Political Prediction Markets Surge as US Election Day Nears

Rush-to-the-polls-bet-from-anywhere-Prediction-markets-abound-ahead-of-US-electionsWith the upcoming US presidential election just days away, political prediction markets have gained extraordinary momentum, capturing the attention of both investors and bettors nationwide. This election cycle has seen a rapid rise in platforms like Kalshi, Polymarket, and PredictIt, where political futures contracts allow users to wager on electoral outcomes.

Prediction markets, often structured as derivatives exchanges offering “yes/no” event contracts, have been around for years but faced regulatory hurdles. However, a recent court ruling has redefined their place in the landscape. On October 2, the US Court of Appeals for the District of Columbia ruled in favor of Kalshi, a New York-based platform, allowing it to list contracts related to Senate and House control. The Commodity Futures Trading Commission (CFTC) had previously delisted these contracts in June, arguing that they resembled gaming. Kalshi countered that regulated, legal markets offer a safer alternative to unregulated ones, where the accuracy of real-time data could enhance voter engagement and combat misinformation.

Contract Growth on Kalshi Reaches New Highs

Since the court ruling, Kalshi has seen a surge in activity. As of October 15, the platform had $15 million in political contracts, but by November 3, that figure had climbed to over $250 million, with the presidential race alone accounting for $184 million. Despite this growth, contracts concerning Senate and House control, the initial focus of the CFTC’s concerns, have generated less than $1 million each, indicating smaller interest compared to high-stakes presidential predictions.

Competing Platforms and Market Leader Polymarket

Kalshi may have achieved legal status in the US, but Polymarket, an unregistered crypto-based platform also headquartered in New York, has maintained its market leadership with over $3 billion in contracts for this election cycle. Although Polymarket is technically inaccessible to US users due to CFTC scrutiny, it remains a significant player globally. In contrast to Kalshi, Polymarket has no CFTC registration, and regulation may prove challenging, as detailed in Fortune.

Another prominent player, PredictIt, based in New Zealand and operated by the Victoria University of Wellington, claims to be a research tool rather than a gambling platform. However, the CFTC moved to revoke its “No Action Letter” in March 2023, creating uncertainty about the platform’s future in the US. In a notice to users, PredictIt acknowledged the legal limbo, allowing traders to continue holding and trading contracts pending a final court decision. PredictIt doesn’t display dollar amounts for contracts, but it lists 10.9 million active shares in the presidential election, indicating substantial interest.

Kalshi’s Marketing Shift and Expanding Appeal

Now recognized as the first legal, regulated prediction market in the US, Kalshi’s messaging has evolved to attract broader audiences. In its defense against the CFTC, the company positioned itself as a hedging tool for political risks rather than a betting platform. However, Kalshi’s recent marketing materials use betting language more freely. For instance, its X account bio now describes it as “The first legal way to bet on the election in America.” CEO Tarek Mansour appeared in a Times Square video on Instagram, stating, “It’s actually an app and a website where you can bet on anything. We’re the first platform that legalised betting on the US election.”

Kalshi’s advertisements have spread beyond Times Square to the Las Vegas Strip, a hub for gaming, underscoring the platform’s appeal in traditional betting spaces.

Robinhood’s Entry and Broader Implications

On October 28, stock trading platform Robinhood announced plans to offer election contracts to US users, a move that could disrupt the political prediction market. With its massive user base, Robinhood may draw significant interest. Sports betting investor Chris Grove highlighted Robinhood’s influence, noting that it “towers over US online betting companies by many key metrics.” According to recent figures, Robinhood had 24.2 million funded accounts and 11.8 million monthly active users as of the second quarter of 2024, dwarfing many online betting platforms.

Accuracy and the Future of Prediction Markets

Prediction markets could serve as a valuable tool to combat misinformation, with platforms like Kalshi suggesting that their odds may offer credible insight. Currently, Kalshi’s odds differ from traditional polling data. On Kalshi, Donald Trump has been the favorite for weeks, with a 52%-48% lead over Kamala Harris as of November 3. On Polymarket, Trump holds a 54%-46% advantage. In contrast, traditional polling outlets like FiveThirtyEight show a tighter race, with Harris narrowly leading.

