New York Moves Prediction Market Banning Bill Forward

• Sen. Joseph P. Addabbo Jr.’s bill, S9414, advanced out of the racing, gaming, and wagering committee
• The legislation prohibits prediction market contracts related to sports, catastrophic events, politics, death, and security markets
• The bill also raises the minimum age of prediction market participation to 21

The New York Senate is moving a bill forward to ban certain prediction markets from the Empire State and raise the minimum age of participation.

Sen. Joseph P. Addabbo Jr.’s bill, S9414, will effectively ban certain prediction market contracts, including those related to sports, and raises the minimum age to purchase event contracts from 18 to 21.

Addabbo Jr.’s bill moved out of the Senate Racing, Gaming, and Wagering Committee by a vote of 6-0 earlier this week.

Prohibiting Controversial Prediction Markets

After being voted out of the Senate Racing, Gaming, and Wagering Committee, the bill now sits int he Senate Finance Committee.

Addabbo’s Jr’s bill, if signed into law, will prohibit the follow types of event contract markets:

• Athletic event markets
• Catastrophic event markets
• Political markets
• Death markets
• Security markets (speculative position on the price of a publicly traded company)

“The State not only can regulate these markets, but it must. Regulating gambling, contracts, and unfair or deceptive practices lies at the core of state police powers to protect health, safety, and welfare. Offering bets to residents, however they are called, falls squarely within that authority. Federal commodities laws do not convert public wagering on news, elections, or disasters into federally protected “financial products,” nor do they strip states of their historic authority over gambling and consumer protection. Courts have recognized as much,” Addabbo Jr. wrote in the legislation.

In addition to prohibiting these markets, the bill sets the minimum age of prediction market trading at 21, the same as sports betting in the Empire State. It also prohibits prediction market operators from allowing users to fund their accounts through credit cards, credit products, and selling gift certificates related to their platforms.

No More Insider Trading

The legislation also requires prediction markets platforms to develop mechanisms “that detect and prevent insider trading” in their markets. If insider trading is identified, the bill requires operators to report insider trading to the New York Attorney General or to law enforcement.

Any prediction market operator who violates any provision of the insider trading clause may be subjected to a civil penalty not to exceed $10,000 for each violation. The Attorney General may impose a civil penalty of no more than $50,000 to any individual who is found engaging in insider trading

“This bill does not outlaw innovation. It prohibits predatory and policy-offensive markets. It protects consumers, preserves election and market integrity, and ensures our states’ licensing system actually means something. It ensures that it means something not just for operators who play by the rules, but for the residents those rules are meant to protect,” Addabbo Jr. wrote in the bill.