Stephen Piepgrass and Cole White have a timely, candid conversation on integrity risks and regulatory trends reshaping the legal gaming landscape.
In this episode of our special 12 Days of Regulatory Insights podcast series, Stephen Piepgrass is joined by Cole White from our RISE Practice Group's gaming team for a timely, candid conversation on integrity risks and regulatory trends reshaping the legal gaming landscape.
The discussion opens with recent law enforcement investigations touching the NBA, including allegations surrounding rigged high‑stakes poker games and inside information schemes, and explores what those probes may mean for charges, enforcement strategy, and league policy. Stephen and Cole unpack how the rapid expansion of sports wagering is testing compliance frameworks, why certain types of bets (like player proposition bets) draw heightened scrutiny, and how both technology and traditional evidence factor into detection. The conversation then turns to prediction markets — specifically Kalshi's sports‑related event contracts — and the growing federal-state jurisdictional debate over whether these markets fall under the CFTC's derivatives oversight or state gaming laws. They conclude by breaking down emerging standards and partnerships and what they could signal for the future of regulated wagering and event contracts.
Regulatory Oversight Podcast
12 Days of Regulatory Insights: Day 6 – Sports Wagering, Player Proposition Bets, and Prediction Market Battles
Speakers: Stephen Piepgrass and Cole White
Aired: December 11, 2025
Stephen Piepgrass (00:04):
Welcome back to a special holiday edition of our Regulatory Oversight podcast series, the 12 Days of Regulatory Insights. This 12 episode series is focused on key highlights and trends from the past year in various regulatory areas, and it's designed to keep our listeners informed and engaged during the holiday season. My name's Steven Piepgrass and I lead the firm's regulatory Investigation Strategy and Enforcement or Rise Practice Group. Before we get started, I want to remind our listeners to visit and subscribe to our blog at regulatoryoversight.com so you can stay up to date on developments and changes in the regulatory landscape. With me today is Cole White, who is attorney as part of our Rise Practice Group and is part of the gaming team, which I lead, and I really appreciate you joining me today, Cole. In today's episode, we'll take a deep dive into current issues that are front of mind for attorneys and business professionals who are involved in the legal gaming space. We've got a few interesting topics teed up for discussion today, and I'm excited to share our insights with our listeners. So let's jump right in.
Cole White (01:09):
Sounds great. Thanks so much Stephen and so glad to be here. Yeah. We've got a couple of interesting topics keyed up for today. I'm really interested to hear what you thought. The first is the recent NBA sports betting scandal. So in October, 2025, Portland Trailblazers coach Chauncey Billups, Miami Heat Guard, Terry Roser and former NBA player Damon Jones, were arrested amid federal probes into illegal sports betting and rigged high stakes poker games linked to mafia crime families. My understanding is that this scandal is somehow linked to the NBA's Spring 2024 investigation that banned Toronto Raptors player Jte Porter for tipping off gamblers and deliberately underperforming in games to cash in on bets. Steven, to get us started here, could you walk us through what exactly happened in this NBA gambling scandal and how it came to light? What led to the arrests of Coach Billups, Terry Rosier and others, and what are they accused of doing in these investigations?
Stephen Piepgrass (02:00):
Thanks, Cole. And I think this is one of those issues that's top of mind for a lot of our listeners, the impact of the massive upswing in sports wagering in the United States that we've all been watching and some of the issues that seems to potentially be raising when it comes to illegal gambling. And so the NBA matters is a very interesting one. It's actually there are two different investigations here that were both announced by the FBI and New York law enforcement at the same time simultaneously. So the first investigation involved Chauncey Billups, who you mentioned, Portland Trailblazers coach allegedly. That was the one where the law enforcement officials and DOJ alleged that Billups and others were involved with Mafia crime families in the New York, New Jersey area in hosting rigged poker games. And that high profile names like Coach Billups were involved, again, according to law enforcement, as really a way of adding legitimacy to these games, making players think that they were not rigged, but in fact there were all sorts of things going on behind the scenes to make sure that the house always won.
