One of the key figures behind the national spread of sports betting in the United States has taken up the fight against prediction markets as a form of wagering.

Former New Jersey Gov. Chris Christie serves as an adviser to the American Gaming Association on prediction markets, the entities that sell event contracts to investors on current events and last year branched into selling contracts on the results of sporting events.

Prediction market sports event contracts are yes-or-no propositions that can pay an investor who correctly predicts an event outcome with those on the losing side getting nothing and losing their stake.

Nevada gaming regulators have said the federally regulated markets are a form of wagering and should hold gaming licenses if they intend to sell contracts in the state.

Christie shared his views on the ongoing fight between prediction markets and gaming regulators across the country in an interview with the Review-Journal prior to Sunday’s Super Bowl. Also during the week, another prediction market filed a lawsuit against Nevada gaming regulators and Attorney General Aaron Ford, seeking an injunction to block its sale of contracts.

“I think it’s important to remember the role I played in us even being here,” Christie said. “We spent six years of my term as governor in court fights with the (professional sports) leagues to allow sports gambling to be established in New Jersey, ultimately winning the fight at the U.S. Supreme Court. So it’s an issue that matters a lot to me and that I’ve invested a lot in and now you’ve seen as a result of that case we see sports gambling in 40 states around the nation. That it’s being done the right way means a great deal to me because I’m the guy who got it all started. So when the AGA came to me for some advice, I was happy to join in.”

Educating the public

Christie believes educating people about how prediction markets operate will be a key part of his work.

“I think the entire country is now understanding what’s going on here, which is the prediction markets are acting illegally in all 50 states in the country,” he said. “In the 40 states that have legalized sports gambling, they’re not complying with regulations, they’re not paying their taxes, they’re marketing to teenagers and they’re not protecting consumers or the integrity of the leagues.

“In the 10 states where the voters or the legislature or both have determined they don’t want sports gambling in their state, in places like Alabama, Georgia, Texas, they’re saying, ‘Too bad. We’re going to let people gamble on sports in your state anyway,’ and blatantly violate the state law. So no matter which state you are in in the country, these prediction markets are violating states’ rights and so I think where this fight is going to be won in the courts across the country where states are standing up for their own rights.”

State court strategy

Nevada recently joined Massachusetts with a different strategy to fight prediction markets. Instead of filing court actions in federal courts, they’re taking their claims to state courts. The Nevada Gaming Control Board recently filed a lawsuit against Blockratize Inc., doing business as Polymarket, in Carson City District Court.

Earlier this month, District Judge Jason Woodbury sided with the Control Board on a temporary restraining order, preventing Polymarket from writing derivatives contracts in Nevada ahead of a Wednesday hearing.

Christie believes it was a good move because he believes state courts may be better invested in protecting states’ rights.

“The reason is that the state courts understand state laws better than the federal courts do,” Christie said. “They understand the importance of protecting state statutes and state regulations. I think state courts will be much better informed of that than federal courts will be.”

He said federal judges should be as well informed as the state judges, but that state judges tend to have a greater sensitivity toward state matters.

Christie also has seen the trend of some national sports-betting providers experimenting with a prediction market model. Licensed sportsbooks in Nevada have been warned that if they engage in prediction markets that they can be disciplined with fines or a license suspension or revocation. He doesn’t think those efforts will be successful.

“If it walks like a duck and quacks like a duck, it’s a duck,” he quipped. “They can dress it up with anything fancy they want, but in the end, it’s a sports bet. It’s a sports bet in 40 states that have regulations and taxation and in 10 states it’s (illegal), no matter what they call it.”

New lawsuit

Meanwhile, another lawsuit has been filed in U.S. District Court against state regulators by a company seeking to operate a prediction market in Nevada.

Coinbase Financial Markets Inc. filed its lawsuit Wednesday against Attorney General Aaron Ford and Gaming Control Board members Mike Dreitzer, George Assad and Chandeni Sendall and Nevada Gaming Commissioners Jennifer Togliatti, Rosa Solis-Rainey, Brian Krolicki, George Markantonis and Abbi Silver.

The complaint, filed in U.S. District Court in Nevada, seeks a preliminary and permanent injunction against Ford and regulators from enforcing Nevada gaming laws prohibiting Coinbase from operating a derivatives market.

In the lawsuit, Coinbase calls itself “a pioneer in the cryptocurrency industry” that is seeking to offer event contracts in the futures market.

State officials are seeking a restraining order opposing an injunction and a hearing is scheduled Feb. 17 before U.S. Magistrate Maximiliano Couvillier III.

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