Adam Roarty is a journalist covering sports betting, regulation, and industry innovation for CasinoBeats. His coverage includes tax increases in the UK, covering breaking stories in the ever-evolving landscape of US betting such as the...
Read Full BioArkansas Senator Brian King sent a letter last week requesting that state Attorney General Tim Griffin issue a formal opinion on the legal status of prediction markets.
In King’s letter, he asks four questions of Griffin to clarify the legality of prediction markets that have expanded to include political and sports markets:
- Would a company like Kalshi be operating in violation of Arkansas law if it was not licensed to engage in gaming operations?
- Under Arkansas law, would sports related event contracts be subject to Arkansas’s tax on fantasy sports games?
- If companies like Kalshi are not required to possess gaming licenses, would they be subject to any other Arkansas regulatory body as a financial exchange?
- If companies like Kalshi can operate under Arkansas law without a gaming license, is there any type of event contract that could not be exchanged under Arkansas law, such as election contracts or contracts related to future tragedies?”
The request comes at a time when prediction market platform Kalshi is facing mounting legal challenges, with a judge in Maryland rejecting the company’s request for a preliminary injunction to prevent the state from halting its operations. Maryland is one of seven states to issue a cease-and-desist order to the company over claims its sports event contracts violate state gambling laws.
Arkansas Not ‘Wide Open’ to Gambling
Arkansas has tight laws around gambling and restricts sports betting to the state’s three licensed casinos. Online sports betting was launched in 2022, but is currently operated only through casinos, effectively shutting the door to leading sportsbooks such as DraftKings and FanDuel.
The state has also taken a hard line on the gray area of what constitutes gambling, and issued cease-and-desist letters to fantasy sports operators Underdog and PrizePicks last year. Unlike other states, such as California, the Arkansas AG has not issued an opinion on the legal status of DFS; however, the state’s gambling regulator has stepped in against the operators.
When issuing the notices to halt operations, the Arkansas Department of Finance and Administration (DFA) noted that the pick’em games offered by the DFS platforms amounted to sports betting.
DFA Regulatory Administrator Trent Minner stated: “The internet is today’s equivalent of a ‘wide open town’ where unlicensed gambling thrives outside of the taxation and age-verification requirements required by the law.”
“As the state’s regulator of licensed sports betting, DFA is putting these companies on notice that Arkansas is not ‘wide open.’”
The stance taken against DFS suggests that the DFA would also be opposed to sports prediction markets, which offer Arkansas bettors the chance to wager on sports outside the state’s licensed sportsbooks.
Attorneys General Speak Out Against Unregulated Gambling
Griffin may also take a similar stance to the DFA. He was among the 50 AGs to request that the U.S. Department of Justice (DOJ) take tougher action on unregulated betting platforms this week.
Griffin signed off on a letter to U.S. Attorney General Pam Bondi calling for the DOJ to block access to sites, seize assets, and block payments to platforms operating outside state gambling laws.
The letter focused on offshore gambling sites, which would not include prediction market platforms, such as Kalshi, that are licensed by the Commodity Futures Trading Commission (CFTC).
A formal opinion from Griffin could encourage the DFA to make a similar move to gambling regulators in Maryland and other states. Still, it would not, in itself, lead to any immediate legal consequences for prediction market platforms operating in the state.