So that was one part of the investigation that was announced. And then separately from that, and this is more directly tied to sports wagering where the Terry Rose here and Damon Jones matters, where there were allegations about throwing games, feigning injury, providing inside information to bets who were then able to place bets on games with additional information that others who were betting on them would not have known. So two somewhat different issues, but the common denominator here was the NBA and I guess law enforcement decided to announce them both at the same time and make even more of a splash than announcing them separately.
Cole White (04:02):
Right. And that's fascinating. You talked about the piece of adding legitimacy by involving players and coaches directly, not something I had put together. That's really interesting perspective.
Stephen Piepgrass (04:12):
Yeah, and Cole, on that point too, I think it's really important, you heard me say multiple times as US lawyers do alleged and according to law enforcement, we will have to hear the other side of the story when it comes out. It's unclear the degree to which the players that may have been involved may or may not have known about what was really going on here. Obviously we're used to people using their name brand to legitimize or add interest to something that's being marketed or sold. It happens all the time in the marketplace here. Unfortunately, it was tied to illegal poker games. So we'll see what comes out. A lot more to come on that one as this case makes its way into the courts and both sides of the story are told.
Cole White (04:56):
Yeah, absolutely. And so digging a little deeper into that from a legal standpoint, what are exactly are the key issues and charges in play here? So I guess as reframing that question, are we looking at why are fraud charges sports bribery or other violations, and how unusual or precedent setting is this case in the context of sports betting integrity enforcement?
Stephen Piepgrass (05:16):
Yeah, I think all of those sorts of charges will come into play along with any time organized crime is allegedly involved. Ricoh comes into play because that was one of those statutes that was passed in order to address organized crime conspiracy, all of those sorts of things that are then used to amp up the pressure on criminal defendants. I think that's what we are likely to see, wire fraud, all those usual suspects when it comes to the claims that are brought, I think the high-profile nature of this case is precedent setting. I think it's something that Americans are watching very closely, and it comes at a time when this sports betting marketplace is changing very, very rapidly. And so because of that, it's getting a lot of media attention and a lot of attention from the general public and for our purposes, a lot of attention from regulators as well.
Cole White (06:10):
And you sort of touched on it already, but if I ask you to look into your crystal ball for a minute, how do you think that this scandal is going to impact the NBA and sports betting industry? Do you anticipate changes in league policies or specific regulations to prevent inside betting schemes? And what long-term effects might this have on the relationship between professional sports and the legalized gaming market?
Stephen Piepgrass (06:31):
Yeah, so it's not just the NBA, right? This is something that we are seeing in other leagues as well, both professional and amateur. The NCAA just last week announced another investigation involving six basketball athletes. We had the Cleveland Guardians case just on Sunday where indictments were handed down. And obviously our listeners are hearing this. These are all matters that came to light in early November. Our listeners are listening to this in December, but still very, very recent. And there may be more to come between the time we record this podcast and the time our listeners hear it. But you had the Cleveland guardians, Louis Ortez and Emmanuel Clay, of course. So it's not just the NBA and NBA NCAA baseball, and really every sport is being impacted by this. I think there are a lot of questions around just the integrity of sports generally, that this raises.
One of the things we talk a lot about is there are a lot of great technological tools that can be brought into play to address issues like this. But then when you dig into each of these cases, although there are a couple of them where those tools were in fact employed, and you could see trends taking place in the sports wager marketplace that made it clear that there was probably something wrong. That's not the case in all of them. Many of these cases involve much more traditional ways of gathering evidence and learning about what's going on. Someone overhears someone talking about, Hey, I'm going to give some information to so-and-so who's then going to replace a bet text messages that end up getting forwarded on and eventually make their way into law enforcement's hands. What concerns me about that, and I think it probably does for many of the industry who are watching this very closely, is this the tip of the iceberg?
