Official magazine of the International Masters of Gaming Law
®
MALTA MARKET FOCUS
INTERNATIONAL MASTERS of GAMING LAW MAGAZINE
VOLUME 5 | NO. 2 | JUNE 2025
SUNSHINE & STORM CLOUDS OVER POLAND, ROMANIA & UKRAINE
PLUS:
PREDICTION MARKETS LAW AND PRACTICE NEW ZEALAND LICENSE AUCTIONS FUNDING GROWTH IN REGULATED MARKETS ETHICAL CASINO: AN INDUSTRY IMPERATIVE SUPPLY CHAIN STRUGGLES CRYPTO CASINO: HERE TO STAY?
AND MUCH MORE!
PAGE 1
IMGL MAGAZINE | JUNE 2025 IMGL MAGAZINE | JANUARY 2023
IMMAGLLTAO’FSFIFCAETRFSG2R0E2Y5-LISTING
Officers of IMGL for 2025
MARC DUNBAR President JONES WALKER TALLAHASSEE, FLORIDA +1 850 214 5080 MDUNBAR@JONESWALKER.COM
PHIL SICUSO Assistant Treasurer BOSE MCKINNEY & EVANS, LLP INDIANAPOLIS +1 317 684 5265 PSICUSO@BOSELAW.COM
RON SEGEV Secretary SEGEV LLP TORONTO / VANCOUVER
COSMINA SIMION Executive Vice President WHSIMION & PARTNERS BUCHAREST, ROMANIA +40 31 420 6225 COSMINA.SIMION@ WHSIMIONPARTNERS.RO
+1 604 629 5402 RON@SEGEVLLP.COM
PETER KULICK 1 st Vice President DICKINSON WRIGHT PLLC LANSING, MICHIGAN +1 517 487 4729 PKULICK@DICKINSONWRIGHT.COM
DR. SIMON PLANZER Assistant Secretary PLANZER LAW AG ZUG, SWITZERLAND +41 41 512 42 82 PLANZER@PLANZER-LAW.COM
ERNEST C. MATTHEWS IV Vice President, Affiliate Members INTERNET SPORTS INTERNATIONAL LAS VEGAS, NEVADA +1 954 478 8758 ERNEST@ISISPORTS.COM BIRGITTE SAND Vice President, Affiliate-Regulator Members BIRGITTE SAND AND ASSOCIATES COPENHAGEN, DENMARK +45 24 44 05 03 BS@BIRGITTESAND.COM
MATTHIAS SPITZ 2 nd Vice President MELCHERS Law HEIDELBERG +49 62 2118 50141 M.SPITZ@MELCHERS-LAW.COM
KATE LOWENHAR-FISHER Treasurer EXECUTIVE VICE PRESIDENT, CHIEF LEGAL OFFICER EVERI HOLDINGS INC +1 800 566-2087 KATE.LOWENHARFISHER@EVERI.COM
PAGE 2
IMGL MAGAZINE | JUNE 2025
MALTA MARKET FOCUS
••••••••••••••• ••••••••••••••• ••••••••••••••• ••••••••••••••• ••••••••••••••• •••••••••••••• ••••••••••••••• ••••••••••••••• •••••••••••••• ••••••••••••••• ••••••••••••••• ••••••••••••••• •••••••••••••••
MARC DUNBAR President INTERNATIONAL MASTERS OF GAMING LAW
Welcome to the future
It’s a strange and unfamiliar pleasure to pen this, my first Magazine editorial, but it does give me the opportunity to let you know some of the things that have been going on with IMGL. Firstly, however, it would be remiss of me not to mention Quirino Mancini’s stellar stewardship over the past two years. I am extremely grateful to him for handing on an organization in great shape. Like all our past presidents, he will be a tough act to follow, but I will endeavor to do my best. Before I get into some of the details of our plans for the next period, I would like to encourage you to join me in Vancouver for our spring conference in April. Along with Ron Segev, the conference organizing team and I have worked hard to craft an exceptional event that will deliver top-flight education and networking in a superb location. We have focused on creating an event that is as inclusive as possible, with sessions dedicated to younger lawyers, a focus on indigenous and first nation participation and an occasion that cements our relationships with regulators. I am very much looking forward to meeting every one of you, to sharing time together and to hearing your vision for our future, so please do make every effort to attend. You can discover more details in these pages and, of course, online at our website www.IMGL.org. In my early days as president, I have focused on what more the IMGL can do for members. With that in mind, our committees have been reviewed and, in some cases, revamped with our members in mind to make sure we deliver for you across all our
activities. Our Masterclass Committee is working on an exciting schedule of events where IMGL members will take to the stage to share the benefit of their wisdom and experience with audiences in the US and Canada, in Rome, Cyprus, Czechia, Italy and Lisbon. To support these opportunities, we are putting in place marketing support to highlight members’ involvement together with materials pointing people to our online member directory. Our Membership, New Jurisdictions and Publications & Marketing Committees are developing ways to both attract new members and to give all members greater exposure through our publications and social media platforms. We can expect to see greater use of our website and media partnerships to deliver a range of new opportunities in the coming months. Our Education Committee is looking at reshaping our Student Writing Competition to give greater incentives to potential entrants and valuable experience and exposure to the next generation of gaming lawyers. I believe this is an exciting time to be an IMGL member and I hope you will make the most of the plans and opportunities we are working on. Above all I look forward to working with you at industry events around the world, to listening to your ideas for where we can go together and to securing the position of the IMGL as the pre-eminent association for gaming lawyers, regulators and advisors. Marc Dunbar
PAGE 3
IMGL MAGAZINE | JUNE 2025
MALTA’S FATF GREY-LISTING EDITORIAL
Context is everything
Since the launch of the IMGL Magazine, it has been a top priority of mine to aim for as broad a geographical spread as possible. This, I believe, reflects the global aspiration and membership of IMGL as well as the nature of the gaming industry. In this edition, we have gone above and beyond with contributions from five continents and on indigenous cultures, too. As tribal gaming continues to occupy judges in U.S. courts, we feature two pieces on tribal gaming in this issue: one charting the course of the Seminole Tribe in Florida, the other looking at the possibility that the Choktaw Nation Tribe could be the first to test the waters of sports betting in Texas. In this context, please note that there will be a first nation strand running through the upcoming IMGL Vancouver conference, manifesting our desire for diverse educational programing. I am a strong believer in the value of learning from colleagues around the world. Certainly, there are lessons to be learned from the investigations
