'It Seems To Meet Every Definition Of Gambling': John Curtis Presses McHenry On Prediction Markets

Added: 2026-05-28

[00:00:00]Um, Mr. Mckenry, I'm conflicted whether I call you chairman, uh, congressman, uh, speaker. Uh, but I I will tell you it is a delight to see you again and really enjoyed serving with you. If I'm honest, even a couple of months ago, I would not have been able to tell you what a prediction market was. And so, could you help me just like in one sentence to to the man and woman back in Utah, what is a prediction market? Just like in one sentence.

[00:00:27]>> It is an open exchange. It is uh under commodities regulation called a swap.

[00:00:33]You have folks that have a contract.

[00:00:35]Some say yes, some say no. And they determine it. The marketplace, the consumers and the participants determine what is the ratio on the contract, the likelihood of something happening, >> and what's exactly happening when a purchase event contract is is purchased.

[00:00:51]Just very very like for the people on the ground who don't understand the technicalities of this, tell me exactly what's happen. easiest thing for me to explain is in the political setting, right? In the political setting, is uh John, Jane, or Joe going to win the election. And after the election, the contract is certified based off of information on whether or not that happened. And then people are paid out based off the ratio of that final contract.

[00:01:19]>> Okay. If if if I were hearing that back in Utah, I would say, um I I think something might happen. and I'm going to put money down on it and I have the the chance of either making more money or losing money on that. Is that is that accurate?

[00:01:32]>> Yes. And it's an uncertain outcome just like whether or not you're going to have a crop that comes in this fall or not based off of weather and unpredictable events along the way.

[00:01:42]>> So, if I'm talking to these folks back home in a town hall meeting, they're going to say to me, "Tell me how that is not gambling." Right? It it seems to meet every definition of gambling. Um well this has I I understand how that is viewed when grain futures came uh to fruition uh over a hundred years ago. uh it was viewed much the same uh that this is an uncertain outcome on whether or not your crop will come in in the fall and you can hedge against it in the marketplace about an uncertain event that is driven largely by acts of acts of god mother nature uh and and yields crop yields so >> can I interrupt you only because of time I I don't I don't I know you're what you're saying is important but you as you know we have very limited time my father was an insurance agent and taught me that you you buy insurance for things you can't afford to pay for and it it feels like we've we've moved from the farmer who's buying crop insurance because he can't afford it if he'll be wiped out, right? Uh versus betting uh for a for an income or perhaps loss on that. And I guess my my fundamental question is like how is that any different than a sports wager or roulette uh betting?

[00:02:56]>> Well, it's based off the the business model. The business models are fundamentally different from a sports book. the sports book, the house sets the line and when the consumer loses, they profit. And for an an exchange like this, the exchange is based off of uh two individuals that benefit and they pay a fee, just a flat fee for that engagement. The business models are very different. The question is what do we do about these simp time? I I don't want to cut you off, but you know the drill here. We're just so limited time. Dr. Lavant, you have not had much chance to weigh in. I'd love you to to weigh in on on the speaker's uh thoughts. It >> it excuse me. It's difficult to know where to start, but let me take the most recent comment. Uh poker and paramutual horse racing have the exact same business model. No one would dispute they are gambling. Sports futures contracts are gambling. The business model is just to take the money off the top. The house has to win every time and the public loses. That's sports contracts. Uh the other part I I I want to address is the I would have used tsunami but Mr. Miller used it. I'll use avalanche of unregulated advertising on social media. I've over the last year spoken in six prep schools in four different states. This is not exactly a scientific survey, but I ask the students in each of these schools at the start, how many of you know what couchi is? 95% of the hands go up. I ask how many of you know what a same game parlay is. 95% of the hands in the room go up and it's all from social media.

[00:04:32]>> Yeah. And I'm gonna Sorry, I'm gonna do the same thing. We're just so short on time. So, uh, Congressman uh, Mckenry Mckenry, um, >> let's just put that aside for a minute.

[00:04:42]Just overall, why do we regulate gambling? As we all know, gambling and we'd all agree to to gambling in this room. Why is it we regulate it?

[00:04:52]because society has determined that this is not in societ well elected officials have determined it's not in society's interest um and therefore put weights and measures around and protections.

[00:05:02]>> Yeah. Great. And and Dr. Levant, we know you're going to agree, so I'm not even >> This is why we regulate it. It's a known addictive product just like heroin.

[00:05:10]That's why we regulate it.

[00:05:11]>> And this is where I really want to point out um the state of Utah and the state of Hawaii. Uh we've made a conscious decision because of these impacts. um to not allow gambling of any any kind in our state. And it, you know, it won't surprise you to know from that perspective, I see this very differently than than a lot of my other colleagues.

[00:05:31]So, uh you can see why I take a close interest whenever platforms begin offering something that feels like gambling, that talks like gambling, that smells like gambling. And several months ago, Senator Shift and I introduced a bill. what's called the prediction markets are gambling act to stop the CT CFTC regulated exchange from offering sports betting and casino style contracts and quite frankly it's about for me it's about preserving the state's rights um and protecting our state's ability to do that um wish I had more time just a real quick question for Mr. Miller, I'd like to build on that. I think this is similar question you have.

[00:06:07]States and tribes have spent decades establishing their own approaches to gaming. Some allow it under strict regulation. Others like Utah choose not to allow it at all. These decisions reflect local values, consumer protections, and in many cases significant economic interest.

[00:06:24]So, help me understand this. If products that closely resemble sports betting can be offered nationwide under a federal regulatory framework, what does that mean for the ability of states and tribes to actually enforce the choices they've made?

[00:06:36]>> And if I can intervene, the gentleman is a minute and a half over. If you'll have that submitted.

[00:06:41]>> Very good. Thank you. Very, very appropriate. Thank you, Senator Baldwin.

[00:06:45]>> Thank you.