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There’s states against forms of legal betting, then there’s Alabama. The state is especially against gambling, more so than most other states.
Don’t think we’re just talking about sports betting either. There are 10 other states in America without it. But Alabama doesn’t even allow a lottery. They are one of five states without a legal lottery (the others are Alaska, Hawaii, Nevada, and Utah).
But… Alabama sports betting enthusiasts aren’t completely banned. For years, they’ve been allowed to play at popular offshore sportsbooks, albeit in a legal grey zone. Now, they also have prediction markets. Though the legality of those is also in a grey area.
Prediction markets like Kalshi and Polymarket have allowed Alabama bettors to put money on outcomes related to the Crimson Tide and other sports this Fall. But how long will that last? This is a question that the entire country is asking, not just those in Alabama. Let’s bring you up to speed with the latest happenings.
Polymarket CEO Fights Back
Surprisingly, prediction markets have laid low when they’ve been called quasi-betting companies. That changed this month though, thanks to Polymarket CEO Shayne Coplan. Maybe feeling the heat, he went on the offensive and attacked sports betting apps.
“None of them innovate. They all rip off the consumer, respectfully,” Coplan said. “You can only trade against the house. They can ban you if you make money, and they can profile you as a user and change the prices based on you. That’s a scam.”
The bomb came at the Axios BFD conference in mid-November. Of course, he’s talking about the likes of BetMGM, DraftKings, FanDuel, and others, who, if we’re being honest, do exactly as Coplan claims. These apps routinely bet “sharp” bettors who profit off betting — but allow casual bettors to give them their hard-earned money. No one can honestly argue that’s fair.
In contrast, prediction markets are more transparent, especially Polymarket, which uses cryptocurrency to visibly show order books. No such thing is possible with traditional sportsbooks, which guard that information with their life.
But while Polymarket can argue they offer a fairer experience, that’s not the issue at hand. The bigger issue is whether these prediction markets is options trading as they argue, or just sports betting pretending to be that. Only one party can settle this, and settle it for good, as we discuss next.
The Supreme Court Has All The Power
At the end of the day, what prediction market or sportsbook operators say has no effect in the grand scheme of things. That’s because all roads lead to the Supreme Court, the highest of all courts in the country. Coplan said the fate of his industry lies with the federal courts, not state courts.
That hasn’t stopped states from trying to exert power, however. Kalshi, Crypto.com, and even Robinhood are locked in fights across multiple states right now. Maryland, Nevada, and New Jersey, are a few states that come to mind. Polymarket is not involved in dish battles because, for now, they don’t run in the United States (this will be changing soon).
Anyways, prediction markets argue they are CFTC-regulated markets, and as a byproduct, should override state gambling laws. If the Supreme Court says it’s a commodity, then states can’t say it’s gambling. Federal law (Supreme Court) trumps state law, so that would be final.
Everyone needs that clarity because things are messy right now. A Nevada judge who originally shielded Kalshi from regulators is now publicly saying he’s “leaning toward” reversing himself. He’s questioning whether a sports result — like a final score or player stat — can legally count as a “swap” under the Commodity Exchange Act.
Meanwhile, 34 states just filed an amicus brief backing New Jersey in a related lawsuit. All of them want to make the decision on prediction markets for themselves — not the CFTC.
Speaking of which, don’t expect clarity from the CFTC anytime soon. At a Senate hearing, Michael Selig — the guy nominated to lead the agency — dodged every question about whether sports contracts belong under federal jurisdiction. More or less, he’s trying to kick the decision up to the Supreme Court.
Will Prediction Markets Get A Trump Bump?
Ever the opportunists, the Trump family is circling the matter. Donald Trump Jr. is advising both Kalshi and Polymarket, and Trump Media just teamed up with Crypto.com to build a Truth Social–branded prediction market. Having the Trumps on your side certainly bodes well for the longevity of prediction markets.
If there were a prediction market on the matter (there probably is if you look hard enough), we think that prediction markets being ruled legal would be the favored outcome. That’s how important having political capital is.
We’ll see what happens, but if you’re in Alabama reading this, you might keep this option open for all your sports betting. Make sure to check back with us cause we’re following this story closely and writing updates as we get em.
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