carried out by Andrew Scott and his colleagues into the Crown casino scandal. At the same time, Mr Scott humbly notes in our One-on One interview that “I wouldn’t presume for a second to say that ours was the only process that could be done to arrive at such an important decision.” In fact, it is not an exaggeration that the decision he is referring to was one of the most momentous ever taken in the Australian casino industry and we really can learn a great deal from the thoughtful and methodical approach he and his colleagues took in this complex matter. We have an interesting opportunity in this issue to read how different jurisdictions wrestle with familiar issues. The issues themselves may be universal, but how they are tackled reveals subtle and important differences. Whether those stem from the societal principles underlying their laws, the impact of politics and geopolitics involved, or the culture in which those decisions have to be effective - context is everything.
SIMON PLANZER PHD, Editor in Chief IMGL MAGAZINE
Contents 6
The Seminole Tribe of Florida’s “hub-and-spoke” model for mobile gaming How a ‘disgraceful’ casino rebuilt itself: 1-on-1 with VGCCC’s Andrew Scott
12 18 24
The legalization of casino & online gambling in Thailand
Legislative and regulatory powers over lottery, gaming and betting in Nigeria
30 Navigating the future of gaming: the impact of European digital regulations on the industry 34 Everything is bigger in Texas 38 A global analysis of celebrity gambling endorsement laws 45 Macau’s gaming law: when national security trumps the house 50 Vancouver conference preview
IMGL MAGAZINE | JUNE 2025 IMGL MAGAZINE | JUNE 2025
PAGE 4
MALTA MARKET FOCUS EDITORIAL
How Thailand shapes its gaming laws, how Macau reflects its unique position in its priorities, how Nigeria’s constitution impacts its lottery regulation – these questions are not least subject to the specific jurisdictional context. Part of what makes the IMGL network unique is the opportunity to learn from colleagues from so many different jurisdictions whose initial legal training may have been similar to one’s own, but whose experiences have been molded by the environment in which they practice. Talking of training, it is good to see the return of student- authored manuscripts submitted for review and publication in the IMGL Magazine. I often find the student-authored pieces thoroughly researched, and the smart students of today, are the excellent gaming lawyers of tomorrow. Our two student authors have both been able to unpack topics in different ways and from different perspectives. I hope you enjoy our tour d’horizon around the world and into diverse legal cultures.
Yours sincerely,
Simon planzer@planzer-law.com
To access our extensive archive of expert gaming law articles visit www.IMGL.org/publications
IMGL Magazine is owned, published and distributed by: The International Masters of Gaming Law PO Box 27106, Las Vegas, NV 89126 USA The IMGL is a domestic non-profit corporation registered in Nevada, U.S. with registration number NV20121147120 Editor in Chief: Simon Planzer PhD, planzer@planzer-law.com Publication & Marketing Committee: Co-chairs , Simon Planzer (Publications), Ali Bartlett (Social Networks & Digital) Members : Luiz Felipe Maia, Staff : Phil Savage, Brien Van Dyke Head of Publications: Phil Savage phil@IMGL.org Design and production: SportBusiness Communications. Copyright: All rights reserved to IMGL. No part of this publication may be reproduced or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior permission from the publisher. The articles expressed in this publication do not necessarily reflect the views of IMGL but those of the authors. The publisher and editor do not accept any liability for the contents of the authors’ contributions.
PAGE 5
IMGL MAGAZINE | JUNE 2025
PREDICTION MARKETS
Have a little faith in markets ARRON BROGAN ARGUES PREDICTION MARKETS ARE NOT ONLY LEGAL BUT A DESIRABLE ALTERNATIVE TO STATE-RUN SPORTS BOOKS
Introduction Prediction markets have exploded in popularity over the past twelve months. The function of these markets is relatively simple: users are able to purchase binary contracts which will resolve at some future time to pay either a fixed amount of money or nothing. Generally, these contracts are denominated in either one dollar or one-hundred-dollar increments. Mechanically, the function of a market is to establish a “market price” between the limits of zero and the contract price. Academics theorize that this contract price represents a prediction as to the likelihood of an event occurring through price discovery. 1 As this segment has increased in popularity, two flavors have emerged. The first, which most notably includes Polymarket, operates on cryptocurrency rails without regulatory licensure, and generally prohibits individuals in the United States from participating through a variety of strategies. The second,
spearheaded by KalshiEX LLC (Kalshi) and North American Derivatives Exchange, Inc. (Crypto.com), offers these contracts as derivatives through Commodities Futures Trading Commission (CFTC)-registered designated contract markets (DCMs). It is this second group that has generated significant legal intrigue over the last year, and which we will discuss here. While event contracts are not new — Kalshi has offered essentially the same core product since 2020 — a series of legal events have conspired to broaden their scope dramatically. Registered derivatives are regulated according to the Commodities Exchange Act, and work basically like this. The DCM is permitted to self-certify a market, and after doing so may list the market publicly the next business day. 2 Since Dodd- Frank in 2010, the CFTC may then review the market according to Section 5c(c)(5)(C) of the CEA and CFTC regulation 17 CFR § 40.11.