Limited Response from the Gambling Industry

The rapid rise of prediction markets has drawn little response from the established gambling industry. Some former regulators declined to comment, citing a lack of familiarity with prediction markets. Nonetheless, the shifting regulatory landscape has raised questions, especially as Kalshi’s messaging now openly references betting. Las Vegas consultant Brendan Bussmann commented on this shift, noting the tension it creates with federal and state regulations.

As the CFTC continues to examine these markets, it remains unclear how the legal framework will evolve. For now, prediction markets like Kalshi, Polymarket, and PredictIt are set to play a significant role in the upcoming election, marking a new chapter in the intersection of finance, betting, and political engagement.

Sources:

Prediction Markets Surge as US Election Approaches, igamingbusiness.com, November 5, 2024

Betting Markets Narrow as Election Day Nears, usatoday.com, November 4, 2024

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Las Vegas Sands’ Dr. Miriam Adelson Makes First Political Donation in Nearly Two Years

Dr. Miriam Adelson, the largest individual shareholder of the Las Vegas Sands casino empire she inherited from her late husband, has made her first political donation in nearly two years. But the cash didn’t go directly to Donald Trump, the former president whose 2016 and 2020 White House campaigns she and her husband, Sheldon Adelson, dumped more than $200 million into.

Miriam Adelson Donald Trump Las Vegas Sands
Dr. Miriam Adelson remains the largest shareholder of Las Vegas Sands, the casino empire founded by her late husband. Adelson hasn’t yet donated to Donald Trump’s 2024 presidential bid, though she resumed her political spending in March after nearly two years. (Image: Haaretz)

Adelson controls 46% of the Sands organization following her $2 billion stock sell-off last year to acquire a controlling ownership position in the NBA Dallas Mavericks. Adelson, a stalwart Republican and perhaps the strongest pro-Israel voice in the United States, remained politically active in 2022 after the January 2021 death of her husband.

Adelson gave $1 million to Texas Gov. Greg Abbott’s (R) reelection in 2022, a contribution many saw as an effort to win political favor for the state welcoming in commercial casinos. She also gave $20 million to GOP congressional committees that year.

Adelson’s political spending went quiet throughout 2023. But federal campaign finance records show that Adelson, who’s worth more than $30 billion, might be returning to the political arena ahead of the November 2024 presidential election.

PAC Money

Before 2024, Adelson’s last political donation was an $8,100 contribution in November 2022 to a California Republican’s Attorney General campaign. Records from the Federal Election Commission reveal that Adelson reopened her political treasure chest in March with a $5,000 donation to the Las Vegas Sands Political Action Committee (Sands PAC).

The Sands PAC predominantly supports Republican candidates both on the federal and state level. The PAC limits its contributions to a maximum of $5,000 per candidate.

Adelson pitching in $5,000 is rather uneventful, but it could hint that the billionaire is readying to ramp up her political spending. Adelson said during the 2024 GOP primary that she wouldn’t endorse or financially support a candidate in favor of allowing the Republican electorate to decide who should challenge President Joe Biden.

The primary is long over, yet Adelson hasn’t contributed to Trump’s 2024 campaign. He needs cash, as the costly lawsuits against him play out.

Adelson and her husband poured more than $524 million into Republican campaigns and PACs between 2011 and 2022.

Biden Outpacing Trump

According to the FEC, Biden has significantly more cash on hand than Trump. The incumbent has around $130.8 million in funds to spend on his 2024 campaign, while Trump is said to have around $66.7 million.

Adelson, of course, can singlehandedly push Trump above Biden, assuming the Democrats’ largest donors, including George Soros and Michael Bloomberg, don’t do the same with hefty donations to the president.

Trump will be without the support of Americans for Prosperity, the super PAC controlled by the Koch network. The group backed Nikki Haley during the 2024 GOP presidential primary. The Koch network is controlled by Charles Koch, one of the world’s richest individuals who has long been a Republican supporter, but a Trump foe.