Is there so much more going on that no one even sees and where we really need to be concerned about integrity? And I think that emphasizes the need to accelerate even more and more these technological ways of going about and identifying potential issues with sports betting. And then I think this is also a good segue into what we're going to talk about in the second part of this podcast, which is the massive rapid expansion of sports betting and predictive market contracts which allow people to, I won't say bet, because it's not a bet, right? But to participate in a marketplace around what happens in a sporting event sounds very, very similar to sports wagering, and that's something that regulators are looking at closely.
Cole White (09:03):
Absolutely, extremely similar. And an excellent segue into our next topic on Kalshi. But really quickly on all of those great points that you just provided, I really appreciated your point about the ongoing nature of this incident as things are happening quickly. And as a little reminder and a shameless plug, I'd like to encourage our listeners, as you did at the top of the conversation, to subscribe to our regulatory oversight blog for the latest updates on these types of cutting edge issues in the gaming space. Moving that into our second topic as you so graciously set up for me, Steven, the lawsuits against Kalshi over its predictive market contracts. So in late October, 2025, Kalshi XLLC filed a federal lawsuit against New York state gaming regulators after the state issued a cease and desist letter claiming that Kalshi was running an unlicensed sports wagering operation in violation of state law. This dispute in New York is just the latest in a series of clashes between Kalshi and state regulators. In fact, courts in Nevada and New Jersey have already blocked regulators from halting Kalshi sports related contracts underscoring a broader jurisdictional battle over whether prediction markets on sports fall under federal derivatives law or state gaming laws. So let's begin with some background on Kalshi and these predictive market contracts. Steven, could you explain what Kalshi’s platform does, what event contracts are, and why they're now in the crosshairs of state gaming regulators?
Stephen Piepgrass (10:19):
Sure. And one additional matter I want to make sure we address, and we can address this in this segment, but is there are particular types of bets that are also being targeted by regulators or that regulators are thinking about targeting because there's a perception that they are more susceptible to influence. And those are often betting is the chief example. And this is something that those types of bets are offered both on regular, traditional licensed sports wagering platforms in the states where they're legal, but they're also being offered by khi and others in the predictive markets. So I think that too is an issue that's being raised because of these investigations and scandals that are coming to light. But that's something that I know folks in the predictive market space are thinking about as well. So how do predict these predictive markets work? The CFTC has historically regulated the predictive markets, federal commission and the predictive markets.
The traditional version of what a predictive market is, is basically a commodities futures, right? So is the price of grain going to go up or down over the next month? And that's something that traders have been able to bet on for decades. What the innovation that's taking place here is operators like Kalshi and Poly Market and others are using the same sort of marketplace to create options for persons to wager. And again, I'm using that word in quotes on what will happen in sporting. They're also offering other sorts of opportunities like who's going to get elected in the next congressional race or all sorts of things that you can quote again, bet on. And traditionally the analysis has been does this event have some sort of an economic impact? And so there are legal questions around whether sports futures should be treated like any other unknown future occurrence that people can make a bet on.
And that is really the question that these courts that you're talking about are wrestling with. And Cole, you had said Kashi's been sued. That is true. They have been in a couple of states. Kashi has also gone on the offense. So they have a very interesting strategy where in a lot of these states, Kashi will receive a cease and desist letter and then immediately go to court and bring a claim, usually in federal court, arguing that the action by the state regulator to try to put caution out of business is violative of the supremacy clause of the US Constitution because it is the CFTC that has the right to regulate predictive markets, not the states. And that is the rub. That's the issue that these courts are all grappling with today.
Cole White (13:09):
Yeah, it's fascinating. It really is a novel argument and a cutting-edge legal issue that we've been watching develop over the last few months. So in your view, at a high level, since you sort of gave us an overview of what the legal issues involved in this analysis is, in your view, how is this legal showdown likely to play out and what do you think it could mean for the future of prediction markets and gaming regulation? So if Kashi prevails or if the regulators do, how might this shape the industry going forward?
Stephen Piepgrass (13:37):
We could turn this into a predictive market question as well.
Cole White (13:41):
Absolutely.
