one that is often cross-referenced1622 against the other categories of data above.16231624 Anomalies, of course, occur constantly across each of these1625categories in isolation. What our analytical work looks for is the1626correlated abnormality--the situation in which signals across several1627of these categories cluster around a single event, market, or actor--1628and the trend formation in which a series of such clusters point toward1629a potentially sustained vulnerability.1630 Alerts on our platform are generated through three principal1631pathways:16321633 1. IC360s own identification of circumstances warranting further1634 investigation, derived from the cross-category analysis1635 described above.16361637 2. Operator-initiated reporting of suspicious activity observed on1638 the operator's own platform, which the operator routes to its1639 independent third-party integrity monitor for further analysis1640 and dissemination across the ecosystem. These notifications are1641 critical since IC360 is ultimately limited to what data it is1642 afforded. We consistently recommend our operator partners be1643 overly inclusive in reporting.16441645 3. Regulatory or other governing-body identification of potentially1646 suspicious activity.16471648 When an alert is generated, IC360 distributes the relevant details1649and a structured survey to operators across the ecosystem. The survey1650asks, among other questions, the following:16511652 Whether the market in question was offered on the platform;16531654 Whether the volume in that market was outsized relative to1655 expectations;16561657 Whether previously dormant accounts were transacting in the1658 market in question;16591660 Whether new account openings appeared to target the market1661 in question; and16621663 Whether any flagged or marked patrons were transacting in1664 the market in question.16651666 The IC360 system parses the responses into a consolidated report1667that gives the relevant stakeholders--typically the affected league or1668governance body, and, where appropriate, regulators and law1669enforcement--a comprehensive and holistic view of the matter, including1670whether the suspicious activity appears isolated to one operator or one1671market or, instead, is widespread across the ecosystem. Both the1672willingness of operators to report suspicious activity to their1673independent monitors in the first instance, and their complete and1674timely responsiveness to surveys when alerts are circulated, are of1675paramount importance to the integrity of regulated competition. The1676work is collaborative, and the quality of the resulting picture is a1677direct function of how fully participants engage.1678B. ProhiBet1679 Prohibited patrons across U.S. sport often refers to persons who1680should be prohibited from betting or trading on certain events who, by1681virtue of their role, have regular access to non-public information1682about a competition, or who have the consistent ability to exert undue1683influence over its outcome. These include, in most sports, athletes--1684both professional and collegiate--coaches, referees, athletic trainers,1685administrators, and certain associated individuals. Each governing1686body, league, and member institution maintains its own designation of1687prohibited patrons, and those designations are foundational to the1688integrity rules of the relevant sport.1689 IC360s ProhiBet platform is the secure technology infrastructure1690through which prohibited-patron information moves from a list manager--1691typically a sports governing body--to a platform on which such1692individuals could otherwise transact, including sportsbooks, prediction1693markets, and daily fantasy sports platforms. The information exchanged1694between those parties through the ProhiBet platform is1695cryptographically hashed, so that the personal identifying information1696of designated individuals never leaves the list manager's environment.1697With that infrastructure in place, operators can proactively permission1698the accounts of prohibited patrons before any wager or prohibited1699transaction is placed--ensuring that those individuals are not able to1700transact in markets where they may possess inside information, exert1701undue influence or are regulatorily prohibited from doing so.1702Engagement with this technology solution enables a preemptive form of1703permissions that is, in our experience, among the most consequential1704single contributions a stakeholder can make to proactive integrity1705monitoring.1706 The ProhiBet platform today supports more than 150 stakeholders,1707has performed close to one billion account checks, and has surfaced1708more than sixty thousand alerts. Each of those metrics reflect a1709category of harm that did not occur because the infrastructure to1710prevent it was in place.1711C. Education1712 IC360 recognizes the importance of education and awareness training1713for stakeholders across the sports betting, daily fantasy sports and1714event contract ecosystems. The availability of high-quality onsite and1715digital education resources to sports property stakeholders--athletes,1716coaches, officials, administrators, and support personnel--is, in our1717experience, among the most valuable interventions in preventing bad1718actors from compromising competition integrity.1719 Our curriculum covers, among other topics, integrity-related case1720studies, bad-actor profiles, and emerging vulnerabilities. We have1721delivered hundreds of presentations and have reached hundreds of1722thousands of athletes, coaches, and administrators, through both in-1723person training and our digital learning platform. The curriculum is1724regularly refreshed--for the reasons I described earlier about the pace1725at which the threat environment evolves--and is delivered in close1726partnership with conference compliance offices, league integrity teams,1727and individual member institutions. It is, like the other lines of work1728I have described, fundamentally a collaboration.1729D. The Centrality of Collaboration1730 I want to close this section on the same note with which I opened1731it; each of these three lines of work depends on collaboration.1732Integrity monitoring works because operators report information,1733leagues share intelligence, and regulators share casework. ProhiBet1734works because governing bodies designate, operators screen, and the1735infrastructure between them is trusted. Education works because leagues1736and institutions invest the time and attention of the people closest to1737competition. The value we believe IC360 brings is, in the end, the role1738we play in making the collaborative work of integrity possible at the1739scale and speed that the contemporary market requires.1740VI. Conclusion1741 I want to thank the Subcommittee again for its attention to these1742issues and for the opportunity to share these perspectives on behalf of1743IC360. The work of protecting the integrity of competition in an1744environment of rapidly expanding legal sports betting and sports event1745contracts, in our experience, is neither glamorous nor easily reducible1746to a single intervention. It is instead the steadfast commitment to1747ensuring that the right information moves to the right party at the1748right time, that the rules of every sport remain enforceable in complex1749markets, and that the people closest to competition have the awareness1750and the tools to surface concerns when they arise.1751 That work depends on leagues, operators, regulators, and1752independent integrity providers continuing to invest in collaboration1753with one another. I am thankful for the cooperation and collaboration1754we receive from our stakeholder partners across the sports betting and1755sports event contract ecosystems and for their willingness to adapt as1756these industries evolve. We are committed, for our part, to playing the1757role we are positioned to play. I welcome the Subcommittee's questions1758and look forward to supporting its continued attention to these issues1759in whatever way is most useful.17601761 Senator Blackburn. Congressman McHenry.17621763 STATEMENT OF HON. PATRICK McHENRY, SENIOR ADVISOR, THE1764 COALITION FOR PREDICTION MARKETS17651766 Mr. McHenry. Thank you, Chairman Blackburn, Ranking Member1767Hickenlooper, and distinguished members of the Committee. Thank1768you for the opportunity to testify, and thank you for the warm1769welcome on this side of the Capitol complex for a lowly former1770House member. I will say the chambers are much nicer over here.1771 [Laughter.]1772 Mr. McHenry. I appear before you on behalf of the Coalition1773for Prediction Markets, including U.S. regulated companies like1774Kalshi, Crypto.com, Robinhood, Coinbase, and Underdog. My1775experience as a former Chair of the House Financial Services1776Committee is grounded in financial markets regulation, market1777structure, and market integrity, not in sports betting or1778traditional sportsbooks, and that's the lens through which I1779will speak today.1780 Throughout my time in Congress, I focused on policies that1781expanded participation in financial markets for average1782everyday Americans, democratized access to financial tools1783historically reserved for large financial institutions,1784modernize our laws to foster innovation and facilitate capital1785formation, and strengthen confidence in market integrity.1786 My work with the Coalition for Predictive Markets is a1787continuation of those same principles. The question before us1788is not whether innovation should exist, but whether emerging1789market-based products will operate inside a transparent,1790federally regulated, onshore framework with robust consumer1791protections and oversight.1792 Casinos and traditional online sportsbooks and prediction1793markets are fundamentally different products governed by1794different legal frameworks and subject to different regulatory1795structures, and conflating the two does little to advance our1796shared goal of protecting consumers.1797 In a casino or sportsbook, the house sets the odds and1798profits when customers lose. In a prediction market exchange,1799participants trade with one another, while the platform earns1800transaction fees for facilitating the market. As a result, the1801incentives are fundamentally different. Prediction markets1802benefit from greater participation, liquidity, and more1803accurate information, not from consumers losing money.1804 That distinction was recently reinforced by the Third1805Circuit Court of Appeals, which held that sports events1806contracts are governed by the Commodity Exchange Act, and the1807Dodd-Frank Act. It's also important to recognize that sports1808event contracts are only one part of a much broader market, as1809categories like entertainment and politics grow quickly in1810share. These products are a part of a broader trend toward1811democratizing access to financial and informational tools that1812were once limited to institutions and large market1813participants.1814 Coalition members and coalition companies share the1815League's interest in protecting sports integrity and want to1816work collaboratively to address concerns and, where1817appropriate, share information and data that help protect the1818ecosystem. Customers must trust--must trust that suspicious1819activity will be identified and addressed appropriately. Unlike1820many sportsbooks and unregulated operators, coalition members1821do not offer micro bets that are particularly vulnerable to1822manipulation, such as wagers on the next pitch or the next1823play.1824 Notably, the sports integrity scandals that have made1825headlines in recent days and recent--recent years and recent1826days involving the NBA and MLB players using insider1827information and compromised game outcomes occurred on1828traditional online sportsbooks, not on prediction markets1829exchanges.1830 Coalition members are federally regulated and overseen by1831the CFTC and operate under extensive compliance obligations,1832including real-time surveillance, trade reporting requirements,1833Bank Secrecy Act compliance, know your customer and anti-money1834laundering controls, and comprehensive rulebook reviewed--1835rulebooks reviewed by Federal regulators.1836 They have extensive monitoring that is ongoing, and1837regulated prediction markets prohibit trading not only by1838individuals with material public and nonpublic information, but1839also by anyone capable of influencing the outcome of a1840contract, including players, coaches, referees, league1841employees, and even Members of Congress on political contracts.1842Protections that frankly go well beyond Federal securities laws1843requirements and beyond standards applied to traditional1844sportsbooks as well.1845 Importantly, customers on our platforms are also subject to1846uniform Federal protections that apply nationwide, exceeding1847the consumer protections of casinos and sportsbooks, which are1848governed by a patchwork of State laws. While not the focus of1849this hearing, coalition members also share concerns about1850contracts tied to war, assassination, and acts of violence, and1851those are proliferating in unregulated platforms, and we share1852the interest that those are not in the public interest. These1853kinds of contracts are already prohibited under U.S. law.1854 And welcome your questions today on the ways that we can1855enhance market integrity, protect the integrity of sports, and1856consumer protection writ large. I yield back.1857 [The prepared statement of Mr. McHenry follows:]18581859 Prepared Statement of Hon. Patrick McHenry, Former Chairman, House1860Financial Services Committee On Behalf of the Coalition for Prediction1861 Markets1862 Chairman Blackburn, Ranking Member Hickenlooper, and distinguished1863Members of the Subcommittee: thank you for the opportunity to testify1864today. It is a pleasure to be back among former colleagues.1865 I appear before you on behalf of the Coalition for Prediction1866Markets, which includes U.S.-regulated companies like Kalshi,1867crypto.com, Robinhood, Coinbase and Underdog. My experience as the1868Former Chairman of the House Financial Services Committee is grounded1869in financial markets regulation, market structure, and market1870integrity--not in sports betting or traditional sportsbooks--and that1871is the lens through which I will speak today.1872 Throughout my time in Congress, I focused on policies that expanded1873participation in financial markets for everyday Americans, democratized1874access to financial tools historically reserved for institutions,1875modernized our laws to foster innovation and facilitate capital1876formation, and strengthened confidence in market integrity. My work1877with the Coalition for Prediction Markets is a continuation of those1878same principles. The question before us is not whether innovation1879should exist, but whether emerging market-based products will operate1880inside a transparent, federally regulated framework with robust1881consumer protections and oversight.1882 Casinos/traditional online sportsbooks and prediction markets are1883fundamentally different products, governed by different legal1884frameworks and subject to different regulatory structures. Conflating1885the two does little to advance our shared goal of protecting consumers.1886 In a casino or sportsbook, the house sets the odds and profits when1887customers lose. In a prediction market exchange, participants trade1888with one another, while the platform earns transaction fees for1889facilitating the market. As a result, the incentives are fundamentally1890different: prediction markets benefit from greater participation,1891liquidity, and more accurate information, not from consumers losing1892money. Participants trade directly with one another and can enter or1893exit positions at any time, reflecting the peer-to-peer, market-based1894nature of these products.1895 That distinction was recently reinforced by the Third Circuit Court1896of Appeals, which held that sports event contracts are governed by the1897Commodity Exchange Act and Dodd-Frank.1898 It is also important to recognize that sports event contracts are1899only one part of a much broader market, as categories like1900entertainment and politics grow quickly in share. These products are1901part of a broader trend toward democratizing access to financial and1902informational tools that were once limited to institutions and large1903market participants.1904 Coalition companies share the leagues' interest in protecting1905sports integrity and want to work collaboratively to address concerns1906and, where appropriate, share information and data that help protect1907the ecosystem. Customers must trust that suspicious activity will be1908identified and addressed appropriately.1909 Unlike many sportsbooks and unregulated operators, coalition1910members do not offer micro-bets that are particularly vulnerable to1911manipulation, such as wagers on the next pitch or next play. Notably,1912the sports integrity scandals that have made headlines in recent1913years--involving NBA and MLB players, insider information, and1914compromised game outcomes--occurred on traditional online sportsbooks,1915not on prediction market exchanges.1916 Coalition members are federally regulated and overseen by the CFTC,1917and operate under extensive compliance obligations, including real-time1918surveillance, trade reporting requirements, Bank Secrecy Act1919compliance, know-your-customer and anti-money laundering controls, and1920comprehensive rulebooks reviewed by Federal regulators.1921 Just as securities and derivatives exchanges maintain surveillance1922systems designed to detect insider trading, market manipulation, and1923coordinated misconduct, federally regulated prediction markets are1924subject to extensive monitoring, reporting, and compliance obligations1925enforced by the CFTC. Regulated prediction market companies prohibit1926trading not only by individuals with material nonpublic information,1927but also by anyone capable of influencing the outcome of a contract--1928including players, coaches, referees, league employees, and even1929Members of Congress on political contracts--protections that go well1930beyond what Federal securities laws require and beyond the standards1931applied to traditional sportsbooks.1932 Importantly, customers on our platforms are also subject to uniform1933Federal protections that apply nationwide, exceeding the consumer1934protections of casinos and sportsbooks, which are governed by a1935patchwork of state laws.1936 While not the focus of this hearing, coalition members also share1937concerns about contracts tied to war, assassination, and acts of1938violence proliferating on unregulated platforms, and raise serious1939questions of public interest. These kinds of contracts are already1940prohibited under U.S. law, and our members do not offer them.1941 I want to conclude by reiterating that consumer protection and1942sports integrity matter deeply. We look forward to continuing to work1943with this Committee on bipartisan efforts to reinforce market integrity1944and protect consumers, safeguard sports integrity, and preserve1945American innovation. Thank you.19461947 Senator Blackburn. Dr. Levant.19481949 STATEMENT OF DR. HARRY LEVANT, DIRECTOR OF GAMBLING POLICY,1950 PUBLIC HEALTH ADVOCACY INSTITUTE19511952 Dr. Levant. Good morning. Chairman Blackburn, Ranking1953Member Hickenlooper, members of the Subcommittee, thank you for1954the privilege of testifying today and the privilege of joining1955this panel of distinguished witnesses.1956 Before I begin, take just a moment, Chairman Blackburn, and1957extend my thanks to you specifically. It was December 2024 when1958I testified before the Senate Judiciary Committee, and1959following that hearing, you and I had a brief exchange in which1960you said to me, I am going to remain involved in this issue to1961protect children and families. You have been a person of your1962word. The people of Tennessee benefit from that, and frankly,1963the people and families of America benefit from you remaining1964involved in this important issue. I thank you for that.1965 During that same conversation, I was joined by Senator1966Durbin, Senator Blumenthal, and I believe it was Senator1967Tillis, all expressing similar feelings. This is not a1968Republican issue or a Democrat issue. This is a human issue1969regarding an addiction crisis that needs to be addressed and1970prevented.1971 I am a gambling addict in recovery. I made my last bet on1972April 27, 2014, and survived a near-suicide attempt that same1973night. I made my first bet when I was 15 years old and went to1974the casino for the first time when I was 16. I never had a1975healthy relationship with gambling, but it would take 30 years1976till I fully understood that. It was in 2013 that my world was1977collapsing, much like Senator Hickenlooper described someone he1978knew, and I reached for my drug of choice, which was gambling,1979and I annihilated myself and everything in my wake.1980 I went through all of my money, all money I could borrow,1981and eventually all money I could steal. And on February 13,19822015, I stood in a courtroom in Philadelphia, Pennsylvania--not1983unusual for me since I'd been a lawyer for almost 25 years--but1984on this day, I stood in that courtroom as a defendant, and I1985pled guilty to 13 financial felonies, all related to my1986gambling addiction.1987 And during my sentencing hearing, I made a vow. And that1988vow was, if I could get well--and at that time it was a very1989big if--but if I could get well, I would dedicate whatever my1990future looked like to helping prevent--prevent being the1991operative word--other people, particularly young men, from1992suffering a similar fate.1993 That led me, after 4 or 5 years of treatment, to La Salle1994University in Philadelphia, where I earned a master's in1995professional clinical counseling, and upon graduating, began1996treating people suffering with gambling addiction. But I1997realized I wasn't doing anything on the prevention side. So I1998went back to school again, earned a doctorate in public policy,1999where my research was all about how to address prevention.2000 In the couple of minutes I have left, I want to address 32001issues and then look forward to a more robust conversation.2002Issue number one: Are prediction markets gambling? Most2003certainly yes, when it comes to sports contracts, and there's2004two simple reasons why. First, meets the very basic definition2005of gambling, which is defined as betting or staking something2006of value with consciousness of risk and hope of gain on the2007outcome of a game, contest, or an uncertain event whose result2008may be determined by chance or accident. That's gambling.2009That's what prediction markets do.2010 Next, to the end user, American public, there's absolutely2011no discernible difference. They are gambling. Most importantly,2012the prediction market companies themselves have acknowledged it2013is gambling. And I'll quote that later on.2014 I want to move forward, though, to integrity and offer to2015this committee a broader definition of integrity. Integrity2016isn't just can the American people trust the result of the2017Cubs-Cardinals game. Each of us now have to make that decision2018for ourselves because sports have sold their integrity to the2019gambling industry. There's a much broader issue here, which is2020how the sports leagues, including the NCAA, the owners, the2021players, have partnered for enormous financial gain in the2022billions with the gambling industry and prediction markets to2023sell their real-time data to the gambling industry to create2024something called micro-betting and its close cousins, Same-Game2025Parlays and prop bets.2026 This is what is crushing people and families, particularly2027young men. It is called micro-betting, and I'm here today to2028talk to you about it. Because I'm also here to issue a warning.2029The Senate doesn't do something, if Congress doesn't do2030something, our friends at the NFL have just in the last 32031months announced in partnership with their partners, a company2032called Genius Sports, the launch of a brand new product called2033BetVision, which they describe, ``As an immersive, intelligent,2034interactive tool to convert traditional fans into high2035engagement in-play bettors, which are significantly more2036profitable for Genius and for our sportsbook partners.''2037 They have their eyes on us and our children to convert into2038in-game micro-bettors. It is fundamentally dangerous. I look2039forward to speaking in more detail about it. Thank you.2040 [The prepared statement of Dr. Levant follows:]20412042 Prepared Statement of Dr. Harry Levant, MA, PCC, ICGC-I, Director of2043 Gambling Policy, Public Health Advocacy Institute2044Introduction--Prediction Markets Sports Contracts are Gambling Products2045 Chairman Cruz, Chairman Blackburn, Senator Cantwell, Senator2046Hickenlooper, and members of the Subcommittee on Consumer Protection,2047Technology, and Data Privacy, thank-you for the opportunity to testify2048about this timely and consequential issue and for your consideration of2049the mental health consequences of the unprecedented expansion of sports2050gambling in America. Make no mistake, the unprecedented expansion of2051sports gambling, through online platforms and prediction markets, has2052created a mental health crisis similar to what the country experienced2053with the opioid industry. We stand at the precipice of a mental health2054disaster impacting the lives of children, young adults, individuals,2055and families throughout the country. Time is of the essence for2056Congress to recognize the magnitude of the problem and take decisive2057action to install common sense Federal safety standards governing2058sports gambling in America.2059 Before examining the scope and magnitude of this mental health2060crisis it seems prudent to address the procedural question of whether2061prediction markets offering action on sporting events constitute2062gambling. With appropriate respect to our Federal and state courts,2063which are presently addressing the issue in several jurisdictions,2064there is no doubt that prediction market contracts on sports are2065gambling. There is a plethora of reasons that prediction markets on2066sports are gambling. I will highlight the overriding factors which2067demonstrate that sports prediction markets constitute gambling on2068sports.2069 Sports prediction markets meet the universally accepted and plain2070meaning definition of gambling. Sports gambling is defined as the2071betting or staking of something of value, with consciousness of risk2072and hope of gain, on the outcome of a game, a contest, or an uncertain2073event whose result may be determined by chance or accident or have an2074unexpected result by reason of the bettor's miscalculation.\1\ This2075definition precisely describes what prediction markets offer to the2076public in the form of sports gambling futures contracts. The public is2077induced by a market maker to wager and risk money on the unknown2078outcome of a sporting event or micro portion thereof. The financial2079risk in pursuit of greater reward predicated on an unknown outcome in a2080game, contest, or match is gambling.2081---------------------------------------------------------------------------2082 \1\ Glimne, Dan. ``gambling''. Encyclopedia Britannica, 13 May.20832026, https://www.britannica.2084com/topic/gambling. Accessed 15 May 2026.2085---------------------------------------------------------------------------2086 Prediction market companies wrongly suggest that because the2087``house'' takes its cut off the top of the wager rather than on the2088outcome of the game, sports predictions somehow do not constitute2089gambling. The fatal flaw in this argument is well-illustrated by the2090game of poker. It is played in casinos all over the world. In every2091casino, the house takes its cut (known as the ``rake'') off the top of2092each hand/pot. This is the same model utilized by prediction market2093companies offering gambling contracts on sports. It is also like2094parimutuel gambling where bets are pooled and divided according to2095outcome minus what the house keeps as its fee or ``takeout.''2096 Next, for the American public, there is no discernable difference2097between prediction markets and online gambling companies when it comes2098to sports gambling. Both are gambling; plain and simple. Wagers are2099placed on sporting events or micro portions thereof; there are winners2100and losers; access to action never stops; and the house (the prediction2101market platform) always wins. Prediction markets offering sports2102futures contracts deliver the known addictive product of gambling\2\ to2103the public in an increasingly dangerous form and doing so in2104partnership with other gambling companies and the sports leagues2105themselves. Such is the gambling business model.2106---------------------------------------------------------------------------2107 \2\ American Psychiatric Association. (2013). Diagnostic and2108statistical manual of mental disorders (5th ed.). doi.org. Disorder2109code 312.31 (F63.0).2110---------------------------------------------------------------------------2111 The gambling industry itself has conclusively demonstrated that2112sports prediction markets constitute sports gambling. Sports gambling2113market leaders DraftKings and FanDuel have quickly become the first two2114online sports gambling platforms to openly embrace prediction markets2115and target the public with this latest form of sports gambling.2116According to DraftKings CEO, Jason Robbins, prediction markets are2117sports gambling:21182119 Our core business is strong, and profitability is inflecting.2120 That gives us the firepower to press our advantage in2121 Predictions. With our Super App, market making capabilities,2122 proprietary exchange, and combos coming together, we intend to2123 establish a leadership position in Sports Predictions before2124 year-end . . .''21252126 . . . We have also launched market making, which unlocks access2127 to an additional layer of the value chain. Market making is2128 already generating a positive return for us. In the coming2129 weeks, we expect to launch our proprietary exchange and to2130 begin offering combos. Together, these moves will accelerate2131 innovation, improve the customer experience, and strengthen our2132 economics.