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MGM Resorts Osaka Bid Maintains Political Legs, Public Support

mgm_resorts_osaka_bid_maintains_political_legs_public_supportPublic opinion in Osaka, Japan is on the rise in support of an integrated casino resort in the prefecture according to an exit poll conducted over the weekend by the local news outlet, Mainichi Shimbun. The survey was taken by Japan’s oldest newspaper over the weekend as the Osaka Mayoral Election was held as part of the 20th Unified Local Elections in the country.

Plans call for Japan’s first casino to be built as part of a large integrated resort (IR) on Yumeshima island – a man-made land mass that is part of Konohana-ku, one of the 24 wards of Osaka, Japan.

According to the trusted outlet, the survey queried 6,190 voters as they left 145 polling places. A majority, 53% said they supported the IR development while 45% said they were opposed to it.

Osakans Want the Integrated Resort Casino

Governor Hirofumi Yoshimura was not shy about his support for the development and the issue was seen by many as a key element of his potential re-election which he handily won with more support for a second term than he garnered when he won the governorship the first time. He assumed office in April 2019.

According to a report on Inside Asia Gaming’s website, only a third of those who voted to re-elect the governor were opposed to the development.

Hirofumi Yoshimura was endorsed by Osaka Ishin no Kai (Japan Reformation Association). He is the Deputy Leader of Nippon Ishin no Kai. Osaka (city) is the capital and most populated city in the Osaka Prefecture, and the third most populous city in Japan with a population of 2.7 million.

Also endorsed by Osaka Ishin no Kai was political upstart Hideyuki Yosokawa who was elected mayor of the city. His victory was more robust than that of the governor however with a record 2.44 million votes – the most ever cast for a mayoral candidate in Osaka. His margin of victory was about two-million votes over his closest competitor.

The party also won 55 seats on the city council and retained its majority.

Governor Yoshimura was supported by Japanese Prime Minister Fumio Kishida’s ruling Liberal Democratic Party as well. He had stated earlier that he may resign as a representative if a majority was not maintained.

Hard Work Ahead for Next Four Years

Speaking to constituents after the election Yoshimura said, “I believe that we have received a certain amount of public support to promote the IR attraction. I want to work hard for the next four years with the strong desire to make Osaka grow.”

The prefecture and city tendered an application to the central government in early 2022. Partnering in the endeavor are MGM Resorts and the Japanese multinational ORIX Corporation, a publicly owned Tokyo-based international financial services company established in 1964. ORIX is listed on the Tokyo and New York Stock Exchanges.

When Japanese lawmakers finally passed legislation that was signed by the late Prime Minister, Shinzo Abe, it was hoped by many that at least one IR would be approved and operating before the Tokyo 2020 Summer Olympics opened. However, deep-seated religious and secular political opposition to gambling remained and the fight was taken to a local level where anti-casino voices, mixed with complicated cultural and political machinations won out and drove most casino operators away from the fight.

Current projections, reportedly affirmed by the Governor, project an IR opening in 2029. Investment costs have been estimated to be as high as $10 billion to complete the project.

Out of a large field of deep pockets and top-tier global casino operators that initially vied for approval, MGM’s Osaka bid is seen by many as the last hope to build not only a world-class casino resort in Japan but the country’s only casino.

Various numbers have been tossed about since long before the Diet and Cabinet codified gambling liberalization in Japan. The latest projections indicate that the MGM/Orix consortium’s development could attract as many as 20 million visits each year and generate revenue approaching US$4 billion (JPY 520 billion).

Source: Exit poll shows majority support for Osaka IR as governor wins re-election, Inside Asian Gaming, April 11

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Political Chill Pill for Commercial Gambling in Texas?

political_chill_pill_for_commercial_gambling_in_texasBills are making their way through House committees and support for expanded gambling venues and sports betting in Texas is at an all-time high. However, Lt. Gov. Dan Patrick is the president of the Senate and he has no appetite for legalized gambling in the state – unless it is a Republican idea with broad GOP support in the Senate.

