After scandal, we don’t need to ban sports gaming in KY. We need to improve it | Opinion

Unless you have been living under a rock, you have heard about the gambling scandal that has hit the NBA. One current player and one former player have been accused of sharing inside information with others, who used that information to place large, legal wagers. That inside information usually (but not every time), resulted in a winning bet.

Not surprisingly, this has caused many to decry the types of in-game wagers these people used, or sports betting in general. Anytime something like this happens, there should be a review of processes and options. The sports betting sites as well as the NBA are reviewing types of bets right now.

This episode isn’t the only instance this year of a professional athlete being investigated for improprieties. On July 28, MLB suspended Cleveland Guardians star closer Emmanuel Clase after a betting integrity firm alerted them to suspicious activity on specific pitches thrown by Clase.

Of course, the cries for eliminating sports betting are coming back, or perhaps limiting the options available to bettors. But the fact of the matter is, the system worked the way it should. As we like to say in politics, sunlight is the best disinfectant. Legalizing sports betting has pulled this activity out of the shadows, away from the mafia, the bookies, the illegal offshore accounts. Now these wagers are reviewed by professionals looking for suspicious activity, because they wish to not just lose money to unscrupulous players, but they want to keep their license to operate. Knowingly allowing illegal wagering on your site is a good way to lose your license.

Even though we are now aware of these recent events, it does not mean these issues didn’t exist before the mass legalization of sports betting. Although there are plenty of public tales of sports figures and illegal gambling, we have no idea how much of this activity used to occur on a regular basis. If a bookie believed there was rigging of an event, they certainly couldn’t go to the FBI with their concerns.

Today, thanks to legalized and regulated sports wagering, we literally have a digital record of all wagers that are constantly monitored by algorithms for usual activity. So, if you get inside information on a game, don’t make it your first ever $10,000 wager. That might send up some red flags!

However, the landscape of many industries, including gaming, is always changing. Which brings us to the new kids on the block, prediction market companies like Kalshi and Polymarket, to name a couple. These companies allow you to buy “futures contracts” on events. Some examples on Kalshi’s site are “Who will the next President of the United States be?” or “New pandemic this year?”

However, they also offer the opportunity to buy a futures contract on “Pro Football Champion.” That is a problem. These companies are overseen by the Commodity Futures Trading Commission (CFTC). Historically, the CFTC’s job was to oversee agricultural derivative products. This agency is woefully unprepared to take on this job. Furthermore, call it what you like, but selling “futures contracts” on who wins the “Pro football championship” is sports betting. If they want to offer these services to Kentuckians, they should get a sports betting license just like every other operator. Also, if they want to offer the other types of event contracts to Kentuckians, they need a change in state law.

When I first submitted the bill to legalize sports betting in 2019, I included wagering on things like the Emmys or the Oscars. That was a no-go for legislators, and so it should be for these prediction market companies.

Adam Koenig spent 16 years as a Republican Kentucky State Representative. He owns a consulting company, Koenig Public Policy and Political Consulting. He can be reached at adam@kpppc.us.