\3\2133---------------------------------------------------------------------------2134 \3\ Steve Ruddock, ``Burning Down the House: Prediction markets are2135peer-to-peer, but increasingly the ``peer'' on the other end is looking2136more and more like a sportsbook.'' Straight to the Point. May 11, 2026.2137https://straighttothepoint.substack.com/p/burning-down-the-house21382139 Mr. Robbins is not alone in his direct acknowledgement that sports2140prediction markets constitute gambling on sports. Peter Jacobson, CEO2141of Flutter, Inc (parent of FanDuel) is even more bold with his clear2142---------------------------------------------------------------------------2143assertion that prediction markets are gambling products:21442145 We believe our world-class, proprietary pricing capabilities2146 can also unlock a significant market-making opportunity. In2147 April, we began trialing market-making services on a major,2148 third-party prediction market platform. Early indicators have2149 been encouraging, and we expect to launch our market-making2150 platform in the coming months . . .21512152 . . . market making is an exciting opportunity, and I think it2153 is a great way to showcase the quality of our pricing2154 capabilities that we have in the business more generally. When2155 we think about the opportunities, it is principally around2156 combos, and we are going to be market making on as many2157 platforms as we can. I think it is a good opportunity for us to2158 monetize our pricing expertise in doing so.'' \4\2159---------------------------------------------------------------------------2160 \4\ Id.21612162 This aggressive move by FanDuel to expand its sports gambling with2163prediction markets is a further push by its owner, Flutter, the world's2164top sports gambling company, to dominate sports gambling here in2165America. In Europe, Flutter has launched BetFair Predicts, a global2166prediction market enterprise offering gambling contracts on sports,2167politics, and entertainment.\5\ The stated purpose of BetFair Predicts2168is to coordinate with FanDuel in America and offer worldwide sports2169prediction market gambling.\6\ This expands Flutter/FanDuel's role in2170prediction market gambling by positioning the company as market makers,2171i.e., the gambling house setting the odds for sports contracts.\7\ This2172is yet another example of how the gambling prediction markets are2173inherently part of the gambling industry business model.2174---------------------------------------------------------------------------2175 \5\ Rob Fletcher, ``Flutter bet launches Betfair prediction markets2176product.'' Next IO News, April 9, 2026. https://next.io/news/2177prediction-markets/flutter-beta-launches-betfair-prediction-markets/2178 \6\ Justin Byers, ``Flutter CEO vows to `sharpen' execution as2179FanDuel undergoes changes.'' SBC Americas, May 12, 2026. https://2180sbcamericas.com/2026/05/12/flutter-ceo-fanduel-changes/2181 \7\ Finance Magnates, ``FanDuel owner Flutter is making money from2182prediction markets as a market maker.'' Trading View News, May 7, 2026.2183https://www.tradingview.com/news/finance2184magnates:43599d90b094b:0-fanduel-owner-flutter-is-making-money-from-2185prediction-markets-as-a-market-maker/2186---------------------------------------------------------------------------2187 Even more chilling is how brazenly Flutter/FanDuel seeks to extract2188more losses from the American public. In an investor day conference,2189the FanDuel CEO and CFO openly discussed strategies to target gamblers2190with bonus bets to keep people more aggressively engaged with its2191sports gambling/prediction markets:21922193 ``If we look back at last year, it was very evident, with the2194 benefit of hindsight, that we were slightly inefficient in our2195 generosity approach . . .21962197 . . . We've got our team from sports betting working with our2198 financial team to make our generosity deployment more2199 efficient, so we get more bang for our buck in the U.S.'' \8\2200---------------------------------------------------------------------------2201 \8\ Justin Byers, ``Flutter CEO vows to `sharpen' execution as2202FanDuel undergoes changes.'' SBCAmericas, May 12, 2026. https://2203sbcamericas.com/2026/05/12/flutter-ceo-fanduel-changes/22042205 This means that FanDuel plans to expand its online sports and2206prediction market gambling loyalty program to all online sports2207wagering markets by the start of the upcoming NFL season.2208 To remove even a scintilla of doubt as to whether prediction2209markets constitute gambling, we need to look no further than the2210uncontroverted data regarding gambling losses. Thus far in 2026, people2211in America have lost more than $100 million on Kalshi prediction2212markets just by gambling on sports parlays (which Kalshi calls2213``combos'').\9\ The hold rate (amount won by Kalshi from these wagers)2214is an astonishing 15 percent and sports parlays now account for nearly221523 percent of wagers on the Kalshi platform.\10\2216---------------------------------------------------------------------------2217 \9\ Bernstein and Akabas,'' Kalshi retail bettors have lost $100m+2218on parlays this year.'' Sportico, May 13, 2026. https://2219www.sportico.com/business/sports-betting/2026/kalshi-parlays-retail-2220bettor-losses-rfq-1234894471/2221 \10\ Id.2222---------------------------------------------------------------------------2223 In January 2025, Kalshi launched sports gambling futures contracts2224in all fifty states.\11\ This was despite the fact that sports gambling2225was, at that time, legal in only thirty-eight states.\12\ At its2226launch, Kalshi boldly proclaimed itself the ``First Nationwide Legal2227Sports Betting Platform.'' \13\ Advertising on social media, including2228Instagram and Tik-Tok, announced the arrival of ``The First Nationwide2229Legal Sports Betting Platform,'' making ``Sports Betting Legal in all223050 States on Kalshi.'' \14\2231---------------------------------------------------------------------------2232 \11\ Purdum and Surendran, ``How Kalshi and prediction markets are2233disrupting sports betting.'' ESPN, June 2, 2025. https://www.espn.com/2234espn/betting/story/_/id/45377686/kalshi-prediction-markets-disrupt-2235sports-betting2236 \12\ Id.2237 \13\ Benjamin Schiffrin, ``Everyone should go on Kalshi and see for2238themselves whether it looks like sports betting or derivatives2239trading.'' Better Markets, May 6, 2026. https://better2240markets.org/analysis/everyone-should-go-on-kalshi-and-see-for-2241themselves-whether-it-looks-like-sports-betting-or-derivatives-trading/2242 \14\ Ho Chunk Nation v Kalshi, Inc. UNITED STATES DISTRICT COURT2243FOR THE WESTERN DISTRICT OF WISCONSIN, No. 25-cv-698 (August 28, 2025).2244---------------------------------------------------------------------------2245 Initially, the online gambling industry shrugged off the launch of2246sports gambling futures contracts. This did not last long as Kalshi and2247other prediction market platforms became increasingly aggressive in2248their marketing approach to sports gambling futures contracts. In2249November 2025, Fanatics Sportsbook, FanDuel, and DraftKings resigned2250membership in the American Gaming Association (``AGA'') because of a2251desire to add sports prediction market gambling to their online2252gambling products.\15\ Just one month later, all three online gambling2253platforms added prediction market gambling making sports gambling2254available in all fifty states and to anyone as young as eighteen.\16\2255---------------------------------------------------------------------------2256 \15\ Contessa Brewer, ``FanDuel, DraftKings abandon AGA trade group2257as rift over sports prediction markets grows.'' CNBC, November 18,22582025. https://www.cnbc.com/2025/11/18/fanduel-draftkings-abandon-aga-2259memberships.html2260 \16\ Tom Nightingale, ``FanDuel Predicts live in all 50 states,2261adds sports in California and Texas.'' SBCAmericas, January 15, 2026.2262https://sbcamericas.com/2026/01/15/fanduel-predicts-all-50-states/2263---------------------------------------------------------------------------2264 To further support the aggressive move to add prediction market2265gambling to their portfolio of online products, DraftKings, Fanatics,2266and FanDuel joined BetMGM and Bet365 as members of the gambling2267industry trade and lobbying group known as the Sports Betting Alliance2268(SBA) to advocate for sports gambling, including prediction market2269sports gambling, in all fifty states.\17\2270---------------------------------------------------------------------------2271 \17\ Sports Gambling Alliance, ``Mission Statement.'' https://2272sportsbettingalliance.org/about/2273---------------------------------------------------------------------------2274 As of May 2026, prediction markets are offering a wide variety of2275sports gambling contracts in every state. This now includes parlays2276(``combos''), same-game parlays and numerous forms of micro betting.2277During the recently completed 2025-26 football season, gambling on2278sports contracts accounted for nearly 50 percent of all action on the2279Kalshi platform.\18\ It is presently estimated by the gambling industry2280that on a weekly basis nearly 80 percent of all action on the2281prediction market platforms are sports gambling contracts.\19\2282---------------------------------------------------------------------------2283 \18\ Dan Bernstein, ``DraftKings, Flutter stocks fall amid Kalshi2284parlay progress.'' Sportico, September 30, 2025. https://2285www.sportico.com/business/sports-betting/2025/draftkings-flutter-stock-2286kalshi-parlay-1234872516/2287 \19\ Ryan Butler, ``Prediction Market Volume Quadrupled in Past 22288Years, Report Finds.'' Covers, March 13, 2026. https://www.covers.com/2289industry/prediction-market-volume-quadrupled-in-past-two-years-report-2290finds-march-13-20262291---------------------------------------------------------------------------2292 For the American public this amounts to a clear, convincing, and2293unmistakable conclusion; prediction markets, including Kalshi,2294Polymarket, DraftKings, FanDuel, and Fanatics have delivered online2295sports gambling to all fifty states, and the product is now available2296to youth starting at age eighteen.2297 There should be no doubt that sports prediction markets constitute2298gambling. Accordingly, all future references to the gambling industry2299herein include prediction markets.2300Sports Gambling and Integrity of the Leagues--2301 This hearing is to examine among other issues, the impact of2302gambling and prediction markets on the integrity of sports in America.2303There can be no dispute; any business enterprise that gambling touches2304inherently undermines its integrity. This is particularly true when the2305business enterprise at issue is the American institution of2306professional and collegiate sports. This is not merely my opinion. Heed2307the words of National Football League (NFL) Commissioner Roger Goodell2308from his sworn deposition testimony:23092310 Q. And there you state that your most important responsibility2311 is maintaining the integrity of professional football and2312 preserving public confidence in the NFL. What threats are there2313 to the integrity of pro football in the United States?23142315 A. Gambling would be number one on my list.\20\2316---------------------------------------------------------------------------2317 \20\ Deposition transcript R. Goodell, NCAA v Christie, UNITED2318STATES DISTRICT COURT DISTRICT OF NEW JERSEY Civil Action No. 3: 12-cv-231904947-MAS-LHG23202321 This was not an isolated statement from the NFL Commissioner. In a2322subsequent affidavit filed, under oath and with penalty of perjury, the2323Commissioner affirmed that relationships with gambling companies2324severely damage the integrity and fabric of sports and irreparably harm2325long-standing bonds and cultural experiences enjoyed by sports fans and2326---------------------------------------------------------------------------2327families:23282329 The NFL cannot be compensated in damages for the harm that2330 sports gambling poses to the goodwill, character, and integrity2331 of NFL Football, and to the fundamental bonds of loyalty, and2332 devotion between fans and teams that the league seeks to2333 maintain. Once the character and integrity of NFL Football have2334 been compromised, and the bonds of loyalty and devotion between2335 fans and teams have been broken, NFL Football will have been2336 irreparably injured in a manner that cannot be calculated in2337 dollars (emphasis added).\21\2338---------------------------------------------------------------------------2339 \21\ Murphy v. National Collegiate Athletic Association, No. 16-2340476, 584 U.S. 453 (2018).23412342 Although I am quoting NFL Commissioner Goodell, the recognition2343that gambling touching professional or collegiate sports inexorably2344destroys the integrity of our treasured athletic institutions was2345shared by the commissioners of every professional, collegiate, and2346amateur sports organization. This was recently addressed in the context2347of prediction markets by Alex Roth, Esq., assistant general counsel to2348---------------------------------------------------------------------------2349the National Basketball Association:23502351 The integrity risks posed by sports prediction markets are more2352 significant and more difficult to manage than those presented2353 by legal, regulated sports gambling,'' \22\2354---------------------------------------------------------------------------2355 \22\ Roberts and Schiffer, ``NBA views prediction markets as the2356same as sports betting.'' FrontOfficeSports, February 14, 2026. https:/2357/frontofficesports.com/adam-silver-nba-sees-prediction-markets-same-as-2358sports-betting/23592360 The word ``integrity'' must remain at the epicenter of the2361discussion when considering the urgent need for Federal oversight of2362the sports gambling industry, including prediction markets.2363 Integrity is defined as ``the quality of being honest and having2364strong moral principles that you refuse to change.'' \23\ Obviously,2365the sports leagues failed the moral principles that you refuse to2366change piece of the integrity test as the lure of taking fans' gambling2367money quickly motivated every conceivable sports league, and the2368National Collegiate Athletic Association (NCAA)to reverse long-standing2369opposition to gambling and accepting billions in new revenue by2370entering into previously unthinkable deals with the gambling industry2371which have led to their direct involvement in creating gambling2372products.2373---------------------------------------------------------------------------2374 \23\ Cambridge Dictionary (2026). https://dictionary.cambridge.org/2375us/dictionary/english/integrity2376---------------------------------------------------------------------------2377 When it comes to the urgent need to protect people and families,2378the lack of the leagues' moral principles is only a small part of the2379integrity story. Far more dangerous is the lack of candor2380systematically, repeatedly, and intentionally demonstrated by the2381sports leagues and the NCAA regarding the scope of their relationships2382with the gambling industry. This has resulted in the sports leagues and2383NCAA becoming full partners in the gambling industry and unleashing an2384entirely different, inherently dangerous, and more highly addictive2385form of online gambling known as micro betting on the American public.2386Micro betting, and its close cousins, ``prop bets'' and ``same game2387parlays'' has enriched the leagues and the NCAA while simultaneously2388causing a new American mental health and addiction crisis. While the2389most at risk are teenagers and younger adults, the harm is quickly2390metastasizing across all demographics.2391 To borrow an unfortunate phrase, the worst is yet to come. In2392development, ready to launch, and financially backed by the NFL, is an2393even faster and more lethal form of AI-driven micro betting2394specifically designed to convert traditional fans into constant micro2395bettors.\24\ Because the sports leagues, the NCAA, prediction markets,2396and the online gambling companies have not been honest with the public2397and policymakers; the development of this new and more dangerous form2398of online gambling is rolling out without any Federal oversight. It is2399magnifying the mental health crisis and must be addressed forthwith at2400the Federal level.2401---------------------------------------------------------------------------2402 \24\ Matt Fleckenstein, ``One system. Endless solutions.'' Genius2403Sports Investor Day/Genius IQ. https://www.youtube.com/2404watch?v=L6ZWQImpYNw2405---------------------------------------------------------------------------2406 Thus, I shall devote much of my testimony to uncovering the truth2407regarding the dangerous and somewhat clandestine financial2408relationships between the gambling industry and the sports leagues,2409including the NCAA. Once Congress and the American people have a clear2410and accurate understanding of how the public is being targeted with a2411known addictive product which is designed, engineered, and delivered by2412the sports leagues in partnership with the gambling industry, there2413will be an immediate and powerful call for Federal oversight, reform,2414and comprehensive regulation of the gambling industry and its sports2415and technology partners. We are in the early years of a new and fast-2416growing mental health crisis caused by the newest and least understood2417online sports gambling products. Lives and families are in the balance.2418The time is now for Congress to exercise its lawful authority by2419passing legislation to bring Federal safety standards to the online2420sports gambling industry.2421The Mental Health and Sports Integrity Crisis--2422 Let me be clear. I am not opposed to sports gambling. However, I am2423vehemently opposed to and deeply concerned about what has transpired in2424just eight years since the United States Supreme Court struck down the2425Professional and Amateur Sports Protection Act (``PASPA'').\25\2426---------------------------------------------------------------------------2427 \25\ Murphy v. National Collegiate Athletic Association. 138 S. Ct.24281461 (2018).2429---------------------------------------------------------------------------2430 The sports gambling industry has expanded beyond a single industry2431to become the ``gambling establishment'' comprised of once unthinkable2432business partnerships including gambling companies; prediction markets,2433sports leagues, teams, owners, and athletes; the world's largest media2434and technology companies; social media; the AI industry; and state2435governments themselves.\26\ All are acting in concert to deliver online2436gambling at light speed and to ensure that access to sports gambling2437action never stops. This new and AI-fueled business model is resulting2438in increased gambling addiction and gambling-related harm.2439---------------------------------------------------------------------------2440 \26\ Orford, J. (2017). The Gambling Establishment and the Exercise2441of Power: A Commentary on Hancock and Smith. International Journal of2442Mental Health and Addiction, 15(6), 1193 1196. https://doi.org/10.1007/2443s11469-017-9781-8.2444---------------------------------------------------------------------------2445 Medical science has recognized for more than twelve (12) years that2446gambling is a known addictive product, and gambling disorder is an2447addiction similar in nature to heroin, opioids, tobacco, alcohol, and2448cocaine (DSM-5, 2013). With every other addictive product or substance,2449the Federal government regulates the advertising, promotion,2450distribution, speed, and consumption of the product. This is to prevent2451harm and protect the public from danger when an industry is marketing2452and distributing an addictive and potentially dangerous product.2453 With gambling, the exact opposite is occurring. This is the core of2454our new sports integrity nightmare. The sports leagues have further2455embraced avarice by selling real-time data to the gambling industry to2456create high intensity gambling products of a kind we have never seen2457before. These data agreements enrich the leagues and serve as the blood2458and oxygen supply for instant and non-stop micro betting. The gambling2459industry and sports leagues have become partners to deliver constant2460and non-stop gambling action on every phone, tablet, and computer.2461Frighteningly, the gambling and prediction market companies, in concert2462with the sports leagues and AI companies, are poised to launch an even2463more destructive product with touch screen live micro betting. This2464will permit 24-hour nonstop gambling on every conceivable micro event2465by merely touching the screen of your phone, tablet, or use a mouse or2466remote on your computer or television. It will usher in a world of non-2467stop micro betting, at the speed of a slot machine, without ever2468leaving your bed.2469 With the use of cutting-edge technology, incredible computing2470power, artificial intelligence, and billion-dollar data partnerships,2471the gambling industry and sports leagues are poised to turn every2472electronic device into a 24/7 gambling machine in conscious disregard2473of the mental health and addiction epidemic that will surely follow. In2474the crosshairs of this impending epidemic are children and young adults2475being victimized by the unrelenting power of technology and the2476normalization of sports gambling. Without leaving our homes, each game,2477contest, or match from every corner of the globe will deliver constant2478access to highly addictive micro betting and non-stop gambling action.2479The human brain is not built to handle constant and unrelenting2480exposure to an addictive product. However, this is exactly what the2481gambling companies and sports leagues have developed and are prepared2482to launch on the American public.\27\2483---------------------------------------------------------------------------2484 \27\ Nick Watt, ``How the NFL is betting big on gambling.'' CNN's2485The Lead with Jack Tapper, March 29, 2026. https://www.cnn.com/2026/03/248619/business/video/gambling-sports-betting-nfl-genius-lead-jake-tapper2487---------------------------------------------------------------------------2488 The chasing of action and/or losses is a crucial part of the2489diagnostic criteria for gambling addiction.\28\ From my on clinical2490experience, I have found that chasing action is also the symptom most2491closely related to suffering harm. Chasing action is something I see2492every day I meet with clients and families suffering the most dire and2493devastating effects of gambling and gambling addiction. The effects I2494see every day in my clinical work as a therapist include financial2495ruin, desperation, suicidal ideation, depression, anxiety, career loss,2496divorce/separation, criminal behavior, homelessness, cooccurring2497alcohol and substance disorders, and deep despair. With online sports2498gambling, delivering constant action for users to chase is an inherent2499part of the gambling industry and sports leagues' business model. It is2500exactly what online sports gambling is designed to deliver, and it is,2501tragically, ruining the lives of many people and countless families.2502---------------------------------------------------------------------------2503 \28\ Rennert, L., Denis, C., Peer, K., Lynch, K. G., Gelernter, J.,2504& Kranzler, H. R. (2014). DSM-5 gambling disorder: Prevalence and2505characteristics in a substance use disorder sample. Experimental and2506Clinical Psychopharmacology, 22(1), 50-56. https://doi.org/10.1037/2507a0034518.2508---------------------------------------------------------------------------2509 Inducing younger and more vulnerable people to become addicted to2510gambling has become part of the gambling and sports industry business2511model. The leading AI company in this space is Genius Sports. One of2512the largest equity shareholders in Genius is the National Football2513League and its 32 team owners. In partnership with the NFL, Genius2514Sports has developed BetVision; an interactive touchscreen betting2515platform installed in streaming services. The stated purpose of2516BetVision is to deliver a seamless real-time non-stop micro betting2517platform where merely touching the screen will permit gambling on the2518actions of every player. BetVision tracks the tendencies of each2519individual gambler and provides overwhelming personal data to the2520gambling companies for the stated purpose of targeting people with2521individually crafted gambling products and promotions.\29\2522---------------------------------------------------------------------------2523 \29\ Matt Fleckenstein, ``FIVE insights from our CPO: Why BetVision2524is the future of in-play.'' Genius Sports, September 8, 2025. The SPO2525stated: ``By leveraging user behaviour and a smart understanding of the2526live match state, BetVision populates relevant betting markets and2527statistics to help users decide on their next bet and track the2528progress of ongoing ones.'' https://www.geniussports.com/content-hub/2529betvision-future-of-live-betting/2530---------------------------------------------------------------------------2531 The NFL and Genius Sports describe the goal of BetVision as an2532immersive intelligent interactive tool to convert traditional fans into2533high engagement in-play bettors . . . which are significantly more2534profitable for Genius and for our sportsbook partners.\30\ The2535dangerous and intentional lack of candor does not stop with the NFL2536investing in BetVision. Under the guidance of Commissioner Goodell, the2537NFL recently sold all of its streaming content services to Disney. In2538exchange, the NFL received a 10 percent ownership of ESPN.\31\ The2539strategy underlying this new partnership with Disney/ESPN is to deliver2540sports gambling featuring BetVision through streaming services such as2541ESPN Plus. Thus, the NFL and Genius Sports have developed the2542technology to seamlessly deliver non-stop micro betting and prediction2543markets with the aim of converting even casual fans into constant in-2544game gamblers.2545---------------------------------------------------------------------------2546 \30\ See supra note 24.2547 \31\ The Walt Disney Company, ``ESPN to Acquire NFL Network and2548Other Media Assets from the NFL in Exchange for a 10 percent Equity2549Stake in ESPN.'' August 5, 2025. https://thewaltdisneycompany.com/news/2550espn-nfl-agreement/2551---------------------------------------------------------------------------2552 The notion that our sports leagues and the gambling industry are2553openly seeking to convert fans into high engagement micro bettors is2554alarming. On its face, it resembles the villainous plot of a movie. But2555this is really happening right now: The design and delivery of a2556dangerous and addictive product for the purpose of wildly enriching a2557powerful syndicate while knowingly inflicting untoward harm on society.2558 The inclusion of prediction markets in the gambling industry2559syndicate takes the risk of an addiction epidemic to ever more2560destructive levels. Prediction markets, by labeling their sports2561gambling product as ``investment products'' are presently seeking to2562act in total disregard of state laws governing gambling. This means2563that gambling consumer protection laws enacted by states to protect the2564public are disregarded by the prediction markets.2565 This rejection of state consumer protections and the concurrent2566expansion of prediction market gambling to teenagers and adults in all2567fifty states represents a significant expansion by the sports leagues2568into the gambling industry. In October 2025, the National Hockey League2569(NHL) struck a massive deal with Kalshi and Polymarket to sell real2570time and historical data to fuel the advancement of micro betting,2571parlays, and same-game parlays on prediction market platforms.\32\ The2572NHL is not alone in striking prediction market data deals.2573---------------------------------------------------------------------------2574 \32\ Bill King, ``How the NHL got comfortable with prediction2575markets.'' Sports Business Journal, October 27, 2025. https://2576www.sportsbusinessjournal.com/Articles/2025/10/27/how-the-nhl-got-2577comfortable-with-prediction-markets/2578---------------------------------------------------------------------------2579 In March 2026, Major League Baseball signed an ``exclusive data2580deal'' with offshore prediction market gambling company Polymarket.\33\2581Additional sports gambling data deals with prediction market companies2582have been signed by Major League Soccer, and the Ultimate Fighting2583Championship (UFC).\34\ The National Basketball Association (NBA) is in2584the final stage of talks to sell its data to the prediction market2585industry.\35\ The NFL claims a neutral position on prediction markets2586data deals. Meanwhile the league financially benefits from prediction2587markets because of its ownership stake in Genius Sports; a company2588aggressively engaged with prediction market companies as business2589clients.\36\ These complex and lucrative data deals have now resulted2590in the introduction of Polymarket ``bonus bet'' offers for sports2591gambling including MLB and the NBA.