1 See e.g . Robin Hanson, Shall We Vote on Values, But Bet on Beliefs? at 1 (George Mason Univ. Dep’t of Econ., Working Paper, Oct. 2007; rev. Aug. 2013), https://mason.gmu.edu/~rhanson/futarchy2013.pdf 2 17 C.F.R. § 40.2 (2024)
PAGE 6
IMGL MAGAZINE | JUNE 2025
PREDICTION MARKETS
The language of Section 5c(c)(5)(C) of the CEA says that the CFTC can then prohibit a contract from trading if it determines that the contract is “contrary to the public interest” because it involves: i. activity that is unlawful under any Federal or State law; ii. terrorism; iii. assassination; iv. war; v. gaming; or vi. other similar activity determined by the Commission, by rule or regulation, to be contrary to the public interest. For a long time, the CFTC interpreted this definition in a way that gave it plenary authority to ban more or less any market that it wanted. In general, this meant that it refused to permit markets relating to elections, sports, and award shows - so, the juicy stuff – from trading. That’s not what the law says though, and after the Chevron doctrine was overturned in Loper Bright Enterprises v. Raimondo , 603 U.S. 369 (2024), federal agencies have generally been required to follow the law. So when, in late 2023, the CFTC moved to prevent Kalshi from listing contracts related to elections, Kalshi sued. And in August 2024, in KalshiEX LLC v. Commodity Futures Trading Commission , No. 1:23-cv-03257 (JMC), 2024 WL 4164694 (D.D.C. Sept. 12, 2024), Kalshi won. The proximate effect of this ruling was ostensibly narrow. Kalshi, and other DCMs, were allowed to offer election contracts in the lead up to the 2024 election. This lucrative market promoted their growth, but they were dwarfed in scale by their off-shore competitor Polymarket, who ultimately gained the greatest attention share that season. After Donald Trump was elected, as the implications of the Kalshi ruling began to sink in, practitioners began to think
about the margins of the new regime. Crypto.com was the first mover, self-certifying contracts based on the outcomes of sporting events in December 2024, and Kalshi soon followed. 3 While the lame-duck Biden CFTC did move to review the Crypto.com contracts in January, they did not issue a final determination prohibiting the contracts prior to Mr. Trump’s inauguration, and the incoming CFTC has appeared more receptive to the segment. Indeed, in May the CFTC dropped its appeal of the Kalshi case, in effect accepting the limits to its authority to prohibit election contracts. 4 This came amidst speculation that incoming Commission Chair Brian Quintenz will view DCM prediction markets favorably, given arguments he made as far back as 2021 in favor of sports-based prediction markets. 5 Things are looking good for prediction markets on the regulatory front. As sports markets have grown in popularity, states have taken note. Post-PAPSA state-licensed sports betting regimes are major money-makers for states that permit them, and federally licensed DCMs sit outside of this framework. Naturally, traditional sports-betting friendly states like Nevada and New Jersey see this development as a threat to their fiefdoms. In the Spring of 2025, this dynamic led to a flurry of state cease-and- desist letters targeting the new markets. 6 At the time of writing, this litigation is ongoing. However, Kalshi has made significant strides and won preliminary injunctions against Nevada and New Jersey. See e.g. KalshiEX LLC v. Flaherty , No. 1:25-cv-02152, slip op. at 16 (D.N.J. Apr. 28, 2025). Section 2(a)(1)(A) of the CEA provides that “[t]he Commission shall have exclusive jurisdiction [over covered derivatives]” and that is about the strongest preemption case you are likely to see litigated in your career. There are caveats and counterarguments, but brass tacks, if you were betting on the outcome, you would put your money on Kalshi and Crypto. com winning these cases.
3 See Crypto.com, Crypto.com Launches Sports Event Trading (Dec. 23, 2024), https://crypto.com/en/product-news/sports; Alexander Osipov- ich, Prediction Market Kalshi Launches Sports Betting , Wall St. J. (Live Coverage Jan. 23, 2025), https://www.wsj.com/livecoverage/stock-mar- ket-today-dow-sp500-nasdaq-live-01-23-2025/card/prediction-market-kalshi-launches-sports-betting-EMq0xRAi1BL20HWrFKIm. 4 See Turner Wright, US Regulator Moves to Drop Appeal Against Kalshi, Cointelegraph (May 6, 2025), https://cointelegraph.com/news/cftc-dis- miss-appeal-kalshi. 5 Statement of Commissioner Brian D. Quintenz on ErisX RSBIX NFL Contracts and Certain Event Contracts: “Any Given Sunday in the Futures Market,” CFTC (Mar. 25, 2021), https://www.cftc.gov/PressRoom/SpeechesTestimony/quintenzstatement032521. 6 See e.g. Nev. Gaming Control Bd., Cease and Desist Order to KalshiEX LLC, d/b/a Kalshi (Mar. 4, 2025), https://gaming.nv.gov/uploadedFiles/ gamingnvgov/content/about/press-release/NGCB%20-%20News%20Release%20-%20KalshiEX%20Cease%20and%20Desist%20Order%20 %283-4-2025%29.pdf; N.J. Div. of Gaming Enforcement, Cease and Desist Letter to Kalshi Inc. d/b/a Kalshi (Mar. 27, 2025), https://www.nj.gov/ oag/ge/docs/EmergencyOrders/Kalshi2025.pdf; Md. Lottery & Gaming Control Comm’n, Cease and Desist Letter to Kalshi (Apr. 7, 2025), https:// www.mdgaming.com/wp-content/uploads/2025/04/Kalshi-4-7-25.pdf.
