Congress can’t seem to figure out that sports gambling is just sports gambling

My two youngest sons are home from college for a few weeks before fall semester. Last weekend, I watched them pull up an app and buy “contracts” on an NFL preseason spread that I didn’t know existed until they explained it to me.

They weren’t using a sports book. According to the platform, they weren’t gambling at all. They were trading.

I have spent thirty years building and running regulated financial products, from hedge funds to private credit strategies. I can tell you exactly what that product looked like to me: a derivative, but with none of the guardrails I would have had to clear before I could put it in front of a client.

That’s the trick sitting at the center of the fastest-growing corner of American wagering. Unfortunately, Congress has just proved again it has no idea what to do about it.

Legislation meant to rein in sports gambling and the newer prediction market business stalled out completely last week, even as insider trading scandals keep surfacing. The SAFE Bet Act, which would set minimum federal consumer protections for online sports betting, has not gotten a floor vote. Sen. Richard Blumenthal (D-Conn.), one of its sponsors, said the gambling and prediction market industries are simply outspending Congress’s patience, throwing lobbyists and money at the problem until lawmakers move on to something else.

I get why the platforms fight this hard. Kalshi is reportedly looking to raise funds at a $40 billion valuation. Polymarket is near $15 billion. Both built those valuations partly on sports contracts that look, walk and pay out exactly like sports bets on the Chiefs covering the spread.

The difference is regulatory, not economic. A sports book is licensed state by state, limited to those 21 and older, and subject to consumer protection rules built up over a decade of legalized gambling. A prediction market, on the other hand, is federally regulated by the........

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