\37\2592---------------------------------------------------------------------------2593 \33\ Ben Horney, ``MLB makes multiyear prediction-market deal with2594Polymarket.'' March 19, 2026. https://frontofficesports.com/mlb-makes-2595multiyear-prediction-markets-deal-with-polymar-2596ket/2597 \34\ Id.2598 \35\ Ben Horney, ``NBA is in talks with Kalshi and Polymarket.''2599Front Office Sports, April 16, 2026. https://frontofficesports.com/nba-2600is-in-talks-with-kalshi-and-polymarket/2601 \36\ Jack Davidson, ``Betting Overview & Prediction Markets2602Update.'' Genius Sports, January 2026. https://www.youtube.com/2603watch?v=0XFP_bTNdFA; Genius Sports Investor Day ``Panel Discussion with2604Mark Lockem Roger Godell, and Steve Bornstein.'' January, 2026. https:/2605/www.youtube.com/watch?v=AP3gJ0_UWcw2606 \37\ Michael O'Nair, ``Polymarket Promo Code STREET: Get upgraded2607$50 bonus for MLB, PGA, NBA playoffs.'' Russell Street Report, May 14,26082026. https://russellstreetreport.com/2026/05/14/sports-betting/2609polymarket-promo-code-street-get-upgraded-50-bonus-for-mlb-pga-nba-2610playoffs/2611---------------------------------------------------------------------------2612 The expansion of prediction market gambling to include financial2613partnerships with the most powerful sports leagues has dramatically2614increased the risk of addiction specifically with young men. Prediction2615markets are structured in ways that encourage continuous, and2616potentially addictive, engagement. While presented as a financial2617exchange in which users ``trade'' on future events, the prediction2618market design actively encourages patterns of use associated with2619gambling addiction. Most notably, they include features that reinforce2620repeated use through rapid feedback and constant stimulation. As one2621commentator explains ``the platforms demonstrate sophisticated2622understanding of sensation-seeking behavior in their design. For2623instance, real-time price movements, instant feedback mechanisms, and2624celebration pop-ups create a constant stream of novel stimuli that can2625trigger dopamine responses.'' \38\2626---------------------------------------------------------------------------2627 \38\ Sharon Rabinovitz & Nizan G. Packin, All Bets Are On:2628Addiction, Prediction, Regulation, and the Future of Financial2629Gambling, 36 Fordham Intellectual Prop., Media, Entm't L. J. 1472630(2025).2631---------------------------------------------------------------------------2632 The prediction market then packages this action as a form of2633investment rather than gambling to circumvent state regulatory2634requirements for gambling operators. This is intended not only to avoid2635state regulation, but also to attract an ever more vulnerable group of2636gamblers to participate in the action. States historically set twenty-2637one as the minimum legal age for gambling. The prediction markets2638ignore this public safety law and openly tout their gambling product as2639available to anyone eighteen or older.2640 Next, states with legalized sports gambling will typically mandate2641self-exclusion programs as part of the package of consumer protection2642laws. The prediction markets turn a blind eye to self-exclusion2643programs and readily welcome all takers, including those battling to2644overcome gambling addiction. The labeling of prediction markets as an2645investment rather than gambling is another predatory tactic designed to2646attract the most vulnerable users to these platforms. It is not2647difficult to imagine how people struggling with a gambling problem2648would be drawn to prediction markets under the false premise that they2649are not gambling but merely investing. Ignoring the basic form of2650safety enhancement by pretending that prediction markets are not2651gambling is not only self-serving, but vile and predatory. Yet it is2652being openly encouraged by prediction market operators.2653 Only forty states have legalized sports gambling. For a variety of2654reasons, the people in the other ten states have chosen to reject2655sports gambling. However, the prediction markets, including Kalshi,2656Polymarket, DraftKings, FanDuel, and Fanatics disregard the will of the2657people in these ten states and are delivering sports gambling in open2658defiance of the law and the public good. We are literally witnessing2659this segment of the gambling industry acting as though it is entirely2660above the law. This defiance of the law extends to taxation. The2661prediction markets have unilaterally decided that state laws do not2662apply to their gambling products.2663 Thus, in addition to rejecting state consumer protection2664regulations, these companies refuse to pay state taxes on the enormous2665profits they generated by prediction market gambling. Yet, the economic2666and mental health consequences and costs are experienced in the states.2667 This brings us back to the crucial issue of integrity of the sports2668leagues. This is not an issue of whether the public can trust the2669outcome of any particular game. The moment the leagues decided to2670embrace and accept gambling money, they inexorably called into question2671the sanctity of their sports and the joy of athletic competition. This2672was a conscious and deliberate decision on the part of the leagues: to2673forsake their historical value to society for the ability to extract2674more money from their fans' bank accounts to their bottom lines. What2675the leagues presently attempt to casually portray as ``fan engagement''2676is a calculated effort to chase the revenue offered by data deals with2677gambling and prediction market operators. Sports once belonged to the2678American public. Sports has, for centuries, belonged to American2679families and shared by grandparents, parents, children, and sibling.2680Those days are gone. Sports have sold their soul to the gambling2681industry by choosing to become the equivalent of a non-stop slot2682machine.2683 Thus, whether the American public can still trust and value the2684truth, morality, and wholesomeness of athletic competition is a2685decision each of us will make for ourselves. Such is the bed the sports2686leagues have created. Claims that the leagues are poised to police2687themselves are not sufficient.2688 As for the self-serving claim that the leagues must sell their data2689to gambling operators in order to ensure self-surveillance and protect2690the integrity of the game, this is beyond insulting to the public and2691our elected leaders. One need look no further than the plethora of2692professional and collegiate scandals over the last 18 months to see the2693overwhelming evidence that the new world order of in-game micro betting2694has resulted in far too many compromised moments. Companies such as IC-2695360 (a presenter during this hearing) will proclaim that it monitors2696each game and contest for signs of irregularity with betting patterns.2697Considering the still mounting number of alleged cheating scandals in2698the past year that it failed to prevent, with all due respect, this is2699not the answer.2700 What must be acknowledged are the American lives put at risk by2701these alleged cheating scandals. It should be noted that each of the2702people accused are innocent until proven guilty. Thus far, every2703cheating scandal involves micro betting, and this is not surprising.2704Micro betting is an entirely new and inherently dangerous gambling2705product which permits action every 10 seconds or faster. The2706opportunities for gambling to taint and tarnish sports have grown to2707countless numbers and many of the scandals involve student athletes2708under the age of twenty-one. The leagues and the NCAA have created this2709problem. The people getting caught in the trap are increasingly younger2710and often student-athletes. The leagues and the NCAA designed this2711model in partnership with the gambling industry. For the leagues to now2712claim they need to protect their image is disingenuous and problematic.2713 It bears noting that the NCAA is complicit and equally lacking2714integrity when it comes to truth and candor. Previously, the2715Commissioner of the NCAA, Governor Charlie Baker came before the Senate2716Judiciary Committee purporting to request help reining in proposition2717bets on college sports.\39\ However, at the very same time, and2718unannounced to the Judiciary Committee, the NCAA was involved in2719negotiations with Genius Sports to sell college sports data to gambling2720operators to further fuel micro betting. On April 25, 2025, the NCAA,2721quietly, with a late Friday press release, announced a lucrative data2722deal with Genius Sports.\40\ This somewhat unthinkable gambling2723partnership was met with condemnation.\41\ However, without notifying2724Congress, or any other governing body, the NCAA and its gambling2725partners now accept wagers on each shot in our beloved March Madness2726basketball tournaments.2727---------------------------------------------------------------------------2728 \39\ Becky Sullivan, ``The president of the NCAA calls for a ban on2729'prop bets' in college sports.'' NPR, December 17, 2024. https://2730www.npr.org/2024/12/17/nx-s1-5231991/ncaa-charlie-baker-sports-2731gambling-regulations-senate2732 \40\ Genius Sports, ``NCAA and Genius Sports expand partnership2733through 2032.'' April 25, 2025. https://www.geniussports.com/newsroom/2734ncaa-and-genius-sports-expand-partnership-through-2032/2735 \41\ Public Health Advocacy Institute, ``Public Health Advocacy2736Institute response to NCAA decision to sell gambling data to2737sportsbooks.'' April 28, 2025. https://www.prnewswire.com/news-2738releases/public-health-advocacy-institute-response-to-ncaa-decision-to-2739sell-gambling-data-to-sportsbooks-302440104.html2740---------------------------------------------------------------------------2741 Descriptions of the hypocritical complicity of the leagues could2742continue with little end in sight. The height of hypocrisy was2743demonstrated by major league baseball in the wake of the 2025 micro2744betting scandal regarding two Cleveland Guardian pitchers. As the2745Committee will recall, two Guardian pitchers stand accused of fixing2746pitches to enable partners to profit from micro bets on the speed and2747accuracy of each pitch.\42\ In the immediate aftermath of these2748allegations, MLB acted quickly; not to protect the public but to guard2749its lucrative data deals with the gambling industry. MLB Commissioner2750Rob Manfred announced a $200.00 per pitch limit on such wagers. A2751review of this decision by Commissioner Manfred reveals its true intent2752is to protect the value of MLB's relationship with the gambling2753industry.2754---------------------------------------------------------------------------2755 \42\ U.S. Attorney's Office EDNY, ``Two current major league2756baseball players charged in sports betting and money laundering2757conspiracy.'' November 9, 2025. https://www.justice.gov/usao-edny/pr/2758two-current-major-league-baseball-players-charged-sports-betting-and-2759money-laundering2760---------------------------------------------------------------------------2761 Consider, for example; there are approximately 20 pitches each half2762inning, or 40 per inning and 360 each game. With fifteen games most2763nights, people can now wager and lose only $72,0000 a game and2764$1,080,000.00 per night all season on micro betting on each pitch. Yes,2765MLB acted swiftly. Not to protect the integrity of the game, however,2766but to guard its lucrative data deals with the gambling industry.2767The Call for Federal Regulation--2768 On May 24, 2018, the United States Supreme Court struck down the2769Professional and Amateur Sports Protection Act (PASPA). This cleared2770the way for states to legalize online sports gambling. In just eight2771years, thirty-nine states and the District of Columbia have done so.2772 Of critical importance, The Murphy Court specifically noted that2773Congress retains the legal authority to regulate online sports2774gambling:27752776 The legalization of sports gambling is a controversial subject.2777 Supporters argue that legalization will produce revenue for the2778 States and critically weaken illegal sports betting operations,2779 which are often run by organized crime. Opponents contend that2780 legalizing sports gambling will hook the young on gambling,2781 encourage people of modest means to squander their savings and2782 earnings, and corrupt professional and college sports. The2783 legalization of sports gambling requires an important policy2784 choice, but the choice is not ours to make. Congress can2785 regulate sports gambling directly, but if it elects not to do2786 so, each State is free to act on its own (Murphy v NCAA, 2018)2787 (emphasis added).27882789 In aggressively marketing and promoting sports gambling through2790broadcast advertising, internet ads, social media, in-app2791notifications, and steering viewers toward certain gambling products2792during the broadcast of games, our relationship with sports has shifted2793to a relationship with gambling. Equally dangerous is the gambling2794industry use of ``VIP hosts'' where the gambling companies target and2795reward people for increasing their gambling action. VIP hosts use a2796wide array of incentives and induce people to keep gambling. These2797often include tickets, gifts, trips, cash bonuses, restaurant meals and2798more. This is akin to a drug dealer rewarding the best ``customers'' to2799make certain they never stop needing or wanting action. VIP hosts2800presently operate without any Federal scrutiny, and this gambling2801industry tactic warrants its own Senate hearing.2802 The gambling industry and its sports partners have taken sports2803away from children, families, and the American public. Gambling takes2804place on every micro-event within sporting events, from the speed of2805the next baseball pitch to every football snap, basketball shot, tennis2806serve, and even ping pong points from Russia and Eastern Europe. Live2807sports for gambling happen around the globe and around the clock so2808that the action never stops. Sports have sadly become the equivalent of2809a non-stop slot machine.2810How did we get here and why is it essential that Congress act to2811 regulate gambling, including prediction markets, as an issue of2812 public health?2813 There are two answers to this question.2814 First, online sports gambling is a fundamentally different and more2815dangerous gambling product than anyone could have anticipated. In May28162018, when the Supreme Court decided Murphy v NCAA, no one could have2817foreseen what online sports gambling would quickly become.2818 On June 14, 2018, Governor Phil Murphy made the first post-Murphy2819bet. He placed $20 on the New Jersey Devils to win the 2019 Stanley2820Cup. This was a bet that would take 11 months to decide.2821 Now, just eight years later, online sports gambling brings action2822every 11 seconds, or faster. With the use of AI, online sports gambling2823takes place at light speed, and this goes on nearly 24 hours a day,2824every day. The human brain is not built to handle such stimulation from2825the rapid consumption of a known addictive product. This is2826particularly problematic with younger adults as the risk/reward system2827of the brain is not fully developed until age 26.\43\2828---------------------------------------------------------------------------2829 \43\ Arain M, Haque M, Johal L, Mathur P, Nel W, Rais A, Sandhu R,2830Sharma S. Maturation of the adolescent brain. Neuropsychiatr Dis Treat.28312013;9:449-61. doi: 10.2147/NDT.S39776. Epub 2013 Apr 3. PMID:283223579318; PMCID: PMC3621648.2833---------------------------------------------------------------------------2834 Fast approaching is the pending rollout of BetVision and the NFL2835investment in Disney and ESPN resulting in the likely launch of a non-2836stop micro betting streaming service.\44\ This is more like a dystopian2837science fiction story than recreational sports gambling. It certainly2838was not what the Majority in Murphy or anyone had in mind when the case2839was decided on Tenth Amendment principles.2840---------------------------------------------------------------------------2841 \44\ See supra note 31.2842---------------------------------------------------------------------------2843 The second answer to how we arrived at this dangerous juncture with2844online sports gambling is the old adage, follow the money.2845 The sports leagues, teams, owners, and players have entered into2846previously unthinkable partnerships with the gambling industry. They2847sell their real-time data statistics to the gambling industry for2848billions of dollars. This takes place with every sport from baseball,2849football, and basketball to soccer, tennis, golf, hockey, auto racing2850and more.2851 The gambling companies, now including prediction markets, then turn2852these statistics into constant gambling action. Micro bets, same game2853parlays, player props, profit boosts, rapidly changing in-game odds and2854point spreads, and much more. These are AI-driven gambling products2855which target people with the most addictive forms of gambling action.2856Meanwhile, the gambling industry admonishes the public to ``bet2857responsibly'' and calls this industry driven hypocritical approach, the2858``responsible gaming'' (RG) model.2859 Follow the money. The gambling industry is paying its sports and2860media partners billions of dollars to obtain statistics, advertise,2861create, and distribute online gambling products. Unlike any other2862business in this country, no tangible products are sold or distributed.2863The gambling industry is not selling any widgets on the market. The2864only way for the gambling industry to recoup its massive spending and2865generate revenue is to induce the public to chase faster and faster2866gambling action and lose more money more quickly than ever before.2867There is no dispute that keeping people in action is, fundamentally,2868the gambling industry business model.2869 Chasing action is also the clearest symptom of gambling addiction2870and gambling-related harm. Thus, the industry's business model is2871designed to cause harm by prompting the public to engage in constant2872action with ever more risky gambling activities.2873 Meanwhile, the gambling industry contends that less than one2874percent of gamblers are suffering from a gambling addiction and less2875than five percent are at-risk for problem gambling. In fact, The2876President of the American Gaming Association (``AGA'') told CBS' 60-2877Minutes in 2024 that the gambling industry rejects the notion that2878online gambling is addictive:28792880 ``. . . I don't believe that there is an addiction to mobile2881 betting any more than there is an addiction to utilization of2882 your phone for any other reason,'' \45\2883---------------------------------------------------------------------------2884 \45\ Wortheim et al., ``Young gamblers place sports bets while2885showering, wager away student loan money, addiction therapist warns.''2886CBS News, February 4, 2024. https://www.cbsnews.2887com/news/young-gamblers-sports-betting-addiction-60-minutes/28882889 Notwithstanding the reticence of the AGA to recognize the science2890related to gambling addiction, there is a burgeoning international2891movement to consider the unprecedented expansion of the online sports2892gambling industry as a significant threat to mental health The evidence2893is everywhere that we are in the early stages of a mental health and2894gambling addiction epidemic and those most severely impacted are young2895men. This brings the focus squarely to the dangerous conduct of the2896prediction markets and a business model that attempts to deliver non-2897stop gambling to people as young as eighteen.2898 A March 2026 national survey found that nearly two-thirds (652899percent) of American adults report having gambled before the age of290021.10 Online gambling particularly afflicts young men, as a Fairleigh2901Dickinson University study found that 25 percent of men aged 30 and2902under wager on sports digitally, and that 10 percent admit to a2903gambling problem. These are not just statistics. These are young people2904whose relationships with their friends, families, and communities have2905been disrupted by their engagement with these platforms.\46\2906---------------------------------------------------------------------------2907 \46\ Fairleigh Dickinson University, ``FDU Poll finds Online2908Betting Leads to Problems for Young Men,'' September 19, 2024, https://2909www.fdu.edu/news/fdu-poll-finds-online-betting-leads-to-problems-for-2910young-men/.2911---------------------------------------------------------------------------2912 A high percentage of calls to gambling helplines are coming from2913younger adults fixated on the fast-paced action of in-game micro sports2914betting. As recently stated by Felicia Grondin, the executive director2915of the Council On Compulsive Gambling of New Jersey, ``People don't2916really have the time to collect their thoughts to say, `Do I really2917need to place this wager?' They get involved in the game. There's a2918dopamine rush, they're excited and before you know it, they're tens of2919thousands of dollars in debt . . .'' \47\2920---------------------------------------------------------------------------2921 \47\ Bobby Brier, ``Surge in problem gambling in NJ--and in calls2922for help.'' New Jersey Education Association, September 26, 2024.2923https://www.njspotlightnews.org/2024/09/problem-gambling-surges-in-new-2924jersey-more-young-men-call-helpline-sports-betting/2925---------------------------------------------------------------------------2926 The gambling industry itself is strongly opposed to the Federal2927government regulating gambling. The official position of the American2928Gaming Association is ``The AGA firmly believes additional Federal2929regulatory oversight of legal sports betting is unwarranted. States and2930tribal nations have proven to be effective regulators of gaming--2931including sports betting--and the more than 4,000 regulators nationwide2932have decades of experience overseeing gaming operations within their2933jurisdictions.'' \48\ The recently created Sports Betting Alliance2934(SBA) comprised of Bet365, BetMGM, DraftKings, Fanatics, and FanDuel2935also strongly opposes any form of regulation of micro betting.\49\2936---------------------------------------------------------------------------2937 \48\ William C. Miller, Jr., Memo to Members of the 117th United2938States Congress Dated January 28, 2021. https://www.americangaming.org/2939wp-content/uploads/2021/01/Letter-to-the-Hill-Jan-2021.pdf2940 \49\ Robert Linnehan, ``New Jersey lawmakers, regulators consider2941micro betting ban bill.'' SportsBettingDime News, December 16, 2025.2942https://sportsbettingalliance.org/2943---------------------------------------------------------------------------2944 The AGA and SBA contend, without empirical evidence or data, that2945gambling addiction and gambling-related harm are de minimis problems in2946society. The industry publicly states that only 1 percent of the U.S.2947gambling population shows addictive behavior regarding the wagers they2948place.\50\ This frames the gambling industry's position that any mental2949health or financial struggles with gambling should be focused on the2950shortcomings of their customers and not the addictive nature or2951predatory marketing of their gambling products. Thus, the gambling2952industry continues to follow the same ``blame the customer'' playbook2953perfected by Big Tobacco and seeks to place the onus on individual2954users by advancing an industry-driven responsible gaming policy. This2955is intentionally and unethically intended to distract and mislead the2956Federal government to discourage it from regulating online sports2957gambling to help make gambling products safer for consumers.2958---------------------------------------------------------------------------2959 \50\ Devin O'Connor, ``American Gaming Association: 90 percent of2960casino gamblers play responsibly.'' Casino.org, February 14, 2019.2961https://www.casino.org/news/american-gaming-association-90-percent-of-2962gamblers-play-responsibly/2963---------------------------------------------------------------------------2964The Responsible Gaming Model is Fatally Flawed--2965 Historically, gambling disorder was treated as a problem of2966individual responsibility with emphasis placed on people already2967suffering from gambling-related harm. This model is supported by the2968gambling industry and is designed to focus on treating individuals2969diagnosed with gambling disorder while urging the public to exercise2970personal responsibility when gambling. At the core of this approach has2971been the gambling industry-sponsored narrative that harm is suffered by2972only a small percentage of ``problem gamblers'' and they should receive2973treatment funded by gambling industry revenue. This is the model used2974in every state that has introduced online gambling. It is the moral2975equivalent of permitting Big Tobacco free reign to do whatever it wants2976so long as it pays for chemotherapy and hospice.2977 This gambling industry-driven perspective is often called the2978``responsible gaming'' (``RG'') model and rejects the concept that2979online sports gambling causes societal harm. The gambling industry2980wrongly contends that online sports gambling causes no net societal2981harm, and there is no need for a public health approach focused on2982preventing harm. Policy makers are then urged to eschew the notion that2983public harm must be prevented by regulating the distribution and2984marketing of gambling products. This again draws parallels to tobacco2985where for decades the industry denied that tobacco and nicotine are2986addictive and cause disease while simultaneously seeking to avoid any2987public health regulation.2988 The RG model advanced by the industry is based on an incorrect2989theory that only a small percentage of people are suffering harm from2990gambling and gambling addiction, and a tiny fraction of gambling2991revenue would be sufficient to pay for treatment of those who suffer2992harm. The RG approach to industry self-regulation has come under2993increased criticism for lacking empirical evidence. It is also roundly2994criticized for minimizing the scope of public harm by focusing only on2995people struggling with gambling addiction and failing to consider the2996pain, damage and harm inflicted on impacted others including family and2997friends of the persons suffering with gambling addiction.2998 Further, the RG approach is ethically flawed because it was paid2999for and created by the gambling industry with the specific purpose of3000avoiding government regulation.\51\ With every other disease and3001condition the overwhelming emphasis is placed on prevention. With3002gambling addiction, the industry invokes the RG model and rejects calls3003for Federal regulation designed to prevent harm by claiming that the3004gambling industry should be permitted to police and regulate itself.3005---------------------------------------------------------------------------3006 \51\ Hancock, L., Smith, G. Replacing the Reno Model with a Robust3007Public Health Approach to ``Responsible Gambling'': Hancock and Smith's3008Response to Commentaries on Our Original Reno Model Critique. Int J3009Ment Health Addiction 15, 1209-1220 (2017). https://doi.org/10.1007/3010s11469-017-9836-x.3011---------------------------------------------------------------------------3012 The time has come for the Federal government to reject the abject3013failure of the industry-driven RG approach and endorse an effort to3014meaningfully regulate the online sports gambling industry as an urgent3015public health concern. One would like to think that the gambling3016industry and its establishment business partners would welcome efforts3017by the Federal government to design and implement rules and regulations3018to protect the betting public across the board in a way that provides3019an even playing field. However, the mere mention of Federal regulation3020causes a strong reaction in opposition from the industry. This fact3021alone is, to borrow a gambling term, a ``tell'' and suggests the need3022for Congress to become more actively involved.3023The Time to Act is Now--3024 Notwithstanding efforts by the gambling industry to protect its3025financial stranglehold and avoid Federal regulation, the words of the3026Murphy Court endorsing the right of Congress to regulate online sports3027gambling serve as a call for the Federal government to embrace the3028legal, ethical, and moral obligation to prioritize the mental health of3029Americans over gambling industry revenue (which is comprised solely3030from the public's losses). It is the duty of Congress and the Federal3031government to act and protect the mental health of all Americans3032because the evidence of a looming crisis is undeniable.3033 The first waves of independent research examining the societal3034damage related to online sports gambling in the United States are just3035becoming available. In May 2023, the National Collegiate Athletic3036Association (``NCAA'') released an alarming study examining online3037sports gambling on college campuses.\52\ The disturbing findings3038include:3039---------------------------------------------------------------------------3040 \52\ Key Findings from the NCAA Sports Betting Activities Survey,3041April; 2023 are avail-3042able at: https://ncaaorg.s3.amazonaws.com/research/wagering/3043Apr2023NCAA_WageringKey3044Findings.pdf30453046 Sports wagering is pervasive among college students with 583047---------------------------------------------------------------------------3048 percent of 18-22-year-olds engaging in sports gambling.30493050 Sports Gambling is widespread on college campuses with 673051 percent of students betting on sports. Students living on or3052 near campus gamble at higher frequencies.30533054 Nearly 60 percent of students are likely to bet on sports3055 after seeing a gambling advertisement.30563057 More than 60 percent of students engaged in gambling are3058 betting on sports using the highly addictive ``in game/micro3059 bets''.30603061 Nearly 80 percent indicate that betting on sports makes it3062 more likely they will watch the event on television or3063 streaming.30643065 60 percent of student gamblers believe they can and will3066 make money betting on sports.30673068 There were also two important online gambling studies released in3069July 2024. The first is from researchers at UCLA Anderson School of3070Management and the University of Southern California and the other is3071from researchers at Northwestern University.