PAGE 7
IMGL MAGAZINE | JUNE 2025
PREDICTION MARKETS
That doesn’t mean the field is settled, however. In the coming years there will be numerous avenues for policy change, as the CFTC likely retains rulemaking authority to prohibit contracts. As event contracts become an increasingly attractive substitute for state-licensed sports betting, it is also plausible that the CFTC could attempt to take action against gambling companies like DraftKings and FanDuel for offering unregistered derivatives. While the time for legal arguments will no-doubt come again, for now, as a few rule makers in Washington hold unusual sway over the future of an industry, normative arguments come to the fore. What should the future of DCM-based prediction markets be in the United States? What is gambling? The most common aspersion cast against prediction markets is that they are simply gambling by another name. This forced Kalshi CEO Tarek Mansour to take the other side, arguing in an interview with Axios that prediction markets cannot be gambling, because of everything else that would encompass. 7 “I just don’t really know what this has to do with gambling,” he said at an office in Washington. “If we are gambling, then I think you’re basically calling the entire financial market gambling.” But Mr. Mansour is being obtuse. He, you, and I all know what gambling is and know that when a user purchases an event contract on Kalshi, that is exactly what they are doing. Industry commentator Dustin Gouker argued as much in a piece earlier this year. 8 This is all a bit of a straw man. I think we all understand that every decision we make in life comes with some amount of risk, either large or minuscule. That does not inherently make everything we do “gambling.” Gambling generally implies betting on something that is out of our control. Most of the decisions we make that have risk, we also have some measure of control over them.
As an attorney representing prediction markets, I have been asked this question for years and now it’s time to put this conversation to rest. Yes, all of this is gambling, but that definition misses the point. Since the demise of PAPSA in Murphy v. National Collegiate Athletic Association , 584 U.S. 453 (2018), the definition of gambling has been left to the states, and generally, it is quite similar. New Jersey, for example, defines it thus: 9 Staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under the actor’s control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome. You’ll notice first that this definition is quite broad, and second that it unarguably covers every single event contract, sports or no. Indeed, it covers much more than just event contracts. Virtually any derivative or insurance contracts are equally “gambling” by this definition. This is not a flaw of the definition, but it is not l egally meaningful because we recognize that these other types of contracts – grain futures, insurance, and, yes, event contracts – are socially valuable and so they are regulated under different regimes. Et Tu, Brute? Indeed, the same logic that suggests that prediction markets are “gambling” applies in the other direction as well. Why aren’t state gambling contracts just unregistered, federally regulated derivatives? Consider the CFTC’s definition of “binary option” 10 A binary option is a type of options contract in which the payout will depend entirely on the outcome of a yes/no proposition… When the binary option expires, the option holder will receive either a pre-determined amount of cash or nothing at all.
7 Nathan Bomey, Sports Event Contracts Are Not Gambling , Kalshi CEO Says, Axios (Apr. 17, 2025), https://www.axios.com/2025/04/17/kalshi- sports-betting-super-bowl. 8 Dustin Gouker, The Takeaway: Nothing Is Gambling , The Closing Line (Apr. 18, 2025), https://closingline.substack.com/p/the-takeaway-noth- ing-is-gambling. 9 N.J. Stat. Ann. § 2C:37-1(b) (West 2025), https://law.justia.com/codes/new-jersey/title-2c/section-2c-37-1/. 10 U.S. Commodity Futures Trading Commission & U.S. Securities and Exchange Commission, Investor Alert: Binary Options and Fraud (Apr. 28, 2022), https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/fraudadv_binaryoptions.html (last visited May 9, 2025).
