Key Takeaways
- Greenblatt said the CFTC’s casino exclusion has only “stayed” the risk from prediction markets.
- He expects the Supreme Court to side with states and tribes during its 2026-27 term.
A Rule That Can Be Undone
On BetMGM’s third-quarter earnings call on Oct. 13, Greenblatt addressed the CFTC’s Oct. 9 rule changes, including an interim final rule that codifies the agency’s position that “casino-style gambling products, including wagers placed on sportsbooks and casino games,” fall outside the definition of a swap.
“I don’t think it’s no longer a risk,” Greenblatt said, according to Covers. “I think if anything, the risk has been stayed for some time. I think what’s happening now is cosmetics in pursuit of survival.”
If prediction markets survive their legal challenges, he added, then “it is just a matter of time before the casino-like products reemerge in some other incarnation,” noting that rules made now “can be undone and changed in the future.”
The rule takes effect once it is published in the Federal Register, which had not happened as of Thursday morning. The CFTC also proposed the same day to define sports, political, and other event contracts as swaps, placing them within what Chairman Michael Selig called “the agency’s exclusive jurisdiction.”
Greenblatt said he expects the legal uncertainty to be settled by the Supreme Court, saying that most cases so far have gone in favor of states, attorneys general, and tribes. “I think the key test is whether this was the intent of Congress, and I think that will be shown to not be the case,” he said. He expects a ruling during the court’s 2026-27 term, although the justices have not yet agreed to hear New Jersey’s petition in its case against Kalshi, in which Kalshi’s response is due Nov. 9.
BetMGM reported Q3 net revenue of $710 million, up 7% from a year earlier, and adjusted EBITDA of $86 million, up 112%, while average monthly active players fell 3%. Greenblatt said on the call that BetMGM is “reducing investment in certain lower-return, OSB-only markets,” meaning states where it offers online sports betting but not online casino games, and putting more into iGaming, which brought in $483 million of the quarter’s revenue. He told analysts the competitive environment “remains intense, particularly due to investment by unregulated and illegal operators offering sports betting,” InGame reported.
The results come as sports trading on prediction markets surges: sports and combo volume on the exchanges rose about 72% to $68.2 billion in the 30 days to Sept. 29, according to Aldrin Research data. In court, two federal appeals courts have sided with states since August, most recently the Sixth Circuit, which ruled on Sept. 25 that Ohio and Tennessee can enforce their gambling laws against Kalshi.
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