\53\ \54\3072---------------------------------------------------------------------------3073 \53\ Hollenbeck, B., Larsen, P., & Proserpio, D. (2024). The3074financial consequences of legalized sports gambling. Available at SSRN.3075 \54\ Baker, S. R., Balthrop, J., Johnson, M. J., Kotter, J. D., &3076Pisciotta, K. (2024). Gambling away stability: Sports betting's impact3077on vulnerable households (No. w33108). National Bureau of Economic3078Research.3079---------------------------------------------------------------------------3080 The UCLA/USC and Northwestern are separate and independent studies3081but reveal strikingly similar and alarming findings particularly in3082financially vulnerable communities and this includes a nearly 303083percent increase in bankruptcy filings in states with online sports3084gambling.3085 The UCLA/USC researchers concluded:30863087 The legalization of sports gambling decreased consumer3088 financial health. These results seem to be particularly3089 pronounced when states legalize online betting, suggesting that3090 the ease of access to gambling increases the problems3091 associated with it. Moreover, we find that young men,3092 particularly those in low-income counties, are most affected.30933094 It must also be recognized that gambling addiction and gambling-3095related harm causes damages far in excess of mere financial losses.3096There is a direct causal connection between gambling addiction and3097societal harms which include:\55\3098---------------------------------------------------------------------------3099 \55\ Wardle, H., Degenhardt, L., Marionneau, V., Reith, G.,3100Livingstone, C., Sparrow, M., . . . & Saxena, S. (2024). The lancet3101public health commission on gambling. The Lancet Public Health, 9(11),3102e950-e994.31033104---------------------------------------------------------------------------3105 Anxiety, Depression, Isolation31063107 Loss of Job/Career31083109 Cooccurring alcohol and drug disorders31103111 Family violence31123113 Homelessness31143115 Criminality31163117 Psychological distress31183119 Comorbidities with substance misuse31203121 Suicide31223123 Federal regulation will expose and replace the dangerously flawed3124RG system of industry self-regulation with a set of policies that will3125help to prevent most harm from happening in the first place. RG places3126the onus on the individual rather than regulating the addictive nature3127of online sports gambling and predatory conduct of the industry. This3128failure of the RG model must be replaced with a comprehensive response3129at the Federal level, and, obviously, this. must begin with3130Congressional action. This hearing is another significant step forward3131toward Congress enacting meaningful safety standard to address and3132prevent the mental health crisis related to gambling addiction.3133Personal and Professional Background--3134 I hold a master's degree in professional clinical counseling from3135La Salle University, a doctorate in Law and Public Policy from3136Northeastern University, and a juris doctorate from Temple University3137School of Law. My doctorate research focuses on policies required to3138prevent gambling addiction and gambling-related harm.3139 Professionally, I serve dual roles as Director of Gambling Policy3140with the Public Health Advocacy Institute (PHAI) at Northeastern3141University School of Law and as an internationally certified gambling3142addiction counselor. This permits me to clinically treat patients and3143families suffering with gambling addiction while simultaneously working3144as a policy expert and advocate. Simply put, prevention of gambling3145addiction is the single best form of treatment.3146 Given my background and qualifications, I am duty bound to utilize3147the totality of my professional training and personal experience to3148help lead the movement for regulation and reform with the goal of3149preventing gambling addiction and gambling-related harm.3150 In addition to being a gambling addiction therapist and Director of3151Gambling Policy with PHAI, I am also a gambling addict in recovery. I3152made my last bet on April 27, 2014, and on that same night, I nearly3153took my own life in a suicide attempt. With gambling addiction, the3154risk of suicide is omnipresent. Research shows that one in every two3155people suffering with gambling addiction will contemplate suicide and3156one in five will make an attempt.\56\3157---------------------------------------------------------------------------3158 \56\ Wardle, H., Reith, G., Langham, E., & Rogers, R. D. (2019).3159Gambling and public health: we need policy action to prevent harm.3160British Medical Journal, 365.3161---------------------------------------------------------------------------3162 In the grips of my gambling addiction, I devastatingly hurt many3163people who had loved and trusted me. This included clients, friends, my3164children, and the people who were closest to me. Personal carnage3165related to gambling addiction destroys the most trusted and intimate3166relationships, sometimes beyond repair.3167 Gambling addiction took my mind, soul, body, and conscience. It3168left me broken, battered, and homeless. I was unrecognizable to myself.3169The only thing I had left was my name.3170 On February 15, 2015, I stood in a courtroom in Philadelphia,3171Pennsylvania. This was a court where I practiced law for more than two3172decades and where my father had practiced for more than half a century.3173In the presence of the court, the clients I had betrayed, and my3174children, I pled guilty to financial crimes committed in the throes of3175my gambling addiction. On that day, I pledged, under oath to the court,3176that if I could get well and find recovery, I would give back by doing3177everything in my power to prevent others from suffering harm related to3178gambling addiction. I continue this mission by serving as Director of3179Gambling Policy with PHAI and as a therapist working with people and3180families battling to overcome gambling addiction.3181 As a therapist, I adhere to the ethical principle of beneficence.3182As such, it is my duty to advocate in the best interests of my3183patients, their families, and for the good of society. It is in this3184realm that I fight for regulation designed to prevent gambling3185addiction and gambling-related harm. Prevention is the best form of3186treatment. Our Congress can lead the movement to protect families and3187prevent this mental health and gambling addiction epidemic.3188 Thank you for granting me the opportunity to address this3189distinguished Committee. I hope this is just the beginning of a more3190comprehensive and ongoing dialogue.3191 Respectfully,3192 Dr. Harry Levant, MA, PCC, ICGC-I,3193 Director of Gambling Policy,3194 Public Health Advocacy Institute.31953196 Senator Blackburn. And thank you. And I don't think anyone3197would have made a bet that we would have had 5 witnesses who3198stuck to 5 minutes. I congratulate you all.3199 [Laughter.]3200 Senator Blackburn. You're recognized, Chairman Cruz.32013202 STATEMENT OF HON. TED CRUZ,3203 U.S. SENATOR FROM TEXAS32043205 The Chairman. Well, I think that bet may have been on the3206prediction markets. Good morning.3207 Americans love sports. Nearly 70 percent of Americans--3208that's about 232 million people--consider themselves sports3209fans. I am certainly one of them. I'm a sports fan for the same3210reason everyone else is. Sports showcase human talent and grit3211and drive. They put us on the edge of our seats as we wait and,3212and hope for the thrill of the next big play, the come-from-3213behind win.3214 From high school football, which is a religion in the great3215state of Texas, to college basketball, to the professional3216leagues, sports unite us at a time when it seems everything3217else divides us. Today, many sports fans are also sports3218bettors. 39 states and the District of Columbia have legalized3219some form of sports betting, though my home state of Texas has3220not.3221 Even in those states where sports betting is legal,3222everyone agrees that it carries risks, and serious risks. It3223should be regulated, and it should be done, if at all, in3224moderation. This hearing is not about rolling back legalized3225gambling in states that have chosen to authorize it. There are3226two different questions instead before us at this hearing.3227 First, in a world where sports betting exists, how do we3228preserve the integrity and authenticity of the sports that we3229love? And second, are prediction markets operating within the3230law, or are they defying the law and improperly infringing on3231State sovereignty?3232 On the first question, integrity is the foundation of3233sports. We want athletes competing on merit. But the3234opportunity to make money can tempt gamblers, and sometimes3235even athletes themselves, to guarantee a sure bet. Consider a3236few recent cases. NBA players and coaches are accused of3237manipulating performance and providing insider information to3238win bets. Two, Major League Baseball pitchers allegedly rigged3239their own pitches in exchange for money. MLS banned two players3240for intentionally getting yellow cards to win bets. And the UFC3241has canceled matches and terminated contracts because of3242suspected match fixing.3243 These incidents sow doubt in the minds of fans. It is not3244uncommon for fans scrolling Twitter on a Sunday afternoon in3245the fall to see posts speculating that a controversial call by3246an official was related to gambling. That is why sports leagues3247and casinos and regulators have to work together to identify,3248to investigate, and to root out manipulation. Fans need to be3249assured that game rigging is rare and that anyone caught doing3250it will be punished harshly, if not banned forever from the3251game.3252 They're also grappling with a newcomer to the sports3253integrity matrix: prediction markets like Polymarket and3254Kalshi. Prediction markets have started offering, ``event3255contracts on sporting events,'' which for all intents and3256purposes are sports bets. Now, of course, there are real and3257serious questions about the legal propriety.3258 At a minimum, any prediction market that offers event3259contracts on sports should be expected to join serious efforts3260to detect and prevent the rigging of sports. We must also3261acknowledge the existence of unregulated offshore sportsbooks3262that have existed for decades. That issue may well be one for3263law enforcement, Treasury, or the State Department to solve.3264 Today's hearing is designed to focus on the use of tools in3265the regulated market to catch and to prevent game manipulation.3266My hope is that today's discussion will showcase the work3267already underway to protect the integrity of sports and at the3268same time identifying where we can and should do more. I look3269forward to hearing from our witnesses.3270 Senator Blackburn. Thank you, Mr. Chairman. We will begin3271our round of questioning now.3272 Ms. Thomas, I want to come to you. When we speak about3273sports integrity, our states have really been on the front line3274when it comes to protecting fair play and also protecting3275consumers from harm. You talked about this in your opening, I3276know that Tennessee has taken a technology-first approach in3277dealing with this.3278 So I want you to talk a little bit about Tennessee's3279approach and how you have handled or will handle potential3280instances when it comes to match fixing and questionable bets?3281 Ms. Thomas. Thank you for the question. Yes we are a3282technology-forward agency and recognize that we need to move at3283the speed of business and not always at the speed of government3284to keep up with our industry and mitigate all risks that we3285can. And I described what our rules require, but I want to3286emphasize that our standard of what our sportsbooks and their3287vendors can use is one of commercial and technological3288reasonableness, which of course, evolves and improves over3289time.3290 That gives our sportsbooks flexibility to run their3291operations and use vendors that they believe are best suited3292for their needs or develop technology in-house. We also3293internally in our agency use technology to monitor what is3294going on with all of our sportsbooks. We ingest data from our3295sportsbooks, from our vendors related to compliance issues,3296related to any kind of technological changes, any changes to3297any of their operating systems comes to our office. And we also3298ingest data from players that gives us insight into issues that3299they are seeing, and----3300 Senator Blackburn. So let me jump in. You're taking vendor3301data and player data?3302 Ms. Thomas. And sportsbook data. Yes, ma'am.3303 Senator Blackburn. OK.3304 Ms. Thomas. Yes. And then we're able to use that data to3305look at patterns of what might be happening with compliance3306areas. Now, with integrity issues, that might--that may be a3307way that we identify integrity issues, but we also have back-3308office access to all of our sportsbooks platforms so we can see3309real-time account-level data. We can also see their integrity3310providers like IC360 and IBIA. We can see their platforms, and3311so we can see what's being reported by those sportsbooks in3312real time and how others are responding.3313 We also have a platform access to geolocation data, so we3314can see wagering geolocation pings when deposits are made, when3315wagering activity takes place, when odd movements happen or3316differences in geographical locations and wagers that are3317taking place. And that allows us to have a lot of data at our3318fingertips to analyze when there is suspected activity of match3319fixing or otherwise that we can then package and send to sports3320governing bodies, send to law enforcement, and investigate.3321 And we have done that. I want to make sure I get my numbers3322straight, but as of May 14, we had investigated 25 potential3323integrity cases where suspicious wagering activity occurred in3324Tennessee that could have indicated the use of inside3325information. A few of these cases are currently pending, but 173326of these matters were closed and were referred to sports3327governing bodies and law enforcement, including 13 of those to3328the FBI.3329 And where an integrity matter is not criminally referred,3330it is because we identified that it was just somebody had a3331good day.3332 Senator Blackburn. Thank you. Mr. Miller, do your members3333advertise to youth?3334 Mr. Miller. We do not.3335 Senator Blackburn. Do you advertise on social media3336platforms?3337 Mr. Miller. We do have members that advertise on social3338media platforms, yes.3339 Senator Blackburn. And you consider that is not advertising3340to youth?3341 Mr. Miller. I think that the algorithms that are built3342around the idea of----3343 Senator Blackburn. They don't build their algorithms and3344they don't open them. Mr. McHenry, do you--do your members3345advertise to youth?3346 Mr. McHenry. No.3347 Senator Blackburn. Do you advertise on social media3348platforms?3349 Mr. McHenry. Yes, and we welcome the additional tools. And3350as a parent, I laud your goals of protecting our kids online.3351We want enhanced tools so we can make sure----3352 Senator Blackburn. So why are you on those platforms?3353 Mr. McHenry. Pardon me?3354 Senator Blackburn. Why are they on those platforms?3355 Mr. McHenry. Because they're very popular. They're very3356popular----3357 Senator Blackburn. With kids.3358 Mr. McHenry. With adults. The average age of----3359 Senator Blackburn. And we've got a problem with 11-year-3360olds.3361 Mr. McHenry. The average age of the participant on----3362 Senator Blackburn. Let me ask you this----3363 Mr. McHenry.--prediction markets is 33.3364 Senator Blackburn. I want to talk a little bit about the3365prediction market approach to regulation and consumer3366protection. And let's go to a LinkedIn post that Kalshi CEO3367Mansour wrote about the company taking a regulatory-first3368approach, his term, to accelerate growth. And I agree that3369innovators need light-touch rules, and prediction markets are a3370great place for innovation. We realize that. I think that it is3371important that we take action to make certain these3372marketplaces are going to be safe.3373 So talk for a moment about how your association is3374approaching consumer protections, and what you are going to do3375to be certain that you're not on these platforms where children3376are the primary user of these platforms?3377 Mr. McHenry. Yes, and thank you. And thank you for your3378leadership on protecting our kids online. As a parent, I share3379your goals. I very much share your goals. Our coalition members3380adhere to best practices on advertising. There's a complete ban3381of anyone under 18 from touching these products. We understand3382there's a conversation about the age requirements for3383prediction markets. We welcome that conversation.3384 But to be clear, these financial products, just like3385securities, are available to 18 and older. Ninety-seven percent3386of our users of the volume on prediction markets are over 21.3387The average age is 33. The goal is to get customers that will3388be repeat customers that are interested in participating, but3389not targeting kids.3390 And every enhanced tool that we can take, and our members'3391companies can take, to ensure that under-18 don't even see our3392advertising online is a very important mark that we take and3393undertake, but we lack fully the tools necessary to block that.3394 Our member companies will take enhanced surveillance of3395those that they think may be using their parent or someone3396else's phone. We take extra effort to make sure that they don't3397have that access. And we follow the best tools that are3398available to make sure that we know if anyone has any3399touchpoints to the leagues or the folks that we view as3400insiders, and they are--they are banned from using our3401products. Full ban. They can't even trade. And that is an3402undertaking that's very different than the rest of the3403ecosystem.3404 Senator Blackburn. Thank you for that. Dr. Levant, I can3405tell you want to respond to that, but as a courtesy to my3406colleagues, I'm going to call back--come back to you for that3407response. Senator Hickenlooper, you're recognized.3408 Senator Hickenlooper. Thank you, Madam Chair. Thank all of3409you for coming. And Dr. Levant, I particularly think your life3410experience is relevant and real.3411 Mr. McHenry, thank you for your service. You bring a3412reputation from the House, but I think you need to be very3413careful of how you're using that. I think prediction markets,3414you know, largely advertise themselves as financially life-3415changing tools for average people that can allow users to earn3416money through their prediction accuracy. Now, one example I can3417give you, Kalshi partnered with a young woman on TikTok who3418said--so this is a partnership--who said that she struggled to3419pay her rent, but by placing bets on Kalshi, she was able to3420win enough to cover her rent for two years.3421 I know you're welcoming conversations, but do you think3422that's responsible to hold that up as a model for people that3423are having trouble making their rent, that they should go on to3424prediction markets because they're going to be better at3425predicting what is clearly a random occurrence?3426 Mr. McHenry. These contracts are not fully random, and3427these contracts----3428 Senator Hickenlooper. They're not fully random, but if it's3429truly--if there's no inside information, they are largely3430random.3431 Mr. McHenry. The predictive capacity and the specifics of3432the case you raise, I'm unaware of. This is----3433 Senator Hickenlooper. I'm telling you, now you're aware of3434it, and this isn't a case of some random person. This is a3435business partnership with the people that are paying your3436consulting fee.3437 Mr. McHenry. So thank you for--I will attempt to answer3438your question, which is these are two-sided markets established3439by peer-to-peer----3440 Senator Hickenlooper. I get that. I'm talking about what3441the incentive that advertising plays in these types of markets.3442Let's move on. I think I look at the age issue as every bit as3443important as encouraging people that are struggling to make3444ends meet. I think it's specifically dangerous for minors to3445get into sports betting, and especially on prediction markets.3446That's why almost all the states say it's 21, not 18, but 21.3447Prediction markets let users as young as 18 bet on sports, but3448they also market their products to younger, more vulnerable3449audiences who are in many cases adept at getting around the3450platform precautions.3451 There have been reports that Kalshi has been using young3452social media influencers, as young as 15 years old, to promote3453its platform to young consumers. Is that true?3454 Mr. McHenry. Not to my awareness.3455 Senator Hickenlooper. And you wouldn't sanction that?3456 Mr. McHenry. No.3457 Senator Hickenlooper. Young 15-year-old influencers saying3458why this is--these prediction markets are useful and a valuable3459investment of their--the risk of their money.3460 Mr. McHenry. I wouldn't condone anyone using TikTok, but3461that's a separate matter.3462 Senator Hickenlooper. Let's put it this way. Does Kalshi3463have any age restrictions at all on the influencers that it3464works with, basically hires, in order to influence the market3465that it--or the audience that it markets to?3466 Mr. McHenry. They're one of the member companies for the3467prediction markets. I can direct you to them answering that3468specific question.3469 Senator Hickenlooper. No, no, I'm talking about Kalshi. I'm3470not--I don't want to go through the rigmarole--I mean, you're3471saying we're open to the conversation. Why isn't these3472prediction markets--why isn't Kalshi out in front and picking3473out these issues and saying, we're going to deal with this and3474here's how we're going to--one, two, three? We shouldn't have3475to go through hearings and slow it down. Every day that they3476can stall, they're going to make more money. I get that. But3477that means all the more, if you want to be the responsible3478supporter, you need to help them get out in front of this.3479 Mr. McHenry. Well, they are, and our members are. These are3480onshore, regulated by the CFTC, and they comply with Federal3481law and the regulations, and they have complied with all the3482court cases.3483 Senator Hickenlooper. But the CFTC, we know, is3484inexperienced, doesn't have any real regulations around sports3485betting.3486 Mr. McHenry. They've been doing this for----3487 Senator Hickenlooper. When you look at minors, they're3488easily manipulable.3489 Mr. McHenry [continuing]. These contracts for----3490 Senator Hickenlooper. I think the self-certification3491process is a good example. The CFTC allows prediction markets3492to launch new contracts just one business day after filing3493them----3494 Mr. McHenry. That is standard practice for----3495 Senator Hickenlooper.--without any CFTC review at all.3496 Mr. McHenry. No, no, the CFTC reviews those contracts.3497 Senator Hickenlooper. Not in one day, they don't.3498 Mr. McHenry. Yes, they do, as they do for the rest of the3499commodities marketplace. And furthermore, the CFTC has3500regulatory authority to remove contracts or unwind contracts3501off after the fact if they view that was manipulated or there's3502fraudulent activity. The CFTC is a cop on the beat, has the3503capacity to oversee this market, just as they've done with the3504broader commodities marketplace that's been around and well-3505versed for decades.3506 Senator Hickenlooper. There is literally no one that I3507know--you're the first person who's told me you think--that3508they think the CFTC is up to the standards. Well, let me go--3509let me go last, Mr. Miller----3510 Mr. McHenry. I'd say billions of dollars of contracts----3511 Senator Hickenlooper. No, it's OK. It's OK. Mr. Miller, you3512stated that regulated gambling benefits from the--from the3513revenues they collect on taxes from gaming. Colorado collected3514$45 million last year. It's in the billions over the last3515number of years if you look at all the states and the tribes.3516If prediction markets continue to operate as unlicensed3517sportsbooks paying no taxes, is it going to reduce the3518resources available? In Colorado, we use that for water3519projects and all kinds of outdoor recreation opportunities. Are3520those resources available to states like Colorado going to be3521diminished?3522 Mr. Miller. Well, thank you for the question. Of course,3523what we've seen is basically a tsunami that has been created by3524the prediction markets in a completely unregulated manner.3525There's not one single person on this dais or anybody that was3526around during 2010 when we did Dodd-Frank that believed that we3527were enabling and creating the Federal Department of Gambling.3528 So yes, they are absolutely not competent to handle this,3529and two, they are absolutely hurting tribes and states3530financially.3531 Senator Hickenlooper. Thank you. I yield to the chair.3532 Senator Blackburn. Senator Curtis.35333534 STATEMENT OF HON. JOHN CURTIS,3535 U.S. SENATOR FROM UTAH35363537 Senator Curtis. Thank you. Mr. McHenry, I'm conflicted3538whether I call you chairman, Congressman, speaker, but I will3539tell you, it is a delight to see you again and really enjoyed3540serving with you. If I'm honest, even a couple of months ago, I3541would not have been able to tell you what a prediction market3542was. And so could you help me just like in one sentence to the3543man and woman back in Utah, what is a prediction market? Just3544like in one sentence.3545 Mr. McHenry. It is an open exchange. It is under3546commodities regulation called a swap. You have folks that have3547a contract. Some say yes, some say no, and they determine it.3548The marketplace, the consumers, and the participants determine3549what is the ratio on the contract, the likelihood of something3550happening.3551 Senator Curtis. And what's exactly happening when a3552purchase event contract is purchased? Just very, very--like for3553the people on the ground who don't understand the3554technicalities of this, tell me exactly what's that.3555 Mr. McHenry. The easiest thing for me to explain is in the3556political setting, right? In the political setting, is John,3557Jane, or Joe going to win the election? And after the election,3558the contract is certified based off of information on whether3559or not that happened, and then people are paid out based off3560the ratio of that final contract.3561 Senator Curtis. If I were hearing that back in Utah, I3562would say, I think something might happen, I'm going to put3563money down on it, and I have the chance of either making more3564money or losing money on that. Is that--is that accurate?3565 Mr. McHenry. Yes, and it's an uncertain outcome, just like3566whether or not you're going to have a crop that comes in this3567fall or not based off of weather and unpredictable events along3568the way.3569 Senator Curtis. So if I'm talking to these folks back home3570in a town hall meeting, they're going to say to me, tell me how3571that is not gambling, right? It seems to me every definition of3572gambling.3573 Mr. McHenry. Well, this has--I understand how that is3574viewed. When grain futures came to fruition over 100 years ago,3575it was viewed much the same, that this is an uncertain outcome3576on whether or not your crop will come in in the fall, and you3577can hedge against it in the marketplace about an uncertain3578event that is driven largely by acts of--acts of God, Mother3579Nature, and crop yields, so----3580 Senator Curtis. Can I interrupt you, only because of time?3581 Mr. McHenry. Sure.3582 Senator Curtis. I know what you're saying is important, but3583as you know, we have very limited time. My father was an3584insurance agent and taught me that you buy insurance for things3585you can't afford to pay for. And it feels like we've moved from3586the farmer who's buying crop insurance because he can't afford3587it, if he'd be wiped out, right, versus betting for an income3588or perhaps loss on that.3589 And I guess my fundamental question is, like, how is that3590any different than a sports wager or roulette betting?3591 Mr. McHenry. Well, it's based off the business model. The3592business models are fundamentally different from a sportsbook.3593The sportsbook, the house sets the line, and when the consumer3594loses, they profit. And for an exchange like this, the exchange3595is based off of two individuals that benefit and they pay a3596fee, just a flat fee for that engagement. The business models3597are very different. The question is, what do we do----3598 Senator Curtis. Once again, just simply because of time----3599 Mr. McHenry.--about these societal choices and how we3600regulate them?3601 Senator Curtis.--I don't want to cut you off, but you know3602the drill here. We're just so limited time. Dr. Levant, you3603have not had much chance to weigh in. I'd love you to weigh in3604on the speaker's thoughts.3605 Dr. Levant. It's difficult to know where to start, but let3606me take the most recent comment Poker and parimutuel horse3607racing have the exact same business model. No one would dispute3608they are gambling. Sports futures contracts are gambling. The3609business model is just to take the money off the top. The house3610has to win every time and the public loses. That's sports3611contracts.3612 The other part I want to address is the--I would have used3613tsunami, but Mr. Miller used it, I'll use avalanche of3614unregulated advertising on social media. I've, over the last3615year, spoken in six prep schools in four different States. This3616is not exactly a scientific survey, but I asked the students in3617each of these schools at the start, how many of you know what3618Kalshi is? 95 percent of the hands go up. I ask, how many of3619you know what a Same-Game Parlay is? 95 percent of the hands in3620the room go up. And it's all from social media.3621 Senator Curtis. And I'm going to--sorry, I'm going to do3622the same thing.3623 Dr. Levant. Please.3624 Senator Curtis. We're just so short on time. So Congressman3625McHenry, let's just put that aside for a minute. Just overall,3626why do we regulate gambling? As we all know gambling and would3627all agree to gambling in this room, why is it we regulate it?3628 Mr. McHenry. Because society has determined that this is3629not in society--well, elected officials have determined it's3630not in society's interest, and therefore put weights and3631measures around and protections.3632 Senator Curtis. Great. And Dr. Levant, we know you're going3633to agree so I'm not even going to----3634 Dr. Levant. This is why we regulate it. It's a known3635addictive product, just like heroin. That's why we regulate it.3636 Senator Curtis. And this is where I really want to point3637out the state of Utah and the state of Hawaii. We've made a3638conscious decision because of these impacts to not allow3639gambling of any kind in our state. And, you know, it won't3640surprise you to know from that perspective, I see this very3641differently than a lot of my other colleagues. So you can see3642why I take a close interest whenever platforms begin offering3643something that feels like gambling, that talks like gambling,3644that smells like gambling.3645 And several months ago, Senator Schiff and I introduced a3646bill. It's called The Prediction Markets are Gambling Act to3647stop the CFTC-regulated exchange from offering sports betting3648and casino-style contracts. And quite frankly, it's about--for3649me, it's about preserving the State's rights and protecting our3650State's ability to do that. Wish I had more time.3651 Just a real quick question for Mr. Miller. I'd like to3652build on that. I think this is a similar question you have.3653States and tribes have spent decades establishing their own3654approaches to gaming. Some allow it under strict regulation.3655Others, like Utah, choose not to allow it at all. These3656decisions reflect local values, consumer protections, and in3657many cases, significant economic interest.3658 So help me understand this. If products that closely3659resemble sports betting can be offered nationwide under a3660Federal regulatory framework, what does that mean for the3661ability of states and tribes to actually enforce the choices3662they've made?3663 Senator Blackburn. And if I can intervene, the gentleman is3664a minute and a half over. If you'll have that submitted.3665 Senator Curtis. Very good. Thank you. Very appropriate.3666 Senator Blackburn. Thank you. Senator Baldwin.36673668 STATEMENT OF HON. TAMMY BALDWIN,3669 U.S. SENATOR FROM WISCONSIN36703671 Senator Baldwin. Thank you. I'll go along those same lines,3672Senator Curtis. So the Commodity Futures Trading Commission3673prohibits registered entities from listing trades, agreements,3674contracts, transactions, or swaps that relate to gaming. The3675rule exists to protect consumers from fraud and preserve the3676integrity of sports competitions.3677 I understand that the Trump administration--under the Trump3678administration, the Commission does not intend to regulate or3679review prediction market platforms that offer sports betting.3680Yet Wisconsin tribes offering these exact same services operate3681under multiple State and Federal regulations.3682 Mr. Miller, can you walk us through the types of review and3683regulation that tribal gaming operations offering sports3684betting must go through in Wisconsin?3685 Mr. Miller. Yes, Senator, thank you for the question.3686Tribal nations are recognized by IGRA and are governed under3687that Federal statute. But importantly, the tribes negotiate3688with the State government as a sovereign equal. They work to3689gain exclusivity. They work on terms. They work on ensuring3690that they abide by all of the same--all of the protocols that3691are important from a regulatory perspective, and that that is3692why that when prediction markets have come into Wisconsin3693recently, the attorney general there has acted, and we applaud3694that. We applaud the other 40 attorney generals that have also3695done that.3696 It's unfortunate that the CFTC has chosen to sue the state3697of Wisconsin because of that and really harm tribal sovereignty3698and the State's right to determine what sort of gambling exists3699in that state of Wisconsin.3700 Senator Baldwin. Yes, and Mr. Miller, how does this3701regulatory framework compare to prediction market platforms3702offering essentially identical services?3703 Mr. Miller. Well, as again, as I made in my opening3704statement, you know, we're one of the most highly regulated3705industries in the country, you know, from everything from, you3706know, internal controls, licensing, auditing, and being3707actively overseen by the State and tribal governments, this is3708quite--it stands in quite contrast with the prediction markets3709that are now entering into really every state, including those3710that Senator Curtis mentioned in the state of Utah and Hawaii3711that have chosen not to have gaming, either tribal or3712commercial.3713 Senator Baldwin. Mr. McHenry, are your members willing to3714undergo review and regulation by State and Federal regulators3715that is comparable to what Mr. Miller just described for tribal3716gaming operations?3717 Mr. McHenry. They are fundamentally different products and3718fundamentally different business models. And what our member--3719--3720 Senator Baldwin. The answer would be no?3721 Mr. McHenry. Well, let me--if I would finish. They are3722willing and do submit themselves to State reviews just like3723everybody else regulated by the CFTC. And just like every other3724Federal financial product, and so that is similar for3725everything from grain futures to an event contract on who's3726going to win the next Governor's race.3727 And so everything in between is regulated the same, and3728taxes are paid at both the Federal and State level as a result3729of those contracts as well.3730 Senator Baldwin. So the answer is no?3731 Mr. McHenry. Well, they're federally regulated, so if you3732wish--in our system, our federalism system, and according to3733Third Circuit ruling, that these are CFTC-regulated products3734under the Commodities Exchange Act and----3735 Senator Baldwin. But your members would not be willing to3736undergo the type of review and regulation by State and Federal3737regulators----3738 Mr. McHenry. What I would submit is that they----3739 Senator Baldwin.