Political betting under the spotlight on both sides of Atlantic

The UK Gambling Commission (UKGC) has updated on the investigation into the betting scandal which saw last year’s General Election come under public and media disrepute.

A total of 15 individuals have been charged with breaching the 2005 Gambling Act by allegedly placing bets on the timing of the general election while having confidential/privileged information.

The prospect of an election being held in 2024, despite the Conservative government not having to do so until early 2025, was a big discussion point throughout the first half of the year.

After Rishi Sunak announced in June that an election would be held the next month, the UKGC opened an investigation into alleged Gambling Act breaches and subsequently referred this to the Metropolitan Police.

In August, the Met closed its investigation without any prosecutions, but the UKGC continued pursuing the matter under its own separate probe. The Commission detailed that its investigation focused on whether individuals with ‘advanced knowledge of events’ had manipulated betting markets to their advantage – “Such actions constitute an offence of cheating under Section 42 of the Gambling Act 2005, a criminal offence.”

Notably, one of the 15 people charged is Craig Williams, a former Conservative MP who was at the heart of last year’s widely publicised betting allegations and the Metropolitan Police investigation.

A tricky time for political betting?

In Wiliams’ case, the MP and parliamentary aide to then-PM Sunak confirmed to media that he had placed a bet in May 2024 on the prospect of an election taking place in July. The fact that he worked closely with Sunak led to suspicions that he may have had prior knowledge of the PM’s intentions, thus impacting the integrity of the betting markets.

The case may raise questions about the integrity of political betting markets and whether or not bookmakers should be offering these markets to begin with, given the substantial amount of inside information that may be available on these in comparison to, say, a football match.

In the US, no state allows bookmakers to place bets on political markets, but increasingly a form of financial services product has filled this gap. Event contracts have become increasingly popular, with Kalshi the biggest provider of these products while Robinhood and Crypto.com have also launched their own, the former in partnership with Kalshi.

This has led to regulatory clashes, with the US Commodities and Futures Trading Commission (CFTC) in particular finding itself at times at loggerheads with all three firms, though the fact that a member of Kalshi’s board, Brian Quintenz, now sits as CFTC Chair may change the direction of things.

Clashes have also occurred at the state level though. Last month, Kalshi filed lawsuits against the gaming regulators of Nevada and New Jersey, two of the US’ heartland betting and gaming states.

As Kalshi’s product is classed as financial services like commodities, futures, stocks and options, it is regulated at the federal level by the CFTC. The company argues that New Jersey and Nevada regulators therefore intervene against its product, which the authorities argue violates state laws around political betting.

It secured a double ruling from a district court judge in Nevada just last week, enabling it to continue providing its services in the state. However, it has also received cease and desist orders from Illinois, Maryland, Montana and Ohio.

James Kilsby, Chief Analyst at Vixio Regulatory Intelligence, told SBC News: “Litigation over the legality of Kalshi’s sports event markets is perhaps the most significant legal issue for sports betting in nearly a decade.

“Vixio has been tracking the regulation of the US sports betting market since the landmark Supreme Court ruling of 2018 that called time on the federal prohibition, and Kalshi’s litigation marks a key turning point for the future of the market.

“At stake is whether regulation of sports wagering will continue to be a matter for state and tribal governments to determine, or whether there will be a new paradigm of federal regulation that enables licensed exchanges to operate across all 50 states under a framework that does not mesh with state laws on traditional forms of gaming.”