PAGE 8
IMGL MAGAZINE | JUNE 2025
PREDICTION MARKETS
Just as clearly as state-law “gambling” would apply to Kalshi’s event contracts, so too could the Commodity Exchange Act (CEA) apply to DraftKings or FanDuel. The United States has the capacity to regulate this type of contract on a state or a federal level, and by successfully registering as a DCM, Kalshi and Crypto.com find themselves within the federal regime. Because of the language of Sec. 2(a)(1) (A) and the supremacy clause of the United States Constitution, they are outside of the state regimes. The qualitative distinction between prediction markets and state-regulated betting, then, is not that one or the other is gambling. They both are, by the state definition at least. To draw conclusions about prediction markets, policy-makers and stakeholders should think at one less level of abstraction. A normative framework for evaluating the role of prediction markets in American society should consider from first principles whether the new prediction markets modality or the old state-regulated gambling model are better for the United States. A simple and principled way to evaluate this choice is to determine which option maximizes benefits while minimizing harm. The whole naked truth The benefits of prediction markets are novel but well documented. In the first instance, they create signal. Markets are incredibly efficient tools for price discovery: by incentivizing participants to aggregate their knowledge, a price represents the synthesis of all of that knowledge. This, Justin Wolfers and Eric Zitzewitz remarked in their 2004 paper “Prediction Markets”, might make them a powerful tool for predicting events. 11 This suggestion was borne out in 2024, when Polymarket correctly predicted Donald Trump’s election in the face of traditional polling aggregates showing a coin flip. Famously, during this period a French trader named Théo conducted his own polling before betting for Trump. 12 This is
the paradigmatic case of prediction markets developing new information. The market created an incentive, and traders responded by learning true things about the world. This information was then passed on through the market price. This process is fundamentally generative. Beyond just price discovery, predictions markets are natural hedging vehicles. Have a business with lots of exposure to the price of chicken? Well, you can hire Ray Dalio to build you synthetic corn-soy futures, as McDonalds did in the 1980s, but it is probably easier to purchase a large contract betting that the price of chicken will go up. 13 These types of contracts are the whole basis of the insurance industry, and as long as concave utility functions they will continue to add massive value to society. Prediction markets will make them more available and less expensive where they thrive. To be fair, these arguments mostly concern commercial or election markets, which are not the principal locus of dispute today. At the limit, prediction markets concerning relatively trivial events probably are far less valuable along these vectors. This should not be overstated — the Super Bowl and the Academy Awards do have meaningful economic consequences that certain parties may wish to hedge — but it is safe in this domain to flatten the calculus and narrow the benefit we consider to the enjoyment that users derive from using the product. Here’s the truth. People have a fundamental desire to wager on the outcome of events. This may be hubris, entertainment, or opportunism for the intelligent or knowledgeable. Whatever the reason, these markets are inherent to human society and will arise independently anywhere that currency and contingent events meet. It is an entertainment product. This is the benefit of many markets, and if prediction markets don’t do it better than state-licensed betting, they do it at least as well. On the benefit side of the ledger there is no reason to prefer state gambling over prediction markets. In many cases, quite the opposite.
11 Justin Wolfers & Eric Zitzewitz, Prediction Markets, 18 J. Econ. Persp. 107 (2004), https://pubs.aeaweb.org/doi/pdf- plus/10.1257/0895330041371321.
12 Andrew Gelman, Polling by Asking People About Their Neighbors: When Does This Work? , Statistical Modeling, Causal Inference, and Social Science (Nov. 9, 2024, 9:11 AM), https://statmodeling.stat.columbia.edu/2024/11/09/polling-by-asking-people-about-their-neighbors-when- does-this-work/ 13 How Ray Dalio Helped Launch McDonald’s Chicken McNugget , CNBC (May 3, 2018), https://www.cnbc.com/2018/05/03/how-ray-dalio- helped-launch-mcdonalds-chicken-mcnugget.html.
PAGE 9
IMGL MAGAZINE | JUNE 2025
PREDICTION MARKETS
One bite and I was gone with the wind But what of the harm? This is a second hard truth: these markets lead many to ruin. There is a squishy dark spot deep in the recesses of the human mind that triggers reinforcing dopamine in response to uncertainty. That is science. 14 You might have experienced it if you’ve ever felt yourself glued to your phone waiting to hear from a school, job offer or lover — or played golf. Some people exposed to uncertainty react compulsively and destroy themselves. Even more broadly, there is a gradient of sophistication and knowledge in human populations, and, where we are allowed to gather and wager against each other freely, the strong end up extracting money from the weak. This isn’t fair and it isn’t good, but it is the fundamental dynamic of sports betting, day trading, and it will be of prediction markets too. These qualities, combined with a tendency to attract cheats and gambling’s natural association with dissipation and waste, have historically made the practice unseemly, so interlopers have often tried to marginalize and ban it. But this doesn’t work. Markets are not constructed, they are inherent. Bans on betting only create unregulated black and gray markets. This is probably part of the reason that gambling laws have liberalized in the United States in recent years — people recognize that prohibition can cause more harm than good. After all, the problem gambler may lose his house in either a regulated or unregulated betting market. But at least in the regulated market he will keep his teeth. A clear-eyed perspective takes both the downsides and benefits of these markets together. If this is “gambling,” then that is no invective. Weighing these benefits, we can construct a rough harm reduction hierarchy. Prohibition is the worst option, maximizing harm. But state regulated markets likely still cause more harm than do federally regulated prediction markets. That is because of incentives.
State regimes have mostly flowed from pre-existing casino regulation, typically favoring the house. That is why sports books are permitted to limit bet sizes of any “sharp” bettor while giving their losers exorbitant perks to keep betting. 15 This practice maximizes the damaging aspects of these markets, while simultaneously removing the most sophisticated participants, thereby kneecapping price discovery. Extractive behavior flows naturally from sports books’ posture as their customers’ counterparty. They can only make money as long as they are taking it from users. Prediction markets do not have this problem. They are simple intermediaries where bids and asks can meet, and from that process, a signal may emerge. This is the point Mr. Mansour tried to make in his Axios interview, but if you can’t first admit that these products are close substitutes, then the principled arguments melt into noise. Prediction markets are like gambling, just better. It is simply an artifact of history that state-regulated sports books came first, so have an incumbency advantage. Conclusion The CFTC has expressed reservation in the past over the idea of directly regulating new markets. Its capacity will have to increase to do so effectively. This is reasonable, but in accepting the status quo and abdicating the regulation of risk assets to the states, it would be materially harming American consumers. NCAA v. Murphy made progress, but we should not stop there. Prediction markets’ ascendance is an inflection point in the regulation of risk assets. The CFTC will have an opportunity to choose, or at least influence, whether popular betting markets remain regulated by the states or come under the federal umbrella. In making that choice, the natural question is which structure will maximize the benefits, hedging and price discovery, while minimizing the harms, predation and compulsive behavior.