--that is comparable to tribal gaming?3740 Mr. McHenry. What I would say is our member companies have3741enhanced surveillance greater than any casino and greater than3742any sportsbook in the country. We do more market surveillance.3743We ban users on a proactive basis rather than a reactive basis.3744And we have a different business model that says no matter what3745happens with the contract, there's a small fee to the exchange,3746and the sportsbook is incentivized, as opposed to a sportsbook3747that is incentivized they profit off of losers, not off of3748winners.3749 Senator Baldwin. Mr. Miller, any retort?3750 Mr. Miller. Sure. You know, at the end of the day, there3751are a lot of conversations about what it is these entities are3752doing. At the end of the day, they're running sportsbooks at a3753national level without any of the regulatory constraints and3754frameworks that have been created either in Tennessee or in any3755of the other states that have chosen to legalize sports betting3756or any other gaming.3757 Senator Baldwin. Thank you.3758 Senator Blackburn. Senator Schatz.37593760 STATEMENT OF HON. BRIAN SCHATZ,3761 U.S. SENATOR FROM HAWAII37623763 Senator Schatz. Thank you, Chair. Thank you all of you for3764being here. Mr. Sadin, in your work as an integrity monitor,3765are there some categories of bets more likely to threaten the3766integrity of the sport than others?3767 Mr. Sadin. Yes, I certainly would categorize a couple of3768different types of markets as more vulnerable or more3769susceptible to manipulation.3770 Senator Schatz. What are they?3771 Mr. Sadin. I would say, generally speaking, player props,3772micro-betting, in-game market circumstances in which an3773individual or singular person may have more impact than a3774group, that would----3775 Senator Schatz. And the micro-prop thing is insidious in3776the particular way that it can be manipulated a little more3777easily by a player or by anyone else, or a sort of an injury3778proposition bet or anything like that. And then the sort of the3779bigger you get, the harder it is to fix. Not impossible, of3780course, but even a player prop, say Terry Rozier gets six3781rebounds this evening, is a little harder to game than Terry3782Rozier shoots the ball or doesn't, right?3783 And so the more micro you get, the more insidious it is3784from an integrity standpoint, but also to Dr. Levant's point,3785it also sort of taps into the addictive, manic, algorithmically3786driven problem that we're dealing with. Is that fair to say?3787 Mr. Sadin. Yes, I think that's fair to say. It's nuanced3788and there's certainly a continuum, but generally speaking,3789that's accurate. I would say, just to be clear, that I still3790would be a strong proponent of wrapping regulation around those3791types of markets as opposed to pushing that activity offshore.3792 Senator Schatz. Oh, well, OK. So let's go to the offshore3793question. Mr. Miller, could you speak to the problem of illegal3794offshore sportsbooks and how they impact the integrity of3795sports in the United States? I know the answer to this3796question, which is basically they don't work with people like3797you, but go ahead.3798 Mr. Miller. Well, thank you for the question, Senator. You3799know, it has been a challenge. I've been in this job now seven-3800and-a-half years. I think I've sent letters to every director3801of the FBI and the head of the Department of Justice asking3802this to be prioritized because it's very important. It's very3803easy for people of age and people underage, to access the3804offshore illegal marketplace.3805 And so there are--there is obviously a role for--important3806role for law enforcement at the Federal level, State3807Department, others that have the ability to actually put the3808pressure on some of these countries that house and facilitate3809illegal sports betting operations. And for us here, you know,3810it's $700 billion of money that goes out of the pocket of3811Americans into offshore online illegal betting operations3812without any of the consumer protections of the legal market.3813 Senator Schatz. Yes, we think we legislatively have a3814pathway here, and it doesn't solve every problem, and it3815certainly doesn't solve every problem as it relates to the3816challenges that individuals and society is facing with3817gambling. But if you empower the FTC to go after the payment3818processors, and then they would have a perfect right to go and3819say, hey, you may not work with these offshore shops if they're3820not complying with the Federal law having to do with micro prop3821bets.3822 So, Dr. Levant, thank you for your personal story. I was3823sort of staring at my phone as one does, I apologize. And as3824soon as you started to talk, I really--I really applaud your3825life's journey and your--and your life's mission now.3826 Dr. Levant. Thank you, Senator.3827 Senator Schatz. I want to--I want to keep talking about3828microprop bets. A study out of Australia found that sports3829bettors who bet on micro events, that of that cohort, 783830percent met the criteria for gambling that may cause3831significant harm to their lives. Tell me about why microprop3832bets are different?3833 Dr. Levant. Senator, they are fundamentally different,3834inherently dangerous, and frankly, defectively designed3835gambling products. The human brain is not built to absorb an3836addictive product every 10 seconds or less.3837 The bigger problem is the business model. In order for3838micro-betting to work, it involves the leagues selling their3839data for billions of dollars. It involves technology and AI3840companies, sportsbooks, and now prediction markets. They all3841want a piece of the pie. The only way to keep that pie going is3842to get the American public to gamble more often, more quickly,3843on more highly profitable, i.e., addictive products. That's the3844quote I just read to you from Genius Sports.3845 That's the business model. And this is where Congress has3846to come in. This is not what the American public wanted when3847the Murphy case was decided. We loved our sports. Sports have3848become the equivalent of a nonstop slot machine because of3849these data deals. And the only way to protect the public is at3850the Federal level with minimum Federal safety standards.3851 Senator Schatz. Thank you, Dr. Levant. And we'll be--we'll3852be talking to Republicans and Democrats on this committee and3853their staff about our legislative proposals. And again, it's3854not going to solve every problem, but I think this particular3855problem is especially acute and needs to be dealt with3856immediately.3857 Senator Blackburn. Senator Cruz.3858 The Chairman. Thank you, Madam Chair. Prop bets are at the3859center of recent game-rigging allegations. For instance,3860bettors wagered that Terry Rozier would underperform during an3861NBA game, when Rozier took himself out of the game early,3862allegedly to help the bettors cash in. Other gamblers wagered3863that two Cleveland Indian pitchers would throw balls instead of3864strikes after the pitchers allegedly tipped off gamblers.3865Similar incidents have occurred in other professional leagues.3866 Mr. Miller, two questions. First, are there certain prop3867bets that sportsbooks should not offer because of the integrity3868risks they pose?3869 Mr. Miller. Senator, thank you for the question. I would3870answer that question by saying that one, the regulated markets3871in each of the individual states have made determinations with3872regard to prop bets. I think you have seen a movement to limit3873and/or eliminate prop bets in the states, and believe that in3874those states, they are the best determined to make those3875determinations around which props should or should not be3876allowed.3877 The Chairman. So, second question.3878 Mr. Miller. Yep.3879 The Chairman. Do you agree that if a league comes to a3880sportsbook and says a bet creates an integrity risk, the3881sportsbook should not offer the bet?3882 Mr. Miller. I do agree with that.3883 The Chairman. Congressman McHenry, in a recent advisory,3884the CFTC suggested prediction markets should consider the input3885of a sports league before offering event contracts on its3886events. If a sports league tells a prediction market not to3887offer certain event contracts, such as those that resemble prop3888bets, should the prediction market honor that request?3889 Mr. McHenry. Yes, and they have.3890 The Chairman. Over the past five years, several athletes3891have been caught manipulating their performance or giving3892insider information to sports gamblers. Independent integrity3893monitors often play a leading role in detecting this activity.3894When suspicious betting patterns emerge, monitors quickly3895circulate information among State regulators, sportsbooks, and3896leagues.3897 Mr. Sadin, you founded and lead one of these--you founded3898and lead one of these integrity monitors. Can you provide an3899example of how the current system has identified and caught3900game manipulation?3901 Mr. Sadin. Thank you for the question, Senator, and I'm3902happy to. I could share a couple of different examples,3903anonymized for obvious reasons. What I would say is that in the3904first circumstance, our analytical work identified what we call3905inverse line movement across correlated markets. Essentially3906what that means is first half, full game point spreads, those3907are correlated markets. You would expect them to move in tandem3908with one another. We identified a circumstance in which they3909were moving materially in opposite directions. We surfaced that3910circumstance by an alert to our broad sportsbook operator3911network and very promptly received feedback from about 10 to 123912different regulated sportsbook operators that said, we're also3913seeing pretty significant movement and potentially suspicious3914activity across those markets.3915 Our system automatically parses all of that feedback and3916consolidates it into a report that we then surface to the3917appropriate State regulators, to the appropriate sports3918governing body, and then obviously back to the impacted3919sportsbook operators. That's a circumstance in which we3920identified something, but there are dozens, hundreds, perhaps3921thousands of circumstances in which operators identify directly3922to us a circumstance they've highlighted, and then we3923disseminate it out across the ecosystem.3924 The Chairman. Do you have any suggestions for improving the3925system to make it easier to catch game manipulation?3926 Mr. Sadin. Generally speaking, I would probably refer back3927to my written statement, which is anything that would further3928collaboration, engagement, and transparency across the myriad3929stakeholders that operate in the space. So, from an integrity3930monitoring perspective, I would probably urge platforms to3931widen the parameters in which they deem suspicious activity may3932have taken place for reporting purposes. For ProhiBet, I think3933implementing a list of prohibited patrons on a proactive basis3934to ensure you're preventing transactions from prohibited3935individuals before they ever happened, is crucial.3936 And then, obviously, from an education standpoint, vanilla,3937same old training is not going to work. This is a new frontier.3938There are emerging vulnerabilities. There are bad actors that3939are constantly innovating. We need to make sure that curriculum3940is refreshed and constantly reinforced.3941 The Chairman. There is serious disagreement about whether3942the CFTC can unilaterally allow prediction markets to offer3943sports event contracts pursuant to the Commodity Exchange Act.3944Many simply see prediction markets as a workaround to State3945gambling laws. The courts are split. Ultimately, unless3946Congress acts, the Supreme Court may have to decide the issue.3947 Congressman McHenry, when Congress debated Dodd-Frank, some3948senators expressed concern that event contracts could become a3949vehicle for sports gambling. Isn't that in fact what has come3950to pass? The CFTC argues that sports event contracts fit the3951Commodity Exchange Act's definition of a swap because sports3952outcomes have economic consequences. But what is the economic3953consequence of, say, whether a pitcher will throw a ball or a3954strike?3955 Mr. McHenry. Well, like, getting a playoff game has a3956material impact on the economy around that stadium and that3957town. So you can see economic impact on whether or not you get3958a playoff game in your town, or the t-shirt manufacturer on the3959Super Bowl outcome. So there is economic connectivity for that.3960 But the debate around Dodd-Frank, in my experience in Dodd-3961Frank over on the lowly House side, we did not have any3962substantial discussion about the nature of swaps in my3963committee. But in the Ag Committee, both here in the Senate and3964in the House, there was a wide new definition for swaps. And3965that authority was given to the CFTC. And then the Chair of the3966CFTC, Gary Gensler, wrote rules that encompassed a wide array3967and definitions of swaps. As a result----3968 The Chairman. What about an answer to the specific question3969about what is the economic consequence of whether a pitcher3970throws a ball or a strike?3971 Mr. McHenry. It is up to the consumers to decide that under3972swaps--under a swaps definition. And it will be for the courts3973and the Congress to decide whether or not they like that. Under3974the Commodities Exchange Act, onion futures are banned. I don't3975think we have a serious debate about onions, but at the time3976they did. So we welcome Congress's input here and the3977rulemaking of the CFTC on these definitions.3978 The Chairman. Ranking Member Cantwell.39793980 STATEMENT OF HON. MARIA CANTWELL,3981 U.S. SENATOR FROM WASHINGTON39823983 Senator Cantwell. Thank you, Mr. Chairman, and thank you to3984Senator Blackburn and Hickenlooper for doing this subcommittee.3985 And I think that last conversation is illuminating, and I'd3986like to follow up on it, but I'd like to remind everybody we3987had a financial collapse of our economy because we didn't do3988the job of regulating derivatives. And I remember somebody on3989the Senate floor actually saying, we can't regulate them, we3990don't know what they are. That's exactly when, and it had a3991conservative journalist who basically said the lack of clarity3992is fraud. If you can't understand it, then yes, there is3993something behind the situation.3994 So to this, I definitely want to say that fans must have3995confidence that games are being played fairly and honestly. So3996I agree with the Chairman on that. That's what makes3997competition great. And that is why Senator Cruz and I are3998conducting bipartisan inquiry into how the leagues, the3999sportsbooks, and the stakeholders are protecting the integrity4000of sports and teams.4001 But I believe that this integrity crisis goes beyond how we4002monitor players. In betting activities, we must also ask, why4003would a professional athlete making millions of dollars risk4004losing everything to place a bet? In many cases, it's the same4005answer: online betting platforms can be highly addictive.4006 So I'm glad our witness, Dr. Levant, is talking about that4007today. Whether you're a star athlete or a struggling college4008student, and once more--once they're hooked, they're designed4009to keep them coming back for more.4010 So the conversation that we just had had, Mr. Miller, I'm4011just trying to understand, because our former colleague here,4012Congressman McHenry, talked a little bit about the history, but4013in 2010, Congress amended the Commodity Exchange Act in the4014wake of that financial crisis I just said, and under Section 5,4015Congress authorized the CFTC to prohibit prediction markets4016from offering contracts that involved gaming and gaming4017activities, and in 2011, they issued Rule 40.11, which banned4018prediction markets from offering contracts involving gaming4019activities.4020 In doing so, they stated the rule was consistent with our4021congressional intent, and the CFTC prohibited sports betting4022contracts for more than 15 years under this rule. But all of a4023sudden, starting in 2025, prediction markets began offering4024sports gambling contracts.4025 So my state wants to know why the Indian gaming4026associations, who basically have lived by the rules in their4027state and lived by the rules of a regulated entity, are now all4028of a sudden competing with somebody that is not a regulated4029entity that's basically offering the same product?4030 So in 2025, the Indian gaming industry generated more than4031680,000 jobs for rural Americans, and it has served as an4032economic livelihood. If the prediction markets are allowed to4033keep operating unchecked, does this pose an existential threat4034to both tribal sovereignty and to Indian country? And what can4035Congress do to better protect Indian gaming?4036 Mr. Miller. Well, thank you, Ranking Member. Clearly, we4037share the same view. As someone who was around during Dodd-4038Frank, and recognizing that this was a response to a financial4039crisis that was created by lax regulation, or in fact no4040regulation, it's really hard to believe that anybody could pull4041from that the idea that we could create a national sportsbook4042run through the CFTC. It just--it's hard to even imagine that4043anybody could make the argument, but here's where we're here4044today.4045 In fact, there were Federal statutes on the books when4046Dodd-Frank was amended and created. IGRA, which established the4047framework for Indian gaming. PASPA, which actually, you know,4048was struck down in 2018, and the Wire Act. All Federal statutes4049that should have been at least looked at and modified if the4050CEA was going to be amended to create the Federal Department of4051Gambling. Of course it was not. It was never intended to be4052that.4053 And then finally, when in 2018, when the Supreme Court4054actually debated Murphy v. NCAA, even the Supreme Court didn't4055understand and/or recognize that there was a backdoor4056opportunity for the sports betting industry through prediction4057markets back in 2018. And so yes, there's real harm here.4058Chairman Bean, who is the, you know, one of your constituents4059who runs the Indian Gaming Association, you know, he and I are4060very aligned on this.4061 Indian country is scared. They believe that, you know,4062gaming has been a transformational economic opportunity for4063some of the people that have been treated worse than almost4064anybody else in this country's history. And gaming has created4065economic vitality and an opportunity for them. And that4066opportunity is very much at risk because of prediction markets.4067 Senator Cantwell. Well, I just--I just looked it up because4068I wanted to make sure. I didn't get that quote quite right4069before. It was P.J. O'Rourke, and he said, complexity is fraud.4070His point was complexity--if it's so complex and you can't4071understand it, then complexity is the fraud.4072 So that's where we are today. No one can answer the4073question why we have two competing businesses here. Well, we4074have Indian gaming that is offering sports betting, and then4075another entity that's offering sports betting, but it's not4076regulated in the same way. So I think we got to get answers to4077that.4078 Mr. Levant, I know you've probably been asked this by our4079colleagues already, but what do we--what do we do about this4080larger issue? You know, there was recent data from Washington4081Health Survey shows the troubling trends with youth and4082gambling. That these include material increases in the number4083of 10th graders who are saying they've engaged in gaming across4084states. And how does that online betting help--I mean, are4085people just being targeted at this young age?4086 Dr. Levant. People are being targeted relentlessly. And4087this discussion of prediction markets has done something that4088others would have predicted--small p--impossible, as Mr. Miller4089and I agreeing on an issue. The prediction markets take this,4090and not only infringing upon sovereign rights, tribal gaming,4091but 18-year-olds, and they're being told it's investment.4092 I've had six clients in my recovery group who have relapsed4093because they were told this is an investment. I'm not gambling,4094I'm making an investment. It's just so fundamentally wrong, and4095where I disagree with Mr. Miller is there's a huge need for4096Federal oversight because of what's happening with children and4097young adults and families with online sports gambling. But it's4098significantly worse now with prediction markets because they're4099acting under color of Federal law, targeting people as young as410018. They don't have to comply with things like self-exclusion.4101They're just doing whatever they want to do, and the harm is4102growing exponentially.4103 Senator Cantwell. Well, I thank the Chair. I've actually4104gone over my time, but I'm asking him about the impact on4105youth. And the Chairwoman and I have worked diligently on a lot4106of legislation to protect young people online, so we'll add4107this to the list. So thank you so much. Thank you, Madam Chair.4108 Senator Blackburn. Senator Rosen.41094110 STATEMENT OF HON. JACKY ROSEN,4111 U.S. SENATOR FROM NEVADA41124113 Senator Rosen. Thank you. I want to thank you, Madam Chair,4114and thank you to the witnesses for being here. You know, I'm4115just so concerned about all this circumventing the rules. As4116they say, a rose by any other name still smells as sweet. If it4117walks like a duck and quacks like a duck and looks like a duck,4118it's probably a duck.4119 So I want to talk about responsible gaming loophole,4120because licensed sportsbooks are required by State laws to4121implement responsible gaming programs, which include deposit4122limits, cooling-off periods, mandatory disclosures. Under the4123CFTC, no equivalent requirements apply to prediction markets.4124 Dr. Levant, I have a lot of questions, so if you would be4125brief on this. You're working with people with sports betting4126problems. Is there a fundamental difference between this4127problem, a sports bet versus an event contract? A rose by any4128other name is the same. And what is the risk by allowing4129prediction markets to circumvent meaningful mandatory consumer4130protections? They're just trying to get around the rules.4131 Dr. Levant. There's no discernible difference. In fact,4132people are using it as another form of gambling. And you're4133absolutely right, Senator, it skirts--it circumvents all the4134rules, including rules designed to keep people safe at the4135State level. Completely disregards them.4136 Senator Rosen. Thank you. I appreciate that. And I want to4137talk again about circumventing the rules because most of the4138countries only had legalized sports betting less than 10 years.4139But--excuse me. While most countries only legalized sports4140betting less than 10 years ago, Nevada has a long and, of4141course, storied history with regulated sports betting,4142legalizing it nearly 100 years ago.4143 Nevada was a pioneer, and now some of the strongest and4144most comprehensive State rules to promote safe and legal sports4145betting occur in my state of Nevada. Historically, Federal4146action on legal sports betting has often unintentionally pushed4147gaming underground and outside of legitimate regulated markets.4148Therefore, any Federal action must recognize the strong pre-4149existing State and tribal gaming regulatory regimes that ensure4150all sports betting, no matter what you call it, what it's4151branded as, and it's covered under current State and tribal4152law.4153 So, Ms. Thomas, the next few questions are for you. And I'm4154going to ask you to answer, and then I want--I have three4155questions, so we'll try to be as brief, I guess, as we can.4156What does full compliance with sports betting laws today look4157like in practice? And more specifically, what guardrails and4158compliance measures from licensing, background checks, to4159ongoing geolocation requirements, age verification for apps,4160are part of your State's regulatory regime?4161 Ms. Thomas. Yes, thank you. So first of all, you have to be4162over 21 to wager, 21 or over. You have to have--sportsbooks4163must make available and enforce exclusionary measures for those4164who choose to gamble. And our office oversees a Statewide4165exclusion list to make sure that information is communicated.4166Credit card deposits are prohibited, extension of credit is4167prohibited. It is--we review all markets before they're4168offered, and leagues and teams can request that those are not4169allowed if they're risky.4170 Senator Rosen. Really comprehensive.4171 Ms. Thomas. Yes.4172 Senator Rosen. Really comprehensive. So just a simple yes4173or no: Do you believe prediction markets--or prediction markets4174are not currently required to comply with any of the safeguards4175you described? Is that--would that be correct for the most4176part?4177 Ms. Thomas. That is correct.4178 Senator Rosen. I'm going to ask a similar question going4179forward. So what is required of legal sports betting companies4180to comply with anti-money laundering rules, responsible gaming4181safeguards, cybersecurity, and integrity monitoring?4182 Ms. Thomas. It's extensive. All of those things are4183required. Both Federal reporting by the sportsbooks for anti-4184money laundering and State reporting for anti-money laundering4185and unusual and suspicious activity.4186 Senator Rosen. So you're watching this to prevent criminal4187activity and other cyber incidents. So yes or no again, please,4188Ms. Thomas. Prediction markets are not currently required to4189comply with any of these safeguards as we just described: anti-4190money laundering, responsible gaming safeguards, cybersecurity,4191and integrity monitoring?4192 Ms. Thomas. No, not to my knowledge.4193 Senator Rosen. Not to your knowledge. Thank you. I'm going4194to ask a similar question again. How do operators today4195coordinate with State and tribal gaming regulators, our sports4196leagues--you've touched on this--law enforcement, and integrity4197monitoring firms to identify suspicious activity and protect4198consumers?4199 Ms. Thomas. We are in constant contact with all4200stakeholders: leagues, integrity monitors, our partners in4201other states including Nevada. We are very close with all of4202our partners, and we have to be in constant communication so we4203can share important information.4204 Senator Rosen. You're very diligent in this. And so, yes or4205no again, Ms. Thomas. Prediction markets are not currently4206required to comply with any of these safeguards. Would that be4207correct to the best of your knowledge?4208 Ms. Thomas. Yes, correct. Not to the best of my knowledge.4209 Senator Rosen. Thank you. Mr. Miller, we talked a little4210bit--we talked about, as Senator Cantwell touched on, gaps in4211compliance, particularly in our tribal communities, but both4212for State and tribal. You know, when products that are4213functioning identical to legal sports betting, they're allowed4214to operate completely, completely outside of State and tribal4215laws and regulations. What protections, oversight mechanisms,4216and accountability structures do you believe they're able to4217circumvent? And would you say this is a fair and level playing4218field?4219 Mr. Miller. Well, I think that--Senator, thank you for the4220question. I certainly don't believe it's a fair and level4221playing field. We believe that getting a gaming license,4222whether it be in Nevada or in any other state, is a privilege.4223It requires significant due diligence for suitability of that4224licensure, the regulations around the licensee and what they4225apply for, and then how they behave as a licensee.4226 We are all, as licensees, we are held to account by 8,4004227regulators in the states and tribes all over this country, and4228I think that that itself shows that the system is--you know,4229it's iterative, it's continuing to get better, but the notion4230that somehow or another the prediction markets and the 5004231people that work at the CFTC--the CFTC 500 people is less than4232the number of regulators in the state of Pennsylvania.4233 Senator Rosen. Right.4234 Mr. Miller. That somehow or another they could manage and4235facilitate a nationwide sports betting network is laughable.4236 Senator Rosen. So you would agree that----4237 Mr. Miller. I do.4238 Senator Rosen. You just ask for a fair and level playing4239field?4240 Mr. Miller. That's correct.4241 Senator Rosen. Thank you. I'm going to ask you a little4242bit, Mr. Miller, about ongoing litigation. Oh, my time is up.4243Are you waiting for Senator Lujan? Do you want me to keep4244going? I knew he was coming, so thank you. As soon as Senator4245Lujan gets here, we'll defer to him, but----4246 Senator Blackburn. If the gentlelady will pause for a4247moment.4248 Senator Rosen. Yes.4249 Senator Blackburn. Senator Hickenlooper and I each have4250some additional questions.4251 Senator Rosen. OK.4252 Senator Blackburn. But I think Senator Rochester is4253planning to return and--no, OK. But Senator Lujan is planning4254to return and Klobuchar. No? OK. All right, we will continue.4255Go ahead.4256 Senator Rosen. Thank you, Madam Chair. I appreciate it. I4257knew he was on the way, so I was--I didn't realize I was this4258far over, but appreciate your consideration.4259 So, Mr. Miller, you know, Nevada is among many states that4260have been pulled into costly litigation with prediction markets4261to defend its right to regulate gaming within its borders. We4262want to regulate gaming within the state of Nevada. And so what4263does the nationwide litigation landscape look like today? And4264how long might it take for these questions to be resolved if4265it's left to the courts?4266 And in your view, what are the risks if Congress doesn't4267step in to reaffirm that states are the primary regulators when4268it comes to gaming and that Congress never intended the CFTC to4269regulate gambling nationwide?4270 Mr. Miller. Well, thank you for the question. I clearly4271agree with you. Congress never--it was never Congress's intent4272to create a Federal Department of Gambling through the CFTC.4273The fact that we have, you know, federalism in this country,4274that states have the rights of self-determination, and tribal4275nations similarly. This is how we've created a system that4276works in America. 