The Texas House State Affairs Committee recently approved two bills to be sent to the floor of the House for a vote, opening a path for them to be acted on by the Senate and potentially signed into law by the Governor. Governor Abbot has had a sort of fluid response to the issue of expanded gambling – once “wholeheartedly” opposed to it, then open to letting voters decide, and now seemingly leaning more toward sportsbetting but not too excited about casinos.

Charlie Geren (R-Fort Worth) saw his House Joint Resolution (HJR) 155 approved first and then Rep. John Kuempel’s (R-Seguin) saw his House Bill (HB) 2843 make it through the committee as supporting legislation. The companion bills would authorize destination casino resorts in limited numbers and at specific locations based on the population if Texas voters approve of the idea.

Bills Would Allow Voters to Decide

The bills lay out important frameworks for liberalized gambling in the state which is currently illegal and only allowed grudgingly on Native lands that the state has no control over. The legislation would simply allow voters in Texas to approve a constitutional amendment in November that would allow commercial gambling.

The current bills would allow for two casinos in the Dallas and Fort Worth area along with six others elsewhere in the state.

Some reports indicate that at least 75% of Texans favor being given the choice to decide for themselves. That doesn’t mean that three-quarters of all voting residents favor casino gambling or sports betting, only that they want to decide the issue for themselves.

Rep. Jeff Leach (R-Plano) got his mobile sports betting bill through the committee as well as a separate piece of legislation. This law would set a licensing fee of half a million dollars for mobile sportsbetting sites and levy a 10% tax on revenues.

In a March hearing on the Leach bill, the lawmaker said it would advance “freedom and liberty” in the state and empower tax collectors to make money for the state on an activity that already goes on anyway.

There are hundreds of our constituents — citizens of all ages, including minors — who right now, especially with March Madness, are placing unsafe, <sic> unsecure, illegal, criminal bets very easily,” Leach said.

Multiple local media outlets reported earlier this week that Texas Lt. Governor Dan Patrick was making the rounds on state broadcasting networks to make the case against any gambling bills lawmakers might be entertaining. According to his own words, it’s not so much a matter of whether or not Texans want to choose, but which side of the aisle the bills originate from or at least who supports them.

Lt. Gov Claims There is No Support for Voter Choice in Senate

According to Texomashomepage.com, the Senate president took a swipe at the House efforts saying there was “zero support” for the idea in the Senate even though one of his top allies in the Senate, a Republican, is sponsoring Senate Joint Resolution 39 – a constitutional amendment to allow sports betting if voters were to approve it during the next election.

Our members have been clear: they’re not in support today. We don’t have any votes in the Senate,” Patrick said. “Couldn’t find one Senator who supported it.”

Playing partisan hardball, Patrick reportedly said: “Unless I have 15 to 16 Republicans, meaning it’s a Republican-driven bill because we’re a Republican-driven state, I’m not bringing a bill to the floor,” he said. “I need Republican consensus otherwise, it’s a Democrat bill.

The Lt. Governor’s political posturing has not slowed down the push to let the people decide and it hasn’t dampened the drive to get the business taken care of. The Texas Destination Resort Alliance issued a statement in support of the bills making it through committee.

Matt Hirsch, a spokesperson for the Alliance said: “The efforts to bring destination resorts to Texas made significant progress with today’s vote. Texans have made it clear that they want destination resorts in Texas, and we are now one step closer to ultimately allowing them to decide on this issue.”

Dallas Mavericks owner, Mark Cuban has indicated he’d be open to moving his team to a new home when his current long-term lease comes to an end. A casino resort in Dallas would be an ideal location for the NBA franchise.

There are two very small slots/bingo casinos in the state including Naskila Casino near Livingston. The largest casino is also a native operation near the Mexican border at Eagle’s Pass. Legislation has been written to protect Kickapoo Lucky Eagle Casino from too much competition all at once by authorizing the tribe to operate any type of game or gambling a commercial operation is allowed to offer.

It’s estimated that Texans leave over $5 billion a year in out-of-state casinos and tribal gambling venues. Millions of visitor trips a year are logged to Oklahoma and other neighboring states with more liberal gambling laws.

Source: Texas House State Affairs Committee passes two bills on resort casinos and mobile sportsbetting, G3 NewsWire, April 5, 2023

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