This doesn’t necessarily mean that the CFTC should move to
14 Mike J.F. Robinson & Patrick Anselme, How Uncertainty Sensitizes Dopamine Neurons and Invigorates Amphetamine-Related Behaviors , 44 Neuropsychopharmacology 237 (2019), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6300523/. 15 Katherine Sayre, Sports Betting Companies Weed Out Winners. Gamblers Want to Know Why , Wall St. J. (July 14, 2024), https://www.wsj. com/business/media/sports-betting-companies-limit-winners-f06ea822.
PAGE 10
IMGL MAGAZINE | JUNE 2025
PREDICTION MARKETS
ban state-law gambling. While such a move might be legally plausible, it would provoke a significant legal battle and have some legitimate Major Question Doctrine concerns. But it is time to stop pearl-clutching when it comes to prediction markets. This new modality demonstrably produces high quality information, something state-law gambling has never claimed to do. At the same time, it short circuits a perverse incentive structure that suffuses traditional book- making. People respond to incentives, and this relative platform neutrality should prove a boon to consumer welfare.
it. But the pertinent question is not whether that harm is present, but whether it is more or less than the alternatives — and it is difficult to see how it could be more than the present regime. During the Obama years, Cass Sunstein was the Administration of the Office of Information and Regulatory Affairs (OIRA). As part of OIRA’s efforts, Sunstein implemented cost benefit analysis for all federal policy, dictating that agency action may only proceed where “the chosen approach maximizes net benefits.” 16 Years have passed, administrations come and gone, but the analytic frame still pertains. The age of state-licensed betting is over. The time of the prediction market has come.
AARON BROGAN Founder, Brogan Law For information contact: aaron@broganlaw.xyz
There will still be harm. There is no doubt about
16 Cass R. Sunstein, Cost–Benefit Analysis, 114 Colum. L. Rev. 167 (2014), https://columbialawreview.org/wp-con- tent/uploads/2016/04/Sunstein-Final.pdf.
ONE-ON-ONE
An important link in the supply chain DARON DORSEY , PRESIDENT AND CEO OF THE INDUSTRY’S SUPPLIER TRADE ASSOCIATION, TALKED TARIFFS TO EDITOR-IN CHIEF SIMON PLANZER .
Simon Planzer: AGEM has been a partner of the IMGL for many years, but I wonder how many people are clear what the organization is and who you represent. Could you start by telling us a bit more about it. Daron Dorsey: Sure, AGEM is the Association of Gaming Equipment Manufacturers, and it’s the global trade association established to be a voice for equipment suppliers, system providers and others on the B2B side of regulated gaming. It’s a networking and information sharing organization for member companies and that includes the large global companies with brand names like IGT, Aristocrat, Light and Wonder. It also includes payment companies like JCM and CPI and some of the niche but growing companies like TCS John Huxley, ZITRO or Bluberi. Then it’s also the suppliers to the suppliers. Gaming is a technology business now, so our members are making computer and technology products. So there are touch screen monitor companies, computer circuit board manufacturers and a myriad of other suppliers right around the world. AGEM is the voice for that side of the industry with regulatory authorities, with government bodies, with the responsible gaming community all the stakeholders our members deal with.
SP: And does this also include the online guys? DD: It does and that’s a good point to make especially as this industry is migrated from the traditional, land-based environment. The key is that all suppliers to regulated and authorized gaming markets around the world, whether online only or land based, are part of the AGEM community. SP: That’s a very broad membership and one which won’t always align in terms of interests. How do you handle that as president? DD: Great question and you’re right: our members have different perspectives and diverse interests, and when that is an issue, we try to pursue a consensus. But if we get to a point where views are diametrically opposed, then we take the position that we will not come down on one side or the other. We’re not working for the benefits of certain members or against others. We just let the market work through its outcome. SP: And you serve as a president and CEO of the organization. Can you tell us a bit about your double role and how that’s changed over the years. DD: AGEM started over 20 years ago and, like the gaming
PAGE 12
IMGL MAGAZINE | JUNE 2025
ONE-ON-ONE
1 on
1
industry itself, it grew organically. Now we’ve got 58 voting member companies and almost 100 associate members, so we’ve adapted the corporate governance structures from something quite ad hoc to something more formal. Over the years we have adopted a similar governance structure to our member companies. We have a board of directors with a designated executive that is responsible for managing the organization on a day-to-day basis, but with reporting responsibilities to the board. SP: As a member organization, you’re there to serve the members. So what’s on their minds? What’s are the things that come to mind on the supplier side of the industry at the moment? DD: The big one right now is global trade policy and that is affecting pretty much all of our members in ways which are unpredictable, hard to manage and disruptive. That’s something that everyone’s having to deal with and navigate. No matter where they’re domiciled, they are all working across borders with components sourced from right around the world. So top of mind is how they’re going to get through the next six months. Many of these are publicly traded companies and they have to give guidance to the markets and to shareholders and that is very difficult right now. Our members are gaming technology companies, they are building a technology product that happens to be a gaming device. Over many years, the industry has built up a complex supply chain so you might get a touch screen from a company in Taiwan, or computer chips from a manufacturer in South Korea. Then someone else creates the subcomponents in another facility somewhere else. You look at the games today and how different they are from 15 to 20 years ago. That’s the product of a huge amount of R&D to create machines that are highly sophisticated and that sophistication extends to the supply chain as well. Every component has been refined and that takes a high degree of manufacturing capability. That can’t be switched out overnight.