8,400 regulators working every day to make4277sure that there's integrity in the matches, that the consumers4278are protected, and that the state and/or tribe benefits from4279this.4280 And so as it relates to litigation, I think that we're in 94281of the 12 circuits and 41 State attorneys general have written4282the CFTC saying, stop it, knock it off, it's not your purview.4283And these are attorneys general that span the spectrum from the4284farthest left to the furthest right, all agreeing that the4285states have the right to do this. And they are spending4286extraordinary amounts of money in litigation against Kalshi,4287against the prediction markets, and now against the CFTC, who4288has inserted themselves as a party using taxpayer dollars to4289assert their control and dominance in a world that they quite4290frankly have no business being in.4291 Senator Rosen. Well, this is my last and final question to4292follow up on this. The CFTC's current approach, prediction4293market platforms self-certify their own contracts for trading.4294It's like the hen--the wolf guarding the henhouse, right? And4295so that means they decide for themselves whether a new product4296complies with the law. They don't have to get any other audit,4297and the CFTC has 90 days to review.4298 Can you name any other Federal or State regulator that4299allows the entities it regulates to approve their own products4300in this way?4301 Mr. Miller. I'd love to say the short answer is no. The4302short answer is no, but I've never--I have tried to find4303another agency at the local, State, or Federal level that4304allows participants that are regulated entities to self-certify4305that they're adhering to government protocol.4306 Senator Rosen. Aren't you going to let--always let you give4307yourself the benefit of the doubt, I guess, right? Thank you.4308Appreciate it.4309 Mr. Miller. Thank you.4310 Senator Blackburn. Senator Lujan, you are recognized.43114312 STATEMENT OF HON. BEN RAY LUJAN,4313 U.S. SENATOR FROM NEW MEXICO43144315 Senator Lujan. Thank you, Madam Chair. Mr. Miller, last4316week, four New Mexico tribes sued Kalshi alleging the company's4317illegal offering sports betting on tribal lands in violation of4318the Federal Indian Gaming Regulatory Act. Now, there's other4319lawsuits that have also been out there. My question is yes or4320no: Has Congress provided exclusive gaming rights for Indian4321tribes?4322 Mr. Miller. They have.4323 Senator Lujan. And is it your belief that some of these4324sports betting and other predictive models are in violation of4325State and Federal gaming laws by operating on tribal land?4326 Mr. Miller. I do believe that's true.4327 Senator Lujan. So is there agreement on the panel that4328Congress needs to do something to weigh in here? Mr. Miller?4329 Mr. Miller. My view is Congress needs to reaffirm the4330rights of states and tribes.4331 Senator Lujan. Ms. Thomas.4332 Ms. Thomas. I agree with Mr. Miller.4333 Senator Lujan. Mr. Sheldon--Sadin, I'm sorry.4334 Mr. Sadin. It's OK. You know, my perspective is anyone4335that's offering markets on sports, no matter what, should be4336engaging in some type of control to make sure the integrity of4337the sport is preserved.4338 Senator Lujan. Representative.4339 Mr. McHenry. I believe we have to see the CFTC rulemaking4340that's going on. And if Congress wants to step in and assert4341its authority, we welcome the conversation. But as for now, the4342courts and the Third Circuit in particular, has given4343prediction markets this capacity to offer these contracts.4344 Senator Lujan. Should these folks be able to advertise to4345kids?4346 Mr. McHenry. No, and the members of our coalition do not,4347number one, there's a solid ban at 18. Congress can debate what4348is the appropriate option for securities, for commodities, for4349whatever it is in society. We would like to be engaged in that4350conversation if Congress wants to do that. But for our markets,4351for prediction markets, they comply with market surveillance,4352AML requirements, know your customer requirements.4353 All of our members maintain an active ban list of folks4354that we have coordinated with leagues. We'd like to have4355relationships with all of them to ban folks that are insiders4356as designated by the people they work with or workaround. And4357we maintain that by using technologies like IC360, other4358surveillance techniques like geolocation.4359 And in particular, when it comes to tribal issues, I think4360it's very important that anyone who's engaged with tribes4361respect their treaty rights that have been longstanding in this4362country and have been and should be affirmed by the courts and4363Congress.4364 Senator Lujan. I appreciate your thorough response on that4365last one. I should have said, Mr. Chairman, but it's always4366good to see you, Patrick. Dr. Levant.4367 Dr. Levant. Congress most certainly--I think this hearing4368proves it--must certainly step in with prediction markets, but4369the Congress needs to go further. And this is where I come back4370to my disagreement with Mr. Miller and the AGA. It's ironic to4371me that the AGA is asking Congress for help with prediction4372markets, but yet telling you at the same time you have no role4373in regulating sports betting.4374 There needs to be minimum Federal safety standards enacted4375governing sports betting, which will also recognize the4376sovereignty of states to go further if they like. But this is4377too big, involving too many entities. There's no way to prevent4378harm without Congress stepping in and creating minimum Federal4379safety standards, sir.4380 Senator Lujan. I appreciate. I agree with that, sir. Now,4381Madam Chair, while I know this hearing is on the subject of4382sports betting integrity in America, there's one thing I wanted4383to raise today because it's sports betting proximate. And maybe4384there are some folks in this room that like to collect trading4385cards, baseball cards, soccer cards, Pokemon cards, cards of4386cards. There are even cards of members of the Senate and the4387House of Representatives.4388 The reason I'm raising this is I don't know how many of4389you--has anyone in this room heard about Whatnot? Whatnot.com?4390Anybody? I see a few yeses. Look, this is a company that's4391being sued right now over illegal lottery and gambling. And4392what they do is you buy into this website and they draw your4393name, they spin, whatever the hell that they do, and they let4394kids start doing this with credit cards. And people have gotten4395in debt. And I just certainly hope that when we choose to clamp4396down on protecting kids, that we do it in all these spaces.4397 This is ridiculous that people are getting addicted to this4398kind of nonsense, that kids are getting in debt, they're4399getting their parents in debt, they're driving up credit cards.4400And I certainly hope these people get put out of business with4401the kind of nonsense with what they're doing to prey on some of4402the most vulnerable people in America. I do not want to4403distract from this important hearing on what we're doing here.4404 But Madam Chair, I know this is an area of interest. We're4405talking about kids. I just certainly hope that we can dig in,4406we can ask the experts, and we can look at this, and that we4407don't forget about people like this that are also preying on4408kids as well.4409 So thank you for the indulgence for the time, and everyone4410that's here today, I really appreciate your time today.4411 Senator Blackburn. Well, you've raised an important point,4412and what we do have to realize is there are laws and there are4413rules in the physical space over certain activities, but in the4414virtual space, there are no laws or rules. And as I have many4415times said, product safety design exists in every single4416industrial sector in this country except in the virtual space.4417 If you buy a car, there are safety standards. They don't4418tell you how to drive the car, but they tell you the car is4419safe to drive. And what we are seeing is growth in these4420industries where the standards have not been put in place and4421the industries have taken off on their own, and then regulation4422is being discussed on the backside.4423 Dr. Levant, I said I would come back to you, and I do want4424to go to you on this issue of advertising to children. I know4425Mr. Miller says they don't. Congressman McHenry says they4426don't. But we know the dirty truth of a lot of this is they are4427on these websites that are targeting children and are trying to4428build databases of children: eyeballs, the number of eyeballs,4429the amount of time they capture them, the amount of time4430they're online. Then that is going to give them richer data.4431That richer data is worth more money.4432 So the issue of where children engage with these activities4433is a part. Senator Lujan just mentioned it. Senator Cantwell4434just mentioned it. Senator Curtis is looking at this issue. And4435that presence of gaming or prediction markets on those sites4436and trying to pull those children into that and then4437algorithmically being pulled further. You've spoken to that in4438the issue of addiction. So when it comes to advertising to4439children, what has your research shown you and what is the4440engagement?4441 Dr. Levant. Senator, what we're seeing and when we hear--4442I'm going to call them gambling companies inclusive of4443prediction market companies--when they say we don't advertise4444to children, they're speaking about advertising on primetime4445TV, on network television. That's not where kids are getting4446their entertainment. Children are getting their entertainment4447online, on their phones, on Instagram, unfortunately on TikTok,4448on a variety of platforms. That advertising is completely4449unregulated and it is inundated.4450 Social media is inundated with various levels of gambling4451advertising. One of the most sinister is something the gambling4452industry calls affiliates. People they pay to talk about their4453platforms, to post about their platforms. The pop-up ads are4454relentless, and they're completely unregulated. States can't4455address that. Congress has to address that. Because once these4456companies go on social media, they are going to, as night4457follows day and day follows night, they're going to pull in the4458eyes of children and young adults.4459 And once those eyes have hit and the algorithms have been4460triggered, it will continue without any safeguards. So what4461we're talking about is delivery of advertising of a known4462addictive product to children long before the risk-reward4463system of the human brain is fully formed. That doesn't happen4464until you're about 25 or 26. So by its very definition, what4465they are doing is endangering children for their benefit. It4466certainly doesn't benefit the kids. That is problematic.4467 Senator Blackburn. Mr. Sadin, what do you see in your4468research about the advertising? How are you seeing these kids4469engaged?4470 Mr. Sadin. Yes, thank you for the question, Senator. I4471don't have a tremendous amount of visibility into the4472demographic types that are engaging in this type of product.4473For us, our central goal is regardless of sort of who you are,4474where you are, you are ensured to be protected on these4475platforms with respect to the integrity of sports. And so, if4476you are a participant, if you are a prohibited participant, if4477you have some access to inside information, if you somehow have4478the ability to exert undue influence, then you're being4479tracked, and then you're being proactively permissioned to4480ensure you're not transacting in markets.4481 Senator Blackburn. I also want to ask you a little bit, and4482we talked a little bit about this yesterday, fair play and the4483match fixing that is going on. I wonder what your take is and4484how instructive you think what you've seen in that is to the4485broader sports and to the microtargeting that is going on?4486 Mr. Sadin. I mean, I think generally speaking, individuals4487who are closest to the level of play, the sport themselves, are4488the ones that are most vulnerable, the ones that are at the4489most risk, right? So, whether that be collegiate stakeholders,4490student athletes, administrators, trainers, coaches, equipment4491managers, et cetera, they are the ones that are the most4492vulnerable to bad actor harm and threats and approaches.4493 And so, I think getting them educated to make sure that4494they know how to deal with those types of threats and4495vulnerabilities is essential.4496 Senator Blackburn. Congressman McHenry, I think there has4497been a lot of discussion around the CFTC as the sole regulator,4498but we know there are lawsuits that are in the states. I think4499Tennessee has an active lawsuit right now. So I believe that4500our State regulators and our State attorneys general have a4501role to play in protecting consumers from harm. So you pivot4502toward only the CFTC. So how are your members engaging? Because4503if you don't have this comprehensive coverage at the Federal4504level, the protection does lie with the states. So why would4505they not engage with the states to make certain that consumers4506are protected?4507 Mr. McHenry. Because they adhere to higher standards than4508what is the average State standard. Give you one example. In4509the states that have legalized gambling, there are a dozen that4510do not ban advertising to children. So at the State level, it's4511not--it's imperfect as well. You have 35 states that allow4512sportsbooks in their state regime.4513 What we have with the CFTC is a requirement for know your4514customer, anti-money laundering, market surveillance. The4515regulator approves contracts before they go on the market. Then4516within 24 hours, they can unwind those contracts if they think4517there's fraudulent activity. They have the ability to ban4518certain types of contracts. You have the CFTC engaged with the4519leagues on data sharing. You have products like IC360 that our4520members use to ensure that they police against insider trading4521and fraudulent activity.4522 We do have very high standards for the members that are4523part of our coalition. So to say that there's no Federal4524standard in this realm is not true. In the general realm that4525you're describing, the broader digital realm, you're absolutely4526right. It is a very complicated space. But for these regulated4527prediction markets, what they're doing is using new technology4528to access a very old type of exchange of a swaps market that4529has been around for 100 years. Has been regulated at the State4530level, then to the Federal level with the creation of the CFTC.4531 So this is a time-honored set of things with new contracts4532offered with a new piece of technology. And with that, we do4533have struggles of how it develops, and the rulemaking regime4534that is ongoing at the CFTC is very important to get right so4535we do have the best consumer protection available and possible.4536 Senator Blackburn. Thank you. Senator Hickenlooper.4537 Senator Hickenlooper. Thank you, Madam Chair. Dr. Levant,4538I've got a couple questions for you. The obviously 35 states,4539including Colorado and Tennessee, prohibit gamblers from4540borrowing money to make wagers. And these rules exist to4541protect consumers so they don't end up trapped in a cycle of4542debt and dealing with their addiction and paying off loans.4543Kalshi recently asked the CFTC for approval to offer its4544consumers these same admittedly risky loans so they can place4545bets using money they don't have. This week we sent a letter to4546the CFTC urging them to reject Kalshi's application.4547 Based on your experience working with people affected, you4548know, by problem gambling, is it dangerous for consumers to4549borrow money to bet on prediction markets?4550 Dr. Levant. It's extremely dangerous. No one should be4551borrowing money to gamble with. Period. In addition to that, I4552will tell you who does borrow money to gamble: Addicts borrow4553money to gamble, and people prone to addiction borrow money to4554gamble.4555 Senator Hickenlooper. Thank you. I agree with that. Let me4556also ask you, since I've got you on the mic, comeback programs,4557often referred to as VIP retention or win-back, generally are4558used to reactivate lapsed accounts. They do so by flagging4559accounts for aggressive re-enrollment, often highlighting their4560previous big wins, that same addictive juice that is almost--4561for some people is almost unavoidable, or irresistible, I4562should say.4563 When utilized on players who have proactively blocked4564themselves from the app, which they call self-exclusion, these4565tactics are, you know, highly controversial. I think in some4566cases they are--they are illegal. I mean, self-exclusion should4567be, to my understanding, irreversible, and it should last six4568months or to a lifetime, whatever someone makes that decision.4569Shouldn't they be protected from this type of advertising?4570 Dr. Levant. Self-exclusion, unfortunately, is a state-by-4571state-by-state matter. We don't have a Federal self-exclusion.4572I will share with you two real-life events. One just happened4573last week. A client who had gone on a one-year self-exclusion,4574took this person quite a while to get to the point to have the4575courage to go on the one-year self-exclusion. And at 40 seconds4576past the hour of the exact one year, this client received an e-4577mail that was offering them a welcome back opportunity and a4578welcome back bonus. And when I looked at the fine print on the4579offer, it was tailored to their player number that they had had4580before.4581 I will also--and I'm happy to make this available to the4582committee--I brought with me today the copy of an e-mail that a4583client of mine received. This client was not on self-exclusion,4584but they had been a very active gambler and for six weeks4585didn't make a bet. They were in treatment, they didn't make a4586bet. About six weeks later, they received an e-mail from what4587is labeled the DraftKings VIP Comeback Series. And it starts4588with, ``I've got some exciting news for you. Your account has4589caught our eye, and we're thrilled to extend an invitation.''4590And it goes on from there. That is as predatory as it gets.4591 And if this were another addictive product, if this were4592alcohol or tobacco, we'd shut it down instantly if a bar was4593exhibiting that type of predatory behavior. In gambling, they4594call them VIP programs. Yet another reason Congress needs to4595step in and create minimum Federal safety standards and stop4596this from happening, because it's ruining lives, it's ruining4597families.4598 Senator Hickenlooper. Well, I think the ultimate--the goal4599should be that the industry reaches out and helps us establish4600those standards instead of avoiding that.4601 Dr. Levant. I suppose in nirvana, yes, but as I pointed out4602earlier Mr. Miller and his organization, on their website, they4603specifically state that the Federal involvement in sports4604gambling is--I believe the words are--a non-starter. So when an4605industry demonstrates an unwillingness to regulate itself, and4606it's an addictive product, most respectfully, that's where4607Congress has to step in.4608 We've seen this before with tobacco. We've seen it with the4609opioid industry. We have an opportunity to get in front of this4610now. We can't wait for the industry to do it.4611 Senator Hickenlooper. I won't speak for the Chair, but I4612think this hearing qualifies as a starter. Ms. Thomas, thank4613you for all your work on this. And many states like Tennessee4614have created regulations on gambling advertisements to ensure4615that consumers are protected. Can you please outline--and here4616we are talking about some of these again, Dr. Levant referred4617to this as predatory advertising--can you just describe some of4618the advertising guardrails and positive impact that they've had4619on consumers?4620 Ms. Thomas. Yes, thank you. So first of all, I believe that4621the issue he was speaking to goes to not only advertising but a4622responsible gaming problem.4623 Senator Hickenlooper. Absolutely.4624 Ms. Thomas. And in our state, we require our operators to4625provide a written responsible gaming plan, training outline,4626the mechanics by which they oversee that, RG, and data about4627who and how many--not who, but how many they've excluded and4628what steps they've taken. Part of their plans--and I can tell4629you that every operator in Tennessee, as part of their plans,4630has in there that they will not market to anybody who was ever4631on an exclusion list. So that is a very positive thing.4632 Otherwise, by statute, we have--obviously, we can't4633advertise to minors, our office receives all advertising terms4634and promotions. There is disclosure about 1-800-GAMBLER and 1-4635800-RESET, which are gambling helplines, and individuals can4636call those and be directed to assistance within Tennessee.4637 I also would like to touch on the fact that we spoke about4638a lot of predatory behavior targeting really young minors, 10th4639graders, I think the Chairman said. I see so much of that with4640illegal sportsbooks, and our office has spent so much time and4641effort targeting those, and especially working with Google and4642Apple to get any illegal apps off the store so that they can't4643target minors.4644 Senator Hickenlooper. Well, thank you, and I'll yield back4645to the Chair, but I feel that all five of you are willing and4646engaged to make--to fix some of these serious glaring problems,4647and look forward to working with the Chair to provide us a4648sense of urgency. These are real people's lives that are being4649negatively impacted right now.4650 Senator Blackburn. And I thank all of our members that have4651been here today, and I thank our witnesses. You've been an4652excellent panel. This does allow us to start to build where we4653should move in regulation and also looking at the division4654between what should be Federal and what should be State and4655preserving those States' rights in order to move forward with4656this.4657 I will have to say Chairman Cruz, who's no longer here,4658talked about how big the football Friday nights are in Texas.4659But I would like to point out for the record that Texas finally4660gave in and joined the SEC, which is the greatest football4661conference. So they finally saw the light, and they're going to4662join with the SEC.4663 I do want to remind you all that members of the panel are4664going to have until May 27 to submit questions. I will remind4665you that you need to respond to those within 7 business days.4666So that's going to give you till the close of business on June466710 to submit your responses to the questions for the record.4668 You've done a superb job in helping us establish this4669baseline. We are grateful for your time. At this time, hearing4670adjourned.4671 [Whereupon, at 12:05 p.m., the Subcommittee was adjourned.]46724673 A P P E N D I X46744675 Prepared Statement of Derek Longmeier, President of the Board of4676 Directors, National Council on Problem Gambling4677 Dear Chairwoman Blackburn, Ranking Member Hickenlooper, and Members4678of the Committee:46794680 Thank you, Chairwoman Blackburn and Ranking Member Hickenlooper,4681for holding this important hearing. I write on behalf of the National4682Council on Problem Gambling (NCPG), the sole national advocate for4683those suffering from problem gambling and their loved ones, to submit4684this testimony regarding sports betting, game integrity, and problem4685gambling in the United States.4686 NCPG's mission is to lead awareness and advocacy efforts to reduce4687gambling harm. Our vision is to advance wellbeing by minimizing harm4688from gambling problems. Since NCPG was founded in 1972, we have4689remained neutral, neither for nor against legalized gambling, and4690completely nonpartisan. NCPG members include 36 state affiliate4691chapters and a wide variety of individuals and organizations--from4692counselors, prevention specialists and researchers to people in4693recovery from gambling problems as well as treatment clinics, gambling4694operators and vendors, regulatory authorities, sports leagues and state4695human services agencies. We speak on behalf of those who suffer from a4696gambling addiction and for those in recovery who must remain anonymous.4697Problem Gambling and its Overlap with Sports Integrity4698 Problem gambling or gambling addiction is characterized by4699increasing preoccupation with and loss of control over gambling and4700continued gambling despite serious negative consequences. Gambling4701addiction (or gambling disorder) is a recognized mental health4702condition in the Diagnostic and Statistical Manual of Mental Disorders,47035th Edition. Gambling problems are highly co-occurring with substance4704abuse and other mental health problems. In fact, gambling addiction has4705the highest rate of suicide of any addiction, and the estimated annual4706social cost to families and communities from gambling-related4707addiction, bankruptcy and crime is $14 billion.4708 NCPG has concerns about the impact of gambling on the health of4709athletes, as nearly all of the limited research that exists indicates4710that elite athletes are more likely to be at risk for gambling4711addiction.\1\ This is not surprising given that data consistently shows4712athletes are gambling at high rates, often on sports. One study from4713Europe found that 57 percent of professional athletes gambled on sports4714in the past year.\2\ In addition, athletes tend to be competitive, and4715more willing to take risks, which are known risk factors for developing4716a gambling problem.\3\4717---------------------------------------------------------------------------4718 \1\ Hakansson A, Durand-Bush N, Kentta G. Problem Gambling and4719Problem Gaming in Elite Athletes: a Literature Review. Int J Ment4720Health Addict. 2021 Dec 1:1-17. PMID: 34867124; PMCID: PMC8634748.4721 \2\ Grall-Bronnec M, Caillon J, Humeau E, Perrot B, Remaud M,4722Guilleux A, Rocher B, Sauvaget A, Bouju G. Gambling among European4723professional athletes. Prevalence and associated factors. J Addict Dis.47242016 Oct-Dec;35(4):278-290. Epub 2016 Apr 25. PMID: 27111296.4725 \3\ Curry, T. J., & Jiobu, R. M. (1995). Do motives matter?4726Modeling gambling on sports among athletes. Sociology of Sport Journal,472712(1), 21-35.4728---------------------------------------------------------------------------4729 Preventing and treating gambling addiction among players protects4730their health and preserves the integrity of the game. Multiple4731instances of professional athletes intentionally compromising game4732integrity have stemmed from the athlete having a serious gambling4733problem and needing to make extra money to feed their addiction or4734relieve them of obligations to their bookie.