Relates to prediction markets

◆ The sponsor's argument

Why Joseph P. Addabbo Jr. says this is needed

Like the pre-flipper pinball machines, sweepstakes cafes, sweepstakes gambling, and many other schemes that preceded it, prediction markets have rebranded old-fashioned wagering as "trading," inviting the public to buy and sell positions on real-world events with an expected payoff. These range from who wins an election, how a court rules, how destruc- tive a natural disaster will be, even whether someone lives or dies. Yet whatever wrapper prediction markets are placed in does not change the substance. The constant throughline throughout history is simple: when a product hits the three classic elements - consideration, prize, and chance- states can treat it as gambling regardless of the label. Predic- tion markets are the latest wrapper. These prediction market products that are bets sold to consumers have consequences that can flow from them which are immense. For instance, insiders can trade on embargoed information and entire markets can be influenced by a single actor. It turns everyday people into insiders who can, if they choose, profit from their knowledge. We are already seeing large, last-minute positions placed just before announcements and "one- person" markets where the subject effectively controls the result. For example, markets such as "What will (x) say during their speech?" or "How many tweets will (x) make in the next month?" A major part of the State's legitimate interest is to protect the integ- rity of its own regulatory framework. Our wagering laws and licenses are designed to provide a system that is supervised and accountable. If large national platforms can sidestep that system by offering the same or a broader array of bets to our residents without a license or state- level consumer protections, then our licensing regime becomes practical- ly meaningless. Sports wagering volume on regulated platforms has been rapidly overshadowed by volume on prediction markets who offer the same bets. This sort of regulatory arbitrage undercuts compliant in-state operators and deprives the public of responsible-gaming safeguards that the state government and problem gambling groups have identified as necessary for consumers. Certain categories of bets are flatly contrary to public policy. Wagers on elections commoditize public office, incentivize misconduct, and corrode confidence in democratic outcomes. Bets on, crime, terrorism, war, disease, natural disasters, or death turn human suffering into a profit center and create harmful incentives. Markets tied to individual mortality are perverse, and markets tied to fluctuations in specific securities or financial indices invite manipulation and destabilize confidence in legitimate financial systems. Markets on pending judicial, regulatory, or law-enforcement actions undermine institutional independ- ence and invite exploitation by those with inside roles. 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. The fact that these markets are not based on a financial or economic inter- est, and that they are self-certified and listed rarely without CFTC intervention is highly suspect. This bill does not outlaw innovation. It prohibits predatory and poli- cy-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 opera- tors who play by the rules, but for the residents those rules are meant to protect.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.