One thing that COVID taught us was not to concentrate the supply chain around sole source providers. That means the supply chain is much more diverse and global than it was. The other thing is that we’re working with quite long lead times. We can’t make products on just in time delivery cycles, meaning we may need to buy things a year in advance to have stock of these items. And that brings in another area of uncertainty to do with cash flow. If you’re expending millions of dollars in cash for boards or monitors, or part-assembled cabinets then those have to sit on your shelves, and you don’t know what you might be able sell the completed product for 12 months from now. That’s what I mean when I talk about uncertainty and why an extended timeline makes uncertainty so disruptive and costly. When you’ve got this highly integrated product, all the components have to work together. It’s very difficult to think about finding an alternate source for one component that’s part of a much larger whole. You have to make sure it functions, that the solution can work in isolation but you also got to make sure that you can support that new component within your product. We realize we’re no different than many other industries, but we are also highly regulated. All of our products have to go through a rigorous testing, certification and approval process from the independent test laboratories and the regulatory authorities. A change in any one of those component items means you have to have the appropriate certification, testing and approvals and that’s not something that happens overnight. It takes a long time and it’s very costly. To get new game or a modified game that through testing and certification cycle in all of your regulated markers is thousands of dollars. For one of these global suppliers, there might be hundreds ot even thousands of games in their library. So when you look at the exponential effect of changing a component, it’s not only the cost and inconvenience of sourcing an alternative, the cash flow implications of a lag to your supply chain, but also the cost of testing and certification. Those things combined make it really difficult to navigate.
PAGE 13
IMGL MAGAZINE | JUNE 2025
ONE-ON-ONE
1 on
1
SP: You’ve mentioned uncertainty several times. Would you agree that uncertainty about tariffs is worse than, say, having 10 percent tariffs across the board? DD: Agreed Simon. That’s spot on. Uncertainty makes it much more difficult to plan. When we’re thinking 12 months ahead, 18 months ahead or longer, what are our products going to look like? What new features are we going to bring to the market, to satisfy the customers of tomorrow? When we have uncertainty, we’re only thinking about the next few months and that impacts our ability to deliver the kind of innovation that has kept our industry growing. SP: We are hearing stories of operators scaling back their ambitions due to increased costs due to tariffs. What is the picture that’s emerging from your customer base? DD: I don’t know if we’re seeing that feeding through yet on the supplier side. I think we have heard some companies are delaying capital investments or renovations, because the cost of construction is less certain. If that were to continue, that would definitely feed through to our members. We see this also in the capital replacement cycle. Everybody refreshes the products that they offer to their customers and depreciates their equipment over several years. That’s where the macro effect of trade policies impacts capital decisions. If our operator customers pull back on capital reinvestment that trickles down into what they decide to replenish on the gaming floor. Or it changes the way they do it so more rental or lease activity, rather than buying outright. Those are all financial decisions that we navigate as best we can with our customers. Every customer is different, but yes, I would expect alternative arrangements to be put on the table by our members so they can get their latest, most innovative products in front of customers. For me, it comes down to two issues: how are we going to keep delivering our products in a profitable way that satisfies the needs of our customers, and how are we going to compete against competitors who are not in the regulated space? Those two things are on every company’s mind right now. SP: That is a neat segue to talk about the black market. Your members work in the regulated market but how does the black market dynamic work on the supplier side? And what are you
as an organization, what are suppliers and your members doing about that? DD: When you look at the growth of our industry, that’s come on the back of innovation, great ideas and new players to the point where gaming is essentially everywhere now in some form. That’s a good thing, but at the same time, it gives a boost to those unlicensed, unregulated companies to be more prevalent. That’s the downside, because the industry is highly regulated and we play by the rules when it comes to compliance, paying taxes, providing the public protection frameworks, the responsible gaming and making sure that the games are tested, certified and approved. There are player dispute mechanisms. That’s what the regulated market does but the unregulated market doesn’t provide any of that. So for suppliers, it is difficult when you’re competing on an unlevel playing field, when customers can’t tell the difference between a regulated or an unregulated game. That eats away at the value of regulated products and regulated suppliers and benefits unregulated and unauthorized ones. We work with our partner associations – the American Gaming Association, the Canadian Gaming Association, the European Casino Association, the GTA down in Australia – to keep them focused on the benefits of regulated suppliers. The message is, if you want these things as a regulated industry, let’s work together to find solutions so that your customers are safe, your taxes are secure and we don’t have black market companies benefiting from all of the good work that regulated gaming has done. We are very pro regulation. Wherever you have regulated markets, whether that’s land-based or online, we’re going to participate in them. We can deliver the products we’re going to be there in those markets. So regulate whatever forms of gaming you wish to have in your jurisdiction and let that be the universe of products and available games. We are the established partners of regulated gaming so let’s find a way to participate on a regulated level playing field, and then the customers will decide whose products are the best. SP: It sounds like there are a couple of elements to this. One is unregulated machines finding their way into regulated casinos. And the other is the enforcement part of that where regulators are actively seeking those out and taking action, is that right?