\4\ Professional sports4735organizations, as well as the NCAA, should, therefore, provide4736comprehensive gambling addiction prevention and education programs to4737all players and team personnel. In addition, however, both the state4738and Federal government have a role to play in ensuring citizens are4739exposed to responsible gambling education and have access to resources4740should they develop a gambling problem.4741---------------------------------------------------------------------------4742 \4\ See e.g., ESPN News Services, Lawyer: Jontay Porter was `in4743over his head' with Gambling Addiction, available at: https://4744www.espn.com/nba/story/_/id/40300820/fourth-man-arrested-betting-4745scheme-involving-jontay-porter4746---------------------------------------------------------------------------4747Gambling and Problem Gambling are Not Just State Issues4748 Since the Supreme Court struck down the Professional and Amateur4749Sports Protection Act (PASPA) in 2018, 39 states and the District of4750Columbia have legalized sports betting either at brick-and-mortar4751locations or online and on mobile devices. This has proven to be the4752largest and fastest expansion of gambling in our Nation's history. All4753but two of the Senators on this Subcommittee have legal sports betting4754in their state, whether it be in-person or mobile, whereas none did in47552018. For all Senators on this Subcommittee, whether their state has4756legalized sports betting or not, your constituents are now exposed to4757ads for sports betting frequently on broadcast television, radio and4758podcasts, online, and in print. In addition, sports event contract4759derivatives offered on prediction markets have emerged over the past4760year-and-a-half as more than a fringe activity for those who choose to4761gamble, and are currently legal nationwide, even in states that have4762not legalized sports betting. Betting, using traditional sports books4763and now prediction markets, is an engrained component of college and4764professional sports.4765 The unprecedented expansion of sports betting and the recent4766emergence of event contract derivatives on sporting events highlights4767that gambling is a national issue, no longer just a state one. Problem4768gambling is also a national public health issue. While the Federal4769government is now regulating sports betting via prediction markets4770overseen by the Commodity Futures Trading Commission (CFTC)--there is4771no Federal spending outside of the military context whatsoever on4772preventing or treating gambling addiction, programs that could help4773players before they get into a situation where they intentionally4774compromise game integrity. Put another way, states receive no support4775for combatting the disease of gambling addiction from any Federal4776health agencies. This is why passing the bipartisan Providing4777Opportunities for Individauls in Need of Treatment and Support (POINTS)4778Act is the single most important action Congress can take to address4779the negative impacts of expanded sports betting and legalized gambling4780in general.4781Unregulated Legal Gambling4782 NCPG takes no stand and makes no argument as to whether trading4783event contract derivatives on sports does or does not legally4784constitute gambling. However, from our over 50 years of experience in4785the field, expertise in problem gambling, and conversations with4786researchers, clinicians, and individuals in recovery, we are certain4787that trading event contract derivatives for most retail customers is4788functionally gambling. Trading event contract derivatives includes the4789three elements of gambling. These are: Consideration (customer must use4790money or something of value to participate), Chance (the result of the4791contract is not 100 percent certain as the event has not occurred), and4792Prize (the customer will earn more money or value than they risked if4793they are successful).4794 Any activity that is functionally gambling, including trading event4795contract derivatives, can cause gambling harm to individuals and their4796loved ones. It makes no difference to NCPG what the activity is legally4797called, whether it be trading or gambling, we know that it is4798functionally gambling and, therefore, must be regulated with4799substantially similar protections to what we see states and tribal4800governments implement with respect to traditional gambling. NCPG is4801neutral as to the legalization of gambling, but we are not neutral as4802to the regulation of gambling. Thus, we urge Congress to ensure this4803activity is thoroughly regulated to protect all customers.4804 In April, NCPG submitted a 12-page public comment to the CFTC's4805proposed rulemaking for prediction markets.\5\ In it, we detailed the4806consumer protections that we believe must be included in any gambling4807app, whether it be traditional sports betting regulated by a state or4808prediction market trading regulated by the CFTC. NCPG believes the CFTC4809must include requirements in the rules for robust responsible gambling4810standards that prioritize customer health for all platforms offering4811event contract derivates to retail customers. The CFTC should look to4812NCPG guidelines of best practices for Internet gambling operators and4813regulators known as the Internet Responsible Gambling Standards (IRGS).4814Although originally written for traditional gambling, the IRGS is4815almost entirely applicable to event contract derivatives and prediction4816markets, and NCPG is currently working to make the document completely4817applicable. These recommendations include things like the encouragement4818and ability for customers to set personalized time and budget limits4819and easy-to-access time-out and self-exclusion programs. Other topics4820covered include but are not limited to: a corporate commitment from the4821operator to responsible gambling; easy access to help via the National4822Problem Gambling HelplineTM (1-800-MY-RESET), responsible4823advertising that does not target vulnerable populations, and setting4824the age to participate at 21 years old. The IRGS serves as a roadmap4825for the CFTC, Congress, and prediction market platforms to prioritize4826customer health and ensure the activity is offered, promoted, and4827conducted responsibly. We encourage you to read the full public comment4828submitted to the CFTC.4829---------------------------------------------------------------------------4830 \5\ See here: https://comments.cftc.gov/PublicComments/4831CommentList.aspx?id=7654&ctl00_ct4832l00_cphContentMain_MainContent_gvCommentListChangePage=14833---------------------------------------------------------------------------4834 The widespread promotion and access to prediction markets will lead4835to gambling problems for some individuals. Participation puts an4836individual at risk for developing a gambling problem. Given this, we4837urge Congress to ensure trading event contract derivatives is regulated4838using the IRGS in order to prioritize player health and safety.4839Problem Gambling is in Every State and Congressional District4840 Available evidence points to increases in gambling problems among4841Americans. Although there has not been a nationwide gambling addiction4842prevalence survey in decades, most states that have conducted4843prevalence surveys are seeing their rates of gambling problems4844increasing. For example, in Indiana, a 2022 survey found that 2.34845percent of adults were classified as having a gambling disorder.\6\ The4846same survey just two years later found that the number of adults4847classified as having a gambling disorder had increased to 3.44848percent.\7\ In addition, in states where studies have not been able to4849conclude whether overall prevalence rates have increased, they are4850finding high rates of gambling problems overall. A 2023 study in New4851Jersey found that ``the overall rate of high-risk problem gambling,4852which best correlates to gambling disorder, was just under 6 percent,4853nearly three times the rate in a majority of population surveys in the4854United States and abroad.'' \8\4855---------------------------------------------------------------------------4856 \6\ Jun, M., Lay, M., Reynolds, D., & Lee, J. (2023). Adult4857Gambling Behaviors in Indiana--2022. Bloomington, IN: Prevention4858Insights.4859 \7\ Jun, M., Lay, M., Reynolds, D., & Lee, J. (2025). Adult4860Gambling Behaviors in Indiana--2024. Bloomington, IN: Prevention4861Insights.4862 \8\ Nower, L., Stanmyre, J.F. & Anthony, V. (2023). The Prevalence4863of Online and Land-Based Gambling in New Jersey. Report to the New4864Jersey Division of Gaming Enforcement. New Brunswick, NJ: Authors.4865---------------------------------------------------------------------------4866 As we have learned from my home state of Ohio's gambling prevalence4867surveys, there is a correlation between increased access to gambling4868and increased rates of problem gambling. In 2012, prior to the4869legalization of casinos and racinos, 5 percent of Ohioans were4870considered at-risk for developing a gambling problem.\9\ Then, in 2022,4871after casinos and racinos had been legalized, and there was expansion4872of gambling through the legalization of daily fantasy sports, e-bingo4873slot machines, and keno, the survey showed that 19.8 percent of Ohio4874adults were at-risk for developing a gambling problem.\10\ This4875represents approximately 1.8 million Ohio adults. Importantly, the 20224876Ohio Gambling Survey, conducted by the Ohio Department of Behavioral4877Health, was completed before the launch of legal sports wagering in the4878state. Since that survey, Ohio's gambling landscape has continued to4879rapidly expand through legalized sports wagering, offshore unregulated4880betting sites, and now the emergence of event contract derivatives4881offered on prediction market platforms. We eagerly await the 2027 Ohio4882Gambling Survey to see the current rates for those at-risk for a4883gambling problem.4884---------------------------------------------------------------------------4885 \9\ Survey Available at: https://dbh.ohio.gov/static/Portals/0/4886assets/FamiliesChildrenandA4887dults/Get%20Help/Problem%20Gambling/2012SurveyofAt-4888RiskandProblemGamblingPrevalence4889amongOhioans.pdf4890 \10\ Survey Summary Available at: https://dbh.ohio.gov/static/4891learnandFindhelp/gethelpnow/4892problem-gambling/2022-Ohio-Gambling-Survey-Highlights_10182023.pdf4893---------------------------------------------------------------------------4894 NCPG works closely with treatment providers and individuals in4895recovery from gambling addiction and continue to hear their concerns4896about the rise of gambling-related problems. NCPG's 2024 National4897Survey on Gambling Attitudes and Gambling Experiences (NGAGE) revealed4898troubling trends, including that the risk for gambling problems is4899concentrated heavily among young male online sports bettors. In 2024,490024 percent of fantasy sports bettors and 17 percent of traditional4901sports bettors met at least one criterion for problematic gambling4902behavior.4903 While sports betting and prediction markets continue to garner4904recent public attention, NGAGE shows most Americans did not place a4905sports bet in the past 12 months. It remains important to recognize4906that problematic gambling behavior extends well beyond sports. The most4907significant predictors of risk identified in 2024 include participation4908in many different gambling activities, agreeing that gambling is a good4909way to make money, participation in sports betting (either traditional4910sports betting or fantasy sports), and being male and/or under the age4911of 35. However, we cannot determine the degree that these factors cause4912problem gambling, especially as they are often highly correlated to one4913another. These complex factors demand a broader national response,4914something the Federal government should lead on.4915Public Health Response4916 Public health is the science of protecting and improving the health4917of communities and populations to reduce disease and improve health in4918communities. A public health approach uses a combination of science and4919social techniques and involves partnerships with communities, health4920and social services, industry, academia, and the media. We must look4921intently but critically at other countries' policies to ensure our4922solutions are embedded in our Nation's cultural, political, and4923economic systems. In the same way it has become part of our cultural4924ethos not to drink and drive, we can make gambling in a responsible way4925the norm. We recognize that state and tribal governments have4926historically overseen gambling in accordance with legal precedent. At4927the same time, emerging technology has created a way to gamble that is4928currently overseen by the Federal government. NCPG will continue4929partnering with all levels of government and all other stakeholders as4930we all work towards solutions that minimize gambling-related harm.4931States Have Not Sufficiently Invested in Problem Gambling Services4932 Many state governments have never invested in their problem4933gambling programs or broad public health infrastructure. In May 2024,4934the National Association of Administrators for Disordered Gambling4935Services (NAADGS) reported that $134M in public funding had been4936invested in state problem gambling programs in 2023, a historic high.4937Yet, that still represents only 50 cents per capita. To put it another4938way, for every dollar states have generated from commercial gambling,4939.0009 cents were invested in problem gambling services. It is critical4940that every state has robust and well-funded gambling addiction4941prevention, education, and treatment services.4942 Public Health is a shared responsibility between the states and4943Federal government. Yet, there are currently no Federal funds dedicated4944to addressing gambling addiction in the United States outside of the4945military context, despite the Federal government profiting4946significantly from taxes on both gambling winnings and sports bets.4947NCPG has long said that all who profit from sports betting are4948ethically obligated to devote a percentage of their profits to gambling4949harm reduction, and the Federal government is no exception--the Federal4950government profits from legalized sports betting. Since the 1950s, the4951Federal government has levied an excise tax of 0.25 percent on all4952money wagered on sports in the United States, equating to one penny in4953tax for every 4 dollars wagered. According to NCPG estimates based on4954publicly available data, the Federal excise tax on sports betting4955currently generates $200-300 million a year. That money does not go4956towards specific programs or services but is simply deposited into the4957general fund.4958Congress Can Pass Federal Funding4959 NCPG strongly supports HR 7875, The Providing Opportunities for4960Individuals in Needs of Treatment and Support (POINTS) Act, introduced4961by Erin Houchin (R-IN), Andrea Salinas (D-OR), Mariannette Miller-Meeks4962(R-IA) and Troy Carter (D-LA). The POINTS Act is the first bipartisan4963bill introduced in Congress to devote resources to preventing and4964treating gambling addiction in nearly 15 years. The bill provides4965critical funding to problem gambling programs that are the foundation4966of responsible gambling initiatives. The bill is funded by dedicating a4967portion of the Federal sports betting excise tax to grants aimed at4968prevention, education, treatment, and recovery. The POINTS Act returns4969to states and tribes a third of the sports betting excise tax revenue.4970By dedicating these funds to mitigating the costs of gambling4971addiction, NCPG estimates that every dollar spent to prevent and treat4972gambling problems will save state governments at least two dollars in4973gambling-related criminal justice, bankruptcy, and healthcare costs.4974 One of the most significant benefits of the POINTS Act is the4975potential for increased access to treatment for individuals struggling4976with gambling addiction. By allowing states to apply for funding for4977state health departments they will be better able to address gambling4978addiction through programs that best resonate with their unique4979communities. The POINTS Act will help ensure those in need have access4980to the support and resources necessary to buttress responsible gambling4981programs. The POINTS Act does not increase taxes; it simply sets aside4982a funding stream for problem gambling prevention and treatment.4983 NCPG believes that passing the POINTS Act is the most important4984first step that the Federal government can take to enshrine gambling4985addiction as a matter of public health. It would provide the first-ever4986dedicated Federal funding for programs to prevent and treat gambling4987addiction. By raising the bar in states that apply for and receive4988grants, it would give athletes, as well as all individuals, better4989opportunities to learn about problem gambling and have access to help4990before they make a disastrous decision.4991Harm Also Comes from Black Market Sites4992 Even as legal sports betting expands at the state and Federal4993level, there is still a vast amount of gray and black-market gambling4994and sports betting occurring in each and every state, resulting in4995considerable confusion among consumers. Young men (including athletes)4996on college campuses are often bombarded with offers to gamble on these4997sites. Many of these sites advertise in traditional media and use4998celebrities to promote them. We call on Congress to ensure all sites4999that offer gambling products are regulated, as well as to crack down on5000illegal black-market sites.5001Conclusion5002 It is clear to us that the expansion of gambling at the state5003level, and now the Federal level, has not been uniformly accompanied by5004appropriate--or in some cases any--funds to prevent or treat gambling5005addiction. As a result, the existing public problem gambling prevention5006and treatment services are insufficient in most states and nonexistent5007in many. This impacts athletes across the Nation who are dealing with a5008gambling problem and results in those athletes being more likely to5009look at compromising game integrity as a solution to their problems.5010 The evidence that expanded sports betting has led to increased harm5011on a national scale is clear. This rapid expansion and its accompanying5012harm demands a public health response based on prevention, treatment,5013and research partnerships amongst all stakeholders and everyone who5014profits from legalized gambling. This includes the Federal government.5015It is essential for Congress to come together and pass the bipartisan5016POINTS Act. This practical and commonsense legislation is the single5017most important action Congress can take to address the negative impacts5018of expanded sports betting and legalized gambling in general. In5019addition, Congress should work to ensure emerging platforms, like5020trading event contract derivatives, are thoroughly regulated to5021prioritize consumer health. On behalf of the 9 million Americans5022directly suffering from gambling-related harm and the millions more who5023are indirectly affected, including family members, coworkers, and5024friends, we ask the Committee to enact lifesaving change by supporting5025the passage of the first-ever Federal funding stream to prevent and5026treat gambling addiction.5027 ______50285029 United States Senate5030 Washington, DC50315032 March 5, 202650335034Hon. Michael Selig, Chairman,5035Commodity Futures Trading Commission,5036Washington, DC.50375038Dear Chairman Selig:50395040 We write to urge the Commodity Futures Trading Commission to5041prohibit event contracts tied to U.S. military operations and5042investigate whether any insider trading has occurred in connection with5043recent military strikes against Iran.5044 Event contracts are derivatives that provide anyone with the chance5045to wager on whether something will occur. Under the Dodd-Frank Act and5046the CFTC's rules, event contracts that ``involve, relate to, or5047reference assassination or war'' are prohibited. This category includes5048event contracts that predict whether a U.S. adversary will no longer be5049in office, such as Ayatollah Khameini in Iran, Nicolas Maduro in5050Venezuela, or Miguel Diaz-Canel in Cuba. Because these leaders are so5051entrenched and protected by vast military forces, their continued5052leadership is perceived to be completely insulated from removal except5053by armed intervention. As a result, event contracts referencing their5054ouster ``involve or relate to'' war.5055 These contracts are so dangerous to the national security of the5056United States and so offensive to U.S. values that they far outweigh5057any legitimate risk-management purpose. Traders with inside information5058that specific geopolitical events will occur or who can directly5059influence such events can easily buy event contracts. Given the high5060potential for insider trading, a surge in buying activity and a rapid5061price increase can signal that the reference event will occur. Such a5062pattern could tip off our adversaries that U.S. intervention is5063imminent. By contrast, speculation in traditional financial instruments5064that may be linked to geopolitical instability, such as oil, gold, and5065currencies, do not send direct and specific signals that an attack in5066one specific country is imminent. And the ability to trade event5067contracts tied to violent geopolitical events could create financial5068incentives for someone to actually commit violence for profit.5069 Activity in prediction markets regarding the war with Iran that5070began on February 28 demonstrates how event contracts tied to U.S.5071military operations are morally repugnant and provide no social5072benefit. On offshore platform Polymarket, which is not regulated by the5073CFTC, at least six wallets made more than $1 million in profits in just5074hours by betting that the U.S. or Israel would strike Iran by that5075date. According to reporting by Bloomberg, this activity is the5076``hallmark'' of insider trading. An investigation is already underway5077by Israeli authorities. On CFTC-regulated platform Kalshi, traders bet5078whether Ayatollah Khameini would be ``out as Supreme Leader'' by that5079date. Kalshi was still promoting the Khameini market as its ``featured5080market'' throughout the day of military strikes, encouraging5081speculation on war or death. After Khameini died, the platform5082``clarified'' that payouts under the contract would be limited and5083announced that some trading fees would be refunded. Despite these5084efforts, many traders still apparently profited from price appreciation5085after the strikes had started but before Khameini's death was5086confirmed. The contract resolved when Khameini died, providing strong5087evidence that this is a death market and that traders profited directly5088from speculation on war.5089 Insiders face little risk of penalty under the CFTC's current5090enforcement program. The insider trading laws for commodities markets5091are underdeveloped compared to analogous laws in securities markets. To5092date, the CFTC has not brought a single enforcement case involving5093prediction markets. All the CFTC has done is issue a press release5094highlighting two minor infractions that were addressed internally under5095Kalshi's own terms and conditions, one involving $246.36 in illicit5096profits and another involving $5,397.58. That signals a lax oversight5097regime and will not deter insider trading.5098 To address dangerous national security, market integrity, and5099immoral outcomes, the CFTC must enforce the law and immediately halt5100trading in event contracts tied to U.S. military operations. Given the5101high potential for insider trading and evidence that insider trading5102did in fact occur in the ``Iran strike'' contract on Polymarket, we5103urge the CFTC to investigate this matter on platforms that the agency5104regulates and ultimately bring big cases to punish significant5105wrongdoers.5106 We would appreciate your immediate action on this important matter5107and look forward to your prompt reply.5108 Sincerely,5109 Jack Reed,5110 United States Senator.5111 John Hickenlooper,5112 United States Senator.5113 ______51145115 United States Senate5116 Washington, DC51175118 Commodity Futures Trading Commission5119 May 18, 202651205121Hon. Michael Selig, Chairman,5122Commodity Futures Trading Commission,5123Washington, DC.51245125Dear Chairman Selig:51265127 We write to urge the Commodity Futures Trading Commission (CFTC) to5128prohibit prediction markets from allowing margin trading in connection5129with event contracts, particularly for retail lending.5130 On March 23, the National Futures Association granted approval for5131an affiliate of Kalshi called Kinetic Markets LLC to offer its5132customers margin trading as a futures commission merchant (FCM). Kalshi5133still needs approval from the CFTC before offering this product. The5134CFTC should not permit Kalshi, or any FCM or designated contract market5135(DCM), to offer margin trading on event contracts. Margin trading5136allows trading without full collateral. In other words, it allows a5137bettor or investor to essentially borrow from the house and lose or5138gain more money than they bet or invest. If the CFTC permits prediction5139markets like Kalshi to allow margin trading, it would expose investors5140and the economy to significant risk and undermine the longstanding5141restrictions placed on betting by state gaming commissions.5142 Sports betting makes up a large portion of prediction markets. A5143staggering 90 percent of event contracts listed on Kalshi's platform5144involve sports betting. For Polymarket, sports betting makes up 405145percent of event contracts.5146 All platforms that permit consumers to bet on sporting events5147should be subject to the same regulatory requirements. A sports betting5148venue should not be able to escape the requirements imposed on it by a5149state gaming commission simply by operating a prediction market5150registered with the CFTC as a DCM. An event contract listed on a5151prediction market that pays out when a particular sports team wins a5152game is economically equivalent to a bet on the same team that is5153placed at a casino or other gaming facility. State gaming commissions5154have spent decades developing regulations covering consumer protection5155and economic risk. Prediction markets pose the same risks to consumers5156and the economy as traditional gambling and should be subject to the5157same requirements.5158 This is particularly true with respect to limitations on the5159provision of credit to consumers. Thirty-five states limit the credit5160that gaming facilities may provide. In some states, such as Colorado5161and Tennessee, gaming facilities are prohibited from providing any5162credit to consumers to finance sports betting. Other states, like Rhode5163Island, permit a gaming facility to provide a consumer with a line of5164credit to finance sports betting only if the consumer meets certain5165criteria, including thresholds for annual income, debt-to-income ratio,5166prior credit history, and average monthly bank balance. There is5167nothing about the structural difference between event contracts traded5168on Kalshi versus traditional betting to justify permitting leverage for5169one but not the other.5170 States limit the provision of credit by gaming facilities to5171prevent consumers from taking on debt that they cannot pay back. These5172rules ensure that bettors' losses are capped at the amounts that they5173use to fund their accounts. Betting on a credit card can cause5174customers to get trapped in a cycle of debt. Interest can quickly5175accrue and balances can compound, resulting in customers losing even5176more money than they bet. So, too, can betting with margin obtained5177from a FCM or DCM. Even small price movements can lead to margin calls5178and ultimately cause positions to become liquidated. Just like with a5179credit card, margin can put the trader on the hook for more money than5180they put down.5181 Significant levels of consumer debt, particularly in connection5182with sports betting, are not only dangerous for consumers, they are5183also detrimental to the broader economy. Online sports betting leads to5184higher credit card balances, more frequent account overdrafts, and5185fewer investments, particularly among already financially vulnerable5186households.