At the Regulating the Game 2026 conference in Sydney, the discussion took an abruptly technical – and legally contentious – turn as Ian Hughes, Chief Revenue Officer for Gaming Laboratories International (GLI) addressed the massive disruptive power of blockchain-backed prediction markets and the existential threat they pose to traditional, state-based wagering models.
Hughes focused on the intersection of federal law, commodities trading, and the increasingly blurred line between a financial contract and a simple bet on the Super Bowl. The executive opened with a provocative quote from former New Jersey Governor Chris Christie: “If it looks like a duck and quacks like a duck, it’s a duck.” In the world of wagering, the “duck” is the traditional bet. But in the world of prediction markets, the duck has been “rebadged” as a binary swap.
The core of the disruption lies in a 2024 US legal victory by the platform Kalshi against the Commodity Futures Trading Commission (CFTC). The court ruled that election-based contracts – previously banned as “gaming” – were, in fact, legal financial derivatives. Because these platforms are regulated at the federal level as derivatives exchanges, they effectively bypass the state-level gambling laws that underpin the entire US wagering industry.
How big is the loophole?
“What we’re seeing is a ‘loophole’ that establishes a national market,” Hughes explained. “While sports betting is legal in only about 30 states, these prediction markets can theoretically operate in all 50 because they aren’t ‘gambling’ in the eyes of federal law: they’re swaps.” In a lighter but telling moment, Hughes walked the audience through the bizarre history of the US Commodity Exchange Act. Trading futures on onions has been a federal offense since 1958, and movie ticket box-office “contracts” were added to the ban list more recently to protect Hollywood.
“The question now,” Hughes posed, “is will sports wagering be next?”
If the courts continue to side with platforms like Kalshi and Polymarket, in the future betting on a touchdown could be regulated by financial watchdogs rather than gaming commissions. For the delegates in Sydney, the immediate question was: can this happen here? Hughes noted that while the US market is in a state of hyper-growth (with the prediction market volume estimated at over $40 billion in 2025), Australia remains a fortress of prohibition – for now.
The Australian Securities and Investments Commission (ASIC) has extended its ban on binary options for retail clients until October 1st, 2031. In the eyes of local regulators, these “yes/no” bets are high-risk financial products that resulted in hundreds of millions in losses before the ban. “ASIC and ACMA (the communications and media regulator) have a very clear line: if it has an Australian customer link, it’s illegal gambling or a prohibited financial product,” Hughes said. “But the popularity of these markets globally is creating a ‘pundit’s demand’ that will keep regulators on their toes. These platforms move faster than polls and faster than traditional bookies.”
Hughes highlighted the Super Bowl as the “perfect platform” for this new era. In 2025, novelty bets – often involving entertainment elements like the halftime show – accounted for 15 percent of all Super Bowl wagering. The risk, according to Hughes, is that these “financial contracts” aren’t subject to the same integrity monitoring as traditional sports betting.
The executive pointed to recent investigations into “insider trading” on prediction platforms as a major red flag. “If someone knows exactly what song a performer will open with, that’s not a wager – it’s a rigged financial instrument. Traditional state regulators aren’t currently equipped to police that level of market manipulation.”