PAGE 14
IMGL MAGAZINE | JUNE 2025
ONE-ON-ONE
1 on
1
DD: Agreed and that really clarifies the difference. We’re educating people so they know that the only products that are allowed are those authorized by a particular jurisdiction. The enforcement piece is difficult, because gaming regulatory authorities have limited resources. They can go and try to shut establishments down but it also depends on the priorities of law enforcement or other agencies or tax authorities. There are a lot of public policy issues, and gaming is not always high on the priority list and it’s maybe not as easy to prosecute those things as it is where there is an obvious public harm aspect. Bringing those cases takes a lot of time and energy. We look at how we can support law enforcement agencies and provide information as best we can. SP: You have substantial experience in this industry as a legal practitioner and now with AGEM. When you look back, how have you seen Responsible Gaming evolve in the gaming machine sector? DD: I think a good place to start is the record we have as an industry for being responsible partners. To the point where we’re no longer viewed as a problem when we talk about Responsible Gambling. There’s a much more widely held view that we’re talking about something that is a legitimate adult leisure activity with some safeguards and protections so that people can enjoy it responsibly. It is no longer seen as a public harm that needs to be immediately addressed. So I think that we’ve done a very good job over the last couple of decades showing that we care about that. As an industry we have funded research to inform in an objective fashion, how we can be better? Rather than rely on anecdotes we have tried to prove those things out looking at say the incidence of problem gambling and the factors that increase levels and how to bring them down. It’s about how to facilitate the activity in a responsible way. RG has been a major focus of AGEM over the years. We have a dedicated Responsible Gaming director and we dedicate 20 percent of our budget to RG initiatives. So as an industry, we have put our money where our mouth is. We don’t hide away from problem gambling we want to be part of the solution and we actually do support measures to keep people playing safely. SP: We have seen approaches to RG change especially in Europe where we have gone from a model where gambling was
essentially a consumer choice and to make that choice they needed free and honest information about the product. Now the onus is on operators to be responsible not for consumers to take responsibility. I get the impression it’s different in North America but I’d be interested in your perspective. DD: I think we are still closer to your original model in North America. People have to have know the rules, there are some safeguards in place, and there are some off ramps if they need them with support and resources. I think what’s also happened is that gaming has become much more critical to the public treasury. It supports education, it supports infrastructure with billions of dollars. So I think the emphasis is less on preventing people from taking part in this activity that we’ve authorized and more on providing ways for them to do so in a responsible manner. That’s where the size and the scale of that unregulated black market is an issue that we can all point to. By making it more difficult and preventing people who wish to take part in this authorized, regulated activity, we’re pushing them to into the unregulated market where there are no protections and at the same time, there’s no public benefit because it’s not contributing to the public treasury. SP: Over the last few years the focus has been increasingly on iGaming. This has been the growth sector. How relevant are slots still to the industry and how can the supply side to the industry help the broader industry achieve its goals? DD: For AGEM, this is one of our key messages. First, as I said, we are digital as well as land based and our side of the industry is growing too. We’re providing many thousands of high-quality jobs, technology jobs. So when the broader industry tries to talk to governments or to the public, don’t forget about us, because we are a growing segment that makes a significant economic contribution. We are additive, and complementary to all the things that you’re doing out there.
[economic impact study]
The data show there’s real, direct and indirect economic impact from the supplier side. So that’s what I think the message of
PAGE 15
IMGL MAGAZINE | JUNE 2025
ONE-ON-ONE
1 on
1
the next couple of years will be. It’s not just the front facing operations. The lift comes from all of the B2B players, and that’s where we can be additive and provide more support. It’s a good story that we want to keep telling. When we’re in DC with a delegation to talk about tariffs, we know we’re not the automotive industry, but we’re growing and hiring people and building new facilities. We’re here, we’re growing and we’re contributing and whatever you can do to help that is going to deliver a return.
PAGE 16
IMGL MAGAZINE | JUNE 2025
ONE-ON-ONE
1 on
1
PAGE 17
IMGL MAGAZINE | JUNE 2025
POLISH REGULATION
The changing face of Polish regulation POLAND’S GAMBLING MARKET HAS POTENTIAL FOR GROWTH BUT REFORMS ARE REQUIRED TO ADDRESS THE PROBLEM OF ILLEGAL GAMBLING ARGUES JUSTYNA GRUSZA-GŁĘBICKA
Current regulations related to gambling in Poland Poland has unique gambling regulations that differ significantly from those adopted in most European countries. The primary piece of legislation governing the gambling sector is the Gambling Act of November 19, 2009 (the Gambling Act). What distinguishes Poland’s gambling regulations from those of other European countries? Firstly, the state holds a monopoly on a significant portion of gambling activities. Entrepreneurs may only apply for a license to operate a land-based casino and a permit to organize mutual betting both online and land-based. Promotional lotteries may also be organized upon obtaining special permission. To obtain a permit for organizing mutual betting in Poland, a company must be registered as a joint-stock company or a limited liability company based in Poland. This activity may also be conducted by companies based in another EU or EFTA member state, provided they operate under similar corporate structures and appoint a representative or branch office. The
minimum share capital must be at least €468,000. The cost of an online license is approximately €173,000. The company must have a transparent ownership structure and no ties to illegal gambling. Applicants must document the legal origin of their funds and provide a business and operational plan. A responsible gaming mechanism is mandatory. Management board members and shareholders must have no criminal records related to tax, economic crimes, or illegal gambling. Key personnel must have appropriate qualifications and experience. Licenses are granted for six years and the application process takes about six months. In the case of lotteries, the procedure is much shorter and depends on the decision of the Head of the Tax Administration Chamber. All other gambling activities, including online casinos, may only be operated by a dedicated state-owned company. Secondly, Poland applies a turnover tax of 12 percent (calculated from revenue) on mutual betting, instead of GGR (Gross Gaming Revenue – revenue minus paid out winnings), which makes it a country with one of the highest gambling tax rates. The tax is automatically deducted by the bookmaker
PAGE 18
IMGL MAGAZINE | JUNE 2025
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62Made with FlippingBook flipbook maker