New Gambling Battle Could Have Major Implications for Atlantic City

ATLANTIC CITY — A rapidly escalating fight over prediction markets could have significant consequences for Atlantic City casinos and New Jersey’s legal sports-betting industry, according to casino analyst Anthony Marino.

Marino, appearing Monday morning on The Don Williams Show on WOND, said the dispute centers on a basic question: Are prediction markets such as Kalshi and Polymarket financial trading platforms regulated by the federal government, or are they effectively gambling operations that should be subject to state gaming laws?

The issue has become increasingly important as prediction markets offer contracts tied to sporting events — putting them into competition with traditional sportsbooks.

“Most of us realize that when you go on a prediction market and say, yes, I will take a trade on that, let's say the Eagles will beat the 49ers and somebody else says, no, I will take a bet that says the 49ers will win,” Marino said. “That is a bet. That's a sports bet by any logical definition.”

Prediction-market operators see it differently. Kalshi operates as a federally regulated designated contract market under the Commodity Futures Trading Commission and has argued in court that its event contracts fall under federal commodities law rather than state gambling regulation.

That argument has already prevailed, at least preliminarily, in New Jersey. In April, the 3rd U.S. Circuit Court of Appeals upheld an injunction preventing New Jersey regulators from enforcing state gambling laws against Kalshi's sports-related event contracts. The court concluded Kalshi had demonstrated a likelihood of success on its argument that federal law preempts state regulation.

Marino described the situation as a direct challenge to the regulatory system New Jersey has built around casino gambling and sports wagering.

“The state of New Jersey has lost a case against [Kalshi],” Marino said. “They tried to block [Kalshi].”

Marino said the Casino Association of New Jersey has also challenged prediction markets.

New York Fight Escalates

The issue has taken on new urgency following a legal confrontation in New York.

New York Attorney General Letitia James sued Kalshi on July 31, alleging the company is operating an illegal gambling platform without a state license. The Trump administration and CFTC have moved to defend federal authority over prediction markets, setting up another confrontation over whether states can enforce their gambling laws against federally regulated event contracts.

The broader battle extends well beyond New York and New Jersey. States around the country have challenged prediction-market operators, while the federal government has argued that the CFTC has exclusive jurisdiction over federally regulated event contracts.

Marino believes the dispute could eventually reach the U.S. Supreme Court.

“It's an ongoing controversy,” Marino said. “And ultimately, a case is going to get to the Supreme Court.”

Marino also said Congress could ultimately resolve the issue by passing legislation defining what prediction markets may and may not offer.

Why It Matters to Atlantic City

For Atlantic City, the stakes go beyond a legal disagreement over regulatory authority.

New Jersey's traditional casinos and sportsbooks operate under an extensive state regulatory system and generate tax revenue for state programs. Prediction markets operate under a different federal framework.

“The casinos don't make anything,” Marino said of prediction-market activity.

Marino argued that New Jersey's existing regulatory infrastructure is another important distinction.

“Right now, sportsbooks have bent the knee to the state they're in and all the regulatory powers of the state,” Marino said.

He said state regulators already have personnel and procedures in place to investigate suspicious wagering activity.

“In the case of prediction markets, none of that exists, whether they're taking a bet on a sporting event or whether they're taking a bet on a political event,” Marino said.

Prediction markets aren't limited to sports. Contracts can be based on elections, political developments and numerous other real-world events.

That breadth has also generated concerns about traders potentially using inside information. Recent reporting indicates prediction-market platforms have been flagging suspected insider activity as federal regulators face questions about enforcement resources.

Marino said the legal and regulatory battle is far from settled.

For Atlantic City's casinos, the ultimate answer could determine whether an increasingly popular competitor offering sports-related contracts must play by New Jersey's gambling rules — or can continue operating under a separate federal regulatory system.

South Jersey NewsBeat will continue following the prediction-market fight and its potential impact on Atlantic City's casino industry.