I do not believe the latter. The attorneys general of nearly every state in the US have signed onto a letter explaining in detail (https://oag.maryland.gov/News/Documents/pdfs/2026-4-30%20CFT...) why the sports-related contracts sold on prediction markets are not swaps nor otherwise subject to CFTC regulation. This isn't a close or debatable question, it's not even a partisan one, and the only reason why a controversy exists is that Kalshi and Polymarket have gotten Americans hooked while bribing key government officials to clear the way.
I can't read your link (it 403s), but there's no fundamental line separating things that are clearly financial instruments but are nonetheless cash-settled derivatives on binary propositions (e.g. credit default swaps), ones that are clearly not financial but also not sports gambling (weather/political prediction markets) and things that are pretty obviously sports gambling (most of Kalshi). The form of these are all identical and so ought to be regulated identically.
I also don't see why _sports_ betting is so especially bad - even if New York were successful here, Kalshi would still be able to offer it's degenerate gamblers all sorts of stupid bets in culture, politics, weather, etc. When I grew up, the only thing you could bet on was horses and dogs... so the gamblers were really into form guides and horses. If the only thing they could gamble on was politics and news markets, they would just obsess over that instead.
What's bad about sports gambling is that it doesn't follow the model you're describing. The AGs point towards a study (https://perma.cc/4SF5-VGZH) which finds that legalizing sports betting does not just reallocate money that was going to go to gambling anyway. Instead it crowds out savings. There are people who will explicitly tell pollsters and journalists (see e.g. https://www.bloomberg.com/news/articles/2026-08-12/gen-z-inv... from yesterday) that they engage in sports betting because they see it as a fun alternative to traditional investments.
The NV link doesn't work either. I suspect geoblocking.
That study is measuring the effect of the introduction of _any_ modern online betting to these jurisdictions; before it was legalised there was no equivalent other than going to a casino or racetrack. But that genie can't be put back in the bottle just by restricting sports betting to sports books, as NY is asking for, now that all sorts of other prop bets are available as substitutes (and also sports betting on state-licensed sites). IMO regulators should focus on forcing the market makers to offer tighter spreads so prediction markets (and options etc.) are less negative-expectation for retail punters.