Stephen Piepgrass (13:42):
I'll give you my prediction about the future and maybe I should put some money on it and we'll see where we end up. I think this is going to continue to play out in the courts for quite some time. As of today, it's beginning to look like there is a circuit split shaping up on this question of whether the CFTC has jurisdiction or whether and under the supremacy clause, the courts, the states can't regulate activities like Kalshi’s or whether the states as the traditional regulators in the gaming space actually have that authority. And so you've got some courts coming down on one side and some on the other. I think that will continue to play out for quite some time. The next court that I think is likely to consider this is in New York where the regulator of the commission sent Kalshi a cease and desist letter.
Kalshi immediately went to court on that. And I think briefing in that case on the injunctive motion that was filed by Kalshi should be done sometime in mid-December, and then we would expect oral argument and a decision after that. So we'll see where that goes. But in the long run, I do think this ends up likely at the Supreme Court with a circuit split potentially shaping up and significant questions around the supremacy clause all at issue here and the degree of power of this federal regulator. In the meantime, I think we will see more and more folks diving into this market, including a lot of the traditional licensed sports wagering companies. And this is really, really interesting. They're all looking at these event contracts, these predictive market contracts, and as you can imagine, with only 20 some states actually allowing licensed sports wagering in some form, this opens up the rest of the states to that market.
Absolutely. And so it's extremely lucrative, and it's something that I know even those established operators are getting into and they're doing so, and actually all the companies that operate in this space have a significant level of risk tolerance. You don't get into the wage, even the legal wagering business if you don't have some level of risk tolerance and accept where you see this as an acceptable risk. And here because all of these court cases are stayed, or there's some agreement by a regulator not to take enforcement action pending a decision by a court of appeals, the appellate court, it's actually a fairly safe space to play in today. So I think we're going to see in the near term a lot more folks jumping into this market. The other interesting thing is partnerships. So the NHL recently announced that it was partnering with Cal Sheet and Poly Market as well to offer sports futures contracts.
So there will be a continuing move to legitimize and legalize in this space as long as these court cases are still hanging out there. And the bet that folks like Kalshi are making is that they can push that along enough. I think that by the time this makes its way up to the Supreme Court, it's so ingrained in the fabric of our society, it has already been legitimized that it's much more unlikely that the court strikes it down and says that No CFTC, you don't get to regulate in this space, and you've got to get out of the market in all of these different states. The third prediction I have is that those who are operating in this space are already beginning to think about what should regulation look like here and when the CFTC, and again, for our listeners, we're still in the middle of this federal shutdown, so nothing's going on right now, but when that federal shutdown ends and we think it will very soon, and the CFT C starts thinking about what regs should look like, I think it is likely that this industry will have a significant say in what those regs do look like.
And in fact, we know that the administration is listening to people like Kalshi because they're tweeting about it. They've partnered with them on X, we know that the president's son is an advisor to Kalshi, and there are all these different connections all in this predictive market space to the administration. It would behoove those who are operating in the space to work together and come up with some standards that they might begin to push as those regulations are being considered. So I think that's the other area where we will see this developing.
Cole White (18:00):
Absolutely, and I appreciate your point about the fact that as these legal developments continue in the background, this industry continues to blossom, and it's only gating more legitimacy and lobbying power as time goes on.
Stephen Piepgrass (18:12):
Well, Cole, this has been a great conversation. I very much enjoyed it. Thanks for taking on the interviewer role that I often play, and let me talk a little bit about an area where I work and where we've been able to work together For our listeners. Cole and I work very, very closely together on all matters gaming related. It's a fascinating area and one where the law is constantly developing and changing, feels like every day there's something new coming out.
Cole White (18:37):
Absolutely. It's a fascinating area to be watching develop, and really appreciate your time and expertise and the opportunity to get to study underneath you on some of these novel issues. Stephen, it's been really fascinating.
Stephen Piepgrass (18:47):
Absolutely. And thank you to our listeners for tuning in. We're glad you joined us today. Please make sure you subscribe to the podcast on Apple Podcast, Google Play, Stitcher, whatever platform you may choose, and please do stay tuned in for the next episode of Troutman's 12 Days of Regulatory Insights. Happy holidays, everyone.
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