\1\ This problem will only grow if the CFTC permits5187prediction markets to offer margin loans to consumers in connection5188with sports betting on their platforms. Ultimately, the country will5189bear the burden when consumers default on their debt and become less5190economically productive due to a poor credit history and lack of5191savings.5192---------------------------------------------------------------------------5193 \1\ Scott Baker et. al, National Bureau of Economic Research,5194GAMBLING AWAY STABILITY: SPORTS BETTING'S IMPACT ON VULNERABLE5195HOUSEHOLDS (Nov. 2024), https://www.nber.org/papers/w33108.5196---------------------------------------------------------------------------5197 Moreover, prediction markets currently offer margin at levels that5198are far riskier than permitted for traditional retail financial5199products. Polymarket recently announced its intention to offer5200perpetual futures contracts, which will provide investors with up to520110x leverage. This is significantly more than the 2x leverage that is5202typically permitted for leveraged ETFs to retail investors in the5203securities markets. The SEC recently denied applications for high-5204leverage ETFs offering 3x and 5x leverage, less than half of the5205leverage that Polymarket plans to offer consumers. The highly leveraged5206products on prediction markets are dangerous for consumers. If5207prediction markets are permitted to offer margin trading to retail5208bettors and investors, it would expose consumers to financial risks5209that market regulators have long determined to be unsuitable for retail5210products.5211 The CFTC should prohibit prediction market platforms from providing5212margin loans to their users because it would undermine the credit5213limitations imposed by states, resulting in harm to consumers and the5214economy. Even if the CFTC limits margin trading, any amount of5215permissible margin trading would supersede decisions made by states5216with more restrictive limitations. The CFTC should leave it to state5217governments to continue to determine the appropriate amount of credit,5218if any, that consumers may receive when engaging in sports betting and5219other gaming activities on prediction markets or in casinos.5220 Sincerely,5221 John Hickenlooper,5222 United States Senator.5223 Jack Reed,5224 United States Senator.5225 ______52265227 Response to Written Questions Submitted by Hon. Maria Cantwell to5228 Bill Miller5229Prediction Markets5230 Online sportsbooks like FanDuel and DraftKings are required to5231comply with state gambling laws, which typically include a variety of5232consumer protections like advertising restrictions, requiring users to5233be at least age 21, and mandatory self-exclusion lists. But prediction5234markets, like Kalshi and Polymarket, contend their sports ``event5235contracts'' are federally regulated financial swaps that do not need to5236follow state gambling laws.52375238 Question 1. Are there any practical differences between sports bets5239at online casinos and sports event contracts on prediction markets?5240 Answer. There is no meaningful difference. And Americans agree,5241with 81 percent believing that ``sports event contracts'' are gambling.5242In either offering, individuals place money on the outcome of sporting5243events or player performances with the opportunity to profit if their5244wager is correct. ``Sports event contracts'' mirror traditional5245sportsbook offerings, including futures, single-game outcomes, player5246props, and multi-leg style products.5247CFTC Authorities5248 Under the Commodity Exchange Act, the CFTC is authorized to ban5249prediction markets from offering ``gaming'' or any ``activity that is5250unlawful under any Federal or State law.''5251 Nevertheless, the CFTC is thus far choosing to allow prediction5252markets to offer sports event contracts that appear indistinguishable5253from sports betting.5254 Question 1. Do you believe that the CFTC has the current statutory5255authority to prohibit sports betting on prediction markets?5256 Answer. Congress expressly granted the CFTC authority under the5257Commodity Exchange Act to prohibit event contracts involving ``gaming''5258or activities unlawful under Federal or state law. Further, the5259Commission adopted Rule 40.11 to implement that directive and stated5260that the prohibition on gaming-related contracts was intended to5261prevent gambling through the futures markets and protect the public5262interest.5263 For years, the Commission itself recognized that ``sports event5264contracts'' raised concerns under Rule 40.11, and as recently as 2025,5265the CFTC acknowledged publicly that ``sports event contracts'' may5266constitute gaming and initiated review processes on that basis.5267 In 2024, Kalshi itself declared in Federal Court that congressional5268intent was clear that sports betting should NOT be treated as a5269derivative:52705271 ``An event contract thus involves ``gaming'' if it is5272 contingent on a game or a game-related event. The classic5273 example is a contract on the outcome of a sporting event; as5274 the legislative history directly confirms, Congress did not5275 want sports betting to be conducted on derivatives markets.''52765277 Question 2. Do you think the CFTC should use that authority to5278prohibit these offerings?5279 Answer. Yes. ``Sports event contracts'' are functionally5280indistinguishable from sports betting and have created a national5281backdoor sports betting market. Sports wagering should only occur with5282state and tribal licensed operators.5283 Our analysis shows that the Prediction Markets have siphoned more5284than $1 billion in sports betting tax revenue from states and tribes.5285This lost revenue funds critical projects in local communities and will5286continue to balloon if prediction markets are allowed to continue5287evading state and tribal taxes and regulations.52885289 Question 3. If so, why do you think the CFTC is choosing not to5290exercise its existing authority to rein in sports betting on prediction5291markets?5292 Answer. The CFTC has shifted significantly from its prior5293interpretation and enforcement approach regarding gaming-related event5294contracts. Rather than maintaining the longstanding understanding that5295gaming contracts are prohibited under Rule 40.11, the Commission has5296increasingly treated so-called ``sports event contracts'' as5297permissible financial products despite substantial objections from5298state regulators, tribes, attorneys general, sports leagues, and5299members of Congress. The Commission has also undertaken rulemaking and5300litigation positions that suggest it is attempting to redefine the5301scope of its authority in this area rather than defer to Congress or5302the courts to resolve the issue.5303Tribal Gaming5304 As I discussed at the hearing, the Indian gaming industry supported5305more than 680,000 jobs last year and provides economic support for5306countless families. The American Gaming Association and the Indian5307Gaming Association recently sent a letter to Congress calling for5308legislation that would make clear that sports betting cannot take place5309on prediction markets ``under the guise of event contracts.''53105311 Question 1. What can Congress do to better protect tribal gaming5312from prediction markets?5313 Answer. Congress can reaffirm that sports betting and casino-style5314gambling may not be conducted through CFTC-regulated prediction markets5315under the guise of event contracts.5316 The existing state and tribal gaming framework reflects decades of5317work at the state level based on Federal law, including the Indian5318Gaming Regulatory Act, which recognizes tribal sovereignty and5319carefully balances the relationship between tribes, states, and the5320Federal government. Prediction market platforms offering nationwide5321sports betting products undermine those frameworks and tribal5322exclusivity agreements without providing the protections,5323accountability, or oversight required of regulated gaming operators.5324Prop and Micro Bets5325 The sports-betting scandals at the center of the Committee's5326bipartisan investigation all involve prop bets--such as whether an5327individual pitch will be a ball or strike.5328 In addition to posing significant integrity risks, research has5329shown these bets are among the most addictive and pose particular risks5330to younger Americans.5331 Question 1. Does the AGA acknowledge that prop and micro bets pose5332unique risks to consumers, especially younger Americans?5333 Answer. Certain prop and micro betting products can present5334heightened integrity and responsible gaming considerations due to their5335rapid frequency and focus on highly specific in-game events or5336individual player actions. That is precisely why these products are5337offered within heavily regulated state and tribal gaming systems that5338include integrity monitoring, age restrictions, responsible gaming5339tools, self-exclusion programs, advertising standards, and ongoing5340oversight by dedicated gaming regulators working alongside operators,5341leagues, and law enforcement. The AGA supports ongoing discussions5342between regulators and leagues on what wagers are being offered and5343those that should be prohibited.5344 Importantly, these decisions should be made within established5345state and tribal regulatory frameworks specifically designed to oversee5346gaming--not through a system where operators can self-certify ``sports5347event contracts'' and bring them to market without the extensive5348review, consumer protections, and regulatory scrutiny required in legal5349gaming markets.53505351 Question 2. Are there any legislative reforms the AGA presently5352supports to help mitigate the known risks posed by these types of bets?5353 Answer. The AGA supports maintaining sports wagering within the5354established state and tribal regulatory framework, where regulators5355already possess broad authority to approve, restrict, or prohibit5356certain wager types based on integrity, consumer protection, or5357responsible gaming concern. Those regulators continually evaluate these5358products in consultation with operators, leagues, and integrity5359monitors, and they have demonstrated they will take action when5360concerns arise.5361 ______53625363 Response to Written Questions Submitted by Hon. Ben Ray Lujan to5364 Bill Miller5365 Question 1. What responsible gambling practices need to be5366mandatory to protect customers online and help to prevent problem5367gambling?5368 Answer. Responsible gaming protections are a critical component of5369legal online gaming and sports betting. Operators are required to5370implement robust age and identity verification, geolocation controls,5371self-exclusion programs, deposit and wagering limit tools, employee5372training, prominent responsible gaming messaging, and access to problem5373gambling resources. Operators also maintain procedures for identifying5374potentially risky player behavior and providing customers with tools5375and resources to manage their play.5376 The AGA and its members maintain responsible gaming and responsible5377marketing codes that incorporate many of these principles. Importantly,5378state and tribal gaming regulators also impose extensive responsible5379gaming requirements through licensing conditions, regulations, and5380ongoing compliance oversight.53815382 Question 2. Should all industry members be held to the Internet5383Responsible Gaming Standards such as those developed by the National5384Council on Problem Gambling?5385 Answer. The AGA strongly supports robust responsible gaming5386standards and believes the National Council on Problem Gambling has5387played an important role in advancing responsible gaming best practices5388and public awareness.5389 Many of the principles reflected in the NCPG's Internet Responsible5390Gaming Standards are incorporated into the AGA's Responsible Marketing5391Code, as well as into the regulatory requirements imposed by state and5392tribal gaming regulators across the country. These include employee5393training, responsible gaming tools, self-exclusion programs, consumer5394education, and policies designed to protect vulnerable individuals. The5395AGA also supports continued investment into research and academic5396reviews of responsible gaming and problem gambling programs and5397messages. State and tribal regulators are best positioned to determine5398how these standards are applied and enforced within their5399jurisdictions.5400 ______54015402 Response to Written Questions Submitted by Hon. Amy Klobuchar to5403 Scott Sadin5404Sports Betting and Game Integrity5405 Some integrity experts have cautioned that some highly specific5406wagers tied to individual player actions during games may be especially5407vulnerable to manipulation because a single player can potentially5408influence the outcome without affecting the overall game result.54095410 Question 1. From your perspective, are certain categories of5411proposition bets or event contracts inherently harder to protect from5412insider abuse?5413 Answer. Senator Klobuchar--thank you for the question.5414 I agree with the framing of your concern that highly specific5415markets tied to individual player actions may be more vulnerable to5416manipulation because a single player can potentially influence the5417market outcome without affecting the overall contest result. IC3605418would consider the single point of failure and the psychological effect5419of spot-fixing in this scenario as indicia of heightened risk. We5420believe that increased attention, surveillance and integrity-related5421engagement should occur around these markets.5422 I would add, however, that market vulnerability is often a nuanced5423analysis that encompasses additional characteristics. Through IC360s5424monitoring and investigative work, we have come to think about5425integrity vulnerabilities across three core behavioral and economic5426pillars that we deem to be systemic variables.5427 The first pillar captures some of what you have described: a5428single-actor point of failure in which a market can be entirely5429compromised by the conduct of one individual and therefore carries5430lower operational barriers to manipulation than markets requiring5431coordinated action.5432 The psychological accessibility of spot-fixing raises a second5433foundational risk factor because small, discrete in-game actions allow5434a compromised actor to execute a corrupt action while rationalizing5435that they are not jeopardizing their team's success. That psychological5436accessibility makes spot-fixing a primary recruitment vehicle for5437organized integrity threats.5438 While not relevant in the scenario you outlined, economic and5439seasonal variation is a third foundational pillar for identifying5440market vulnerability. This vulnerability scales inversely with athlete5441compensation and competitive relevance, with lower-tier contests and5442leagues in the latter stages of seasons (after competitive relevance5443has potentially been lost) reflecting heightened risk.5444 The vulnerabilities you raised are real and significant, and our5445analytical framework treats it as such--but it sits within a broader5446risk picture that warrants the same attention.54475448 Question 2. Are there safeguards you believe are currently missing5449for these kinds of bets or contracts?5450 Answer. The integrity framework I described in my testimony is, in5451our experience, functioning. However, as with any maturing system,5452there are areas in which broader and deeper participant engagement5453would strengthen the protections already in place. Rather than5454safeguards I would describe as missing, I would offer three areas in5455which increased engagement across the existing collaborative5456infrastructure could yield incremental value.5457 The first is the willingness of licensed operators to surface a5458broader and more inclusive set of integrity signals to their5459independent monitors, and to engage consistently and in a timely manner5460in responding to the alerts that are circulated across the ecosystem.5461Although many operators are deeply engaged in this work today; more5462consistent engagement across the broader operator population, in our5463view, would yield meaningful integrity benefits.5464 The second is broader stakeholder participation in the prohibited-5465bettor screening framework. Such infrastructure gives sports leagues,5466operators, and regulatory bodies visibility into the population of5467individuals subject to role-based wagering and transaction5468prohibitions--athletes, officials, coaches, and other personnel--and5469helps ensure those individuals are not transacting in markets where5470they may possess inside information or have consistent access to exert5471undue influence.5472 The third is consistent and robust integrity education for the5473prohibited-individual population itself. Many consequential outcomes5474across our integrity-related work can be traced back to a moment of5475recognition by a person closest to competition. That recognition5476depends on prior awareness of the rules that apply to them, the5477patterns of bad actors, and the consequences of violating prohibitions.5478Sustained investment in education across that population, across sports5479and across competitive levels, is, in our view, foundational.5480 Each of these can be advanced through deeper engagement from the5481same participants who, today, comprise the existing integrity5482framework.5483 I appreciate the Subcommittee's continued attention to these issues5484and welcome the opportunity to provide any additional detail that may5485be useful.5486 ______54875488 Response to Written Question Submitted by Hon. Ben Ray Lujan to5489 Scott Sadin5490 Question. The Senate recently passed a resolution banning itself5491from engaging in prediction markets. The House introduced a similar5492resolution. Yes or no, should all government officials across all three5493branches should be similarly prohibited from engaging in prediction5494markets?5495 Answer. Senator Lujan--thank you for the question.5496 The specific prohibition you describe raises governance questions5497on which I would defer to the Subcommittee and its colleagues.5498 From an integrity-monitoring standpoint, the broader principle is5499that in any regulated market--financial markets the most familiar5500analog--individuals with regular access to material non-public or5501confidential information should operate within a framework of policies,5502procedures, and surveillance designed to prevent the misuse of that5503access.5504 We have found that the integrity case for applying a protective5505framework is strongest when the at-risk population is clearly5506identifiable. This is particularly true for groups of individuals who5507have regular access to confidential information relating to a5508particular set of markets. We actively assist in building and enforcing5509these exact prohibitive frameworks across the integrity ecosystem.5510 I appreciate the Subcommittee's continued attention to these issues5511and welcome the opportunity to provide any additional detail that may5512be useful.5513 ______55145515 Response to Written Questions Submitted by Hon. Maria Cantwell to5516 Hon. Patrick McHenry5517 Online sportsbooks like FanDuel and DraftKings are required to5518comply with state gambling laws, which typically include a variety of5519consumer protections like advertising restrictions, requiring users to5520be at least age 21, and mandatory self-exclusion lists. But prediction5521markets, like Kalshi and Polymarket, contend their sports ``event5522contracts'' are federally regulated financial swaps that do not need to5523follow state gambling laws.5524 One of your Coalition's biggest sponsors, Kalshi, marketed itself5525as making ``sports betting legal in all 50 states.''5526Prediction Markets5527 Question. How can your Coalition now claim prediction markets offer5528meaningfully different products when Kalshi's own statements5529acknowledge it offers ``sports betting''?5530 Answer. The mechanics are fundamentally different. In a sportsbook,5531the house sets the odds and profits directly when customers lose. On a5532prediction market exchange, contracts are certified to the CFTC and5533participants trade them against one another. Both contracts and trading5534are subject to extensive regulations, and exchanges earn small5535transaction fees regardless of the outcome. Unlike a sportsbook, it has5536no incentive to see users lose. That is a different business model with5537different incentive structures and different regulatory obligations.5538 The Third Circuit Court of Appeals has held that sports event5539contracts qualify as swaps and are governed by the Commodity Exchange5540Act and Dodd-Frank, rather than gaming products subject to state law.5541Coalition members are federally regulated by the CFTC, and comply with5542applicable Bank Secrecy Act and KYC/AML obligations, and conduct real-5543time market surveillance, which is the full suite of obligations5544applicable to serious financial exchanges. Exchanges are required by5545law to prohibit and police illegal, manipulative or abusive trading5546activity. The trading of sports event contracts is a meaningfully5547different activity operating under a meaningfully different legal5548framework.55495550 Question. Do you believe that the CFTC has the current statutory5551authority to prohibit sports event contracts on prediction markets if5552it wanted to?5553 Answer. A number of courts, including the Third Circuit Court of5554Appeals--the highest court to have weighed in on the matter--have held5555that sports event contracts are swaps governed by the Commodity5556Exchange Act. The CFTC has applied its existing regulatory structure to5557licensed prediction market exchanges, and is currently engaged in a5558rulemaking process to establish more detailed standards to govern these5559markets. The CFTC's rulemaking process is the appropriate venue through5560which to resolve questions about which contract types should be5561permissible. We support that process and welcome its outcome.5562Washington State Attorney General's Lawsuit Against Kalshi5563 In the State of Washington, all legal gambling must take place5564through Tribal casinos. In March 2026, Attorney General Brown sued5565Kalshi for operating and advertising online gambling in the state.5566Beyond violating our gambling laws, the complaint also highlighted5567alarming consumer protection concerns.5568 This includes evidence Kalshi specifically targeted college5569students under age 21. For example, the complaint contains evidence5570that Kalshi paid college student influencers to promote their5571platform--and at one point even tried to recruit a 15-year-old5572videogame influencer to promote their brand.55735574 Question. Does your Coalition think it's acceptable for prediction5575markets to target 15-year-olds to promote their platforms?5576 Answer. No. All persons under 18 are prohibited from participating5577on coalition member platforms, and coalition members do not target5578minors in their marketing. Any advertising that inadvertently reaches5579minors through other channels is targeted toward legal adults who can5580lawfully access these platforms.5581 U.S.-based, federally regulated companies are accountable in ways5582that unregulated platforms are not. If the concern is protecting young5583people, the answer is a strong Federal framework with enforceable5584standards, not driving users to unregulated platforms where no5585protections exist.5586 ______55875588 Response to Written Questions Submitted by Hon. Amy Klobuchar to5589 Hon. Patrick McHenry5590Consumer Protections5591 In your testimony you stated that consumer protection matters5592deeply to the Coalition for Prediction Markets.55935594 Question. What steps are Coalition members taking to address the5595risks to consumers posed by gambling addiction?5596 Answer. We take addiction concerns seriously. Coalition members5597have adopted a range of measures to support responsible use and protect5598consumers who may be at risk, including:55995600 Self-exclusion tools and deposit/spending limits that allow5601 users to set boundaries on their own activity;56025603 Regarding sports event contracts, coalition members do not5604 offer in-play micro-bets tied to individual pitches or plays,5605 which are events more susceptible to manipulation and addiction5606 concerns;56075608 Partnerships with problem gambling and responsible trading5609 resources--including Kalshi's membership in a new Financial5610 Services Category established by the National Council on5611 Problem Gambling, which is specifically tailored to the5612 dynamics of financial trading rather than traditional gambling;56135614 Categorical prohibition on participation by anyone under 18,5615 with additional monitoring and guardrails to enforce that ban,5616 such as a portal for parents to verify their information is not5617 being improperly used by a minor to trade on an account;56185619 Data sharing and coordination, where appropriate, with5620 responsible gaming organizations to develop best practices5621 tailored to the prediction market context.56225623 It is also important to acknowledge the structural difference in5624business models. In a traditional sportsbook or casino, the house's5625revenue equals its customers' losses--the platform has a financial5626incentive to keep losing customers engaged and to push addictive5627behavior. In a prediction market, the platform earns a small5628transaction fee regardless of outcome and does not profit from user5629losses.5630 Any financial platform with significant retail participation5631carries risks, and we are committed to continuing to develop resources5632and safeguards appropriate to our platforms. We welcome engagement with5633this Committee on what additional standards should apply.56345635 Question. Does the Coalition have standards or guidelines for5636proactive measures its members should take to step in when it5637identifies users displaying addictive behavior?5638 Answer. To expand on our previous answer, coalition members have5639implemented a range of proactive measures, including monitoring for5640behavioral patterns that may indicate problematic use and providing5641users with tools to manage their own activity, such as spending limits,5642cooling-off periods, and self-exclusion options.5643 Kalshi's partnership with the NCPG is specifically oriented toward5644creating a proactive framework for identifying and responding to5645problematic trading behavior--recognizing that, as financial markets5646have democratized and attracted more retail participants, the industry5647has a responsibility to develop resources that meet users where they5648are.5649 We would also note that a uniform Federal framework is the right5650vehicle for establishing clear, enforceable industry-wide standards in5651this area. Currently, state-by-state regulation results in significant5652inconsistency: for example, under the state-by-state sportsbook system,5653protections for self-excluded users are unevenly enforced and often5654depend on which state someone happens to live in.5655 ______56565657 Response to Written Questions Submitted by Hon. Ben Ray Lujan to5658 Hon. Patrick McHenry5659 Question. The Senate recently passed a resolution banning itself5660from engaging in prediction markets. The House introduced a similar5661resolution. Yes or no, should all government officials across all three5662branches be similarly prohibited from engaging in prediction markets?5663 Answer. We support clear and consistent rules prohibiting5664government insiders from trading on material nonpublic information in5665any market. Coalition member companies already prohibit trading by5666anyone capable of influencing the outcome of a contract, including5667Members of Congress on political contracts, protections that go well5668beyond what Federal securities laws require.5669 On the broader question of whether elected officials and government5670employees should be prohibited from participating in prediction markets5671at all: that is a policy judgment for Congress and the relevant5672branches to make, and we defer to those bodies on how to structure the5673rules.56745675 Question. Is there anything in current Federal law (the Commodity5676Exchange Act, CFTC regulations, or any other statute) that would5677prohibit a prediction market from listing event contracts on a high5678school football game or a Little League World Series baseball game?5679 Answer. Coalition members do not currently offer contracts on high5680school or youth sports events. We would support the CFTC explicitly5681addressing this in rulemaking to provide clear, codified guidance.56825683 Question. Do you believe that it is appropriate to list prediction5684contracts on high school sports or events where the participants are5685under 18?5686 Answer. Coalition members do not offer such contracts. We would5687support the CFTC codifying a prohibition on such contracts as part of5688its rulemaking, and we encourage that outcome.5689 ______56905691 Response to Written Questions Submitted by Hon. John Hickenlooper to5692 Hon. Patrick McHenry5693 In the hearing, I highlighted for you how the CFTC's self-5694certification process works. I explained that under the CFTC Regulation569540.2,\1\ once exchanges declare that their contracts comply with the5696Commodity Exchange Act (CEA) and Core Principles, if the CFTC does not5697object, the market can go live in one day. In summary, it is common5698knowledge that the CFTC's self-certification process allows federally5699registered prediction markets to bypass lengthy government approval5700before launching new event contracts.5701---------------------------------------------------------------------------5702 \1\ https://www.ecfr.gov/current/title-17/chapter-I/part-40/5703section-40.65704---------------------------------------------------------------------------5705 Furthermore, as stated on the CFTC website\2\, because the CFTC5706allows exchanges to self-certify, the agency places heavy emphasis on5707post-launch oversight rather than pre-approval.5708---------------------------------------------------------------------------5709 \2\ https://www.cftc.gov/IndustryOversight/ContractsProducts/5710iongoing rulemaking is specifically designed to address how the5711regulatory framework should be calibrated across the commodities and5712derivatives markets and in light of ndex.htm5713---------------------------------------------------------------------------5714 You claimed during the hearing that the CFTC's process for5715regulating prediction markets is sufficient because it is the same5716process the CFTC uses to review the rest of the commodities5717marketplace.5718 However, the CFTC's self-certification process for designated5719contract markets (DCM) was designed for markets with very different5720characteristics than the prediction markets. The self-certification5721process used by DCMs to list derivatives contracts was designed for5722transactions entered into by sophisticated institutional investors with5723limited information asymmetry. This is very different from the retail-5724oriented sports betting that occurs on the prediction markets. The CFTC5725also needs sufficient time to ensure that no market manipulation has5726occurred. 24 hours may be enough time to identify suspicious economic5727trends in commodity futures markets, where market data is readily5728available. But it is more difficult to effectively monitor sports5729betting markets, where an individual or small group may easily5730manipulate the outcome and evidence of such manipulation can be hard to5731find.5732Self-Certification Concerns5733 Question. Mr. McHenry, can you please explain in detail why you5734believe that 24 hours is sufficient time for the CFTC to determine that5735an event contract is not readily susceptible to manipulation? Please5736also explain how the CFTC's existing self-certification process5737adequately protects retail investors who do not have the information or5738negotiating power that typically exists for the institutional investors5739that traditionally participate in CFTC-regulated markets.5740 Answer. The self-certification framework is the same process used5741across the commodities and derivatives markets and is paired with5742continuous post-listing oversight. The CFTC retains full authority to5743review and unwind contracts after launch. If the concern is that the5744agency lacks adequate staffing to exercise that oversight effectively,5745that is an argument for providing additional funding for the CFTC, not5746for transferring jurisdiction to state gaming commissions that have5747never regulated a financial derivative product. The Coalition supports5748a fully staffed and adequately resourced CFTC, and we look forward to5749working with Congress on legislative proposals, including the5750bipartisan Prediction Market Act of 2026, to strengthen the agency's5751capacity.5752 Question. Mr. McHenry, you also stated during the hearing that 245753hours is sufficient for the CFTC to review an event contract because5754the CFTC has regulatory authority to remove or unwind contracts after5755the fact if they identify fraudulent activity. However, given the5756volume of event contracts, the large number of retail market5757participants, and the speed with which event contracts resolve, there5758is concern that, in practice, the CFTC would not have time to remove or5759unwind contracts if it identified fraudulent activity. In the last two5760years, how many event contracts listed on prediction markets has the5761CFTC removed or unwound after identifying fraudulent activity?5762 Answer. The specific data on the number of contracts removed or5763unwound by the CFTC in the last two years is information the CFTC5764itself is best positioned to provide, and I would encourage the5765Committee to direct that question to the CFTC.5766 The regulatory framework is not premised solely on the CFTC's post-5767listing removal authority. Coalition member companies maintain real-5768time market surveillance systems, file daily suspicious activity5769reports with the CFTC, conduct know-your-customer and AML screening,5770and have preemptively blocked categories of participants, including5771athletes, coaches, referees, and league employees, from trading on5772contracts tied to their sports. These are proactive, front-end5773controls, not just after-the-fact remedies.57745775 [all]