By Former Senator Dean Heller (R-NV)
Representing Nevada in the Senate taught me a great deal about the gaming industry, including how hard it fights to keep competitors out. I helped wage some of those fights. When I backed legislation to ban online gambling, I believed I was protecting an industry that mattered to my state.
Looking back, I learned an important lesson: when an established industry asks government to keep new competitors out, policymakers should be skeptical of the argument that it is really about protecting consumers. Often, it is about protecting market share.
That lesson is especially relevant today as Florida considers the future of prediction markets.
Prediction markets are not casinos. They are federally regulated financial markets overseen by the Commodity Futures Trading Commission (CFTC). They allow people to buy and sell contracts tied to real-world events, providing a mechanism for people to express their views and markets to aggregate information.
Yet some established gaming interests are working to prevent these markets from operating in states where they might compete for consumers.
I understand the instinct. I spent years working with and representing Nevada’s gaming industry. It is a major employer and an important part of our economy. But there is a difference between supporting an important industry and allowing that industry to decide which competitors consumers are permitted to choose.
For small-business owners, the value of prediction markets is not theoretical. Take William Smythe of Alpha Prime Capital in Miami. Since July, Smythe has traded more than $210,000 in prediction-market contracts tied to oil prices. For his business, these markets provide another tool for managing uncertainty in a market where energy prices can have significant economic consequences.
These are not casino games. They are examples of businesses using markets to manage risk and make decisions in an uncertain economy.
Florida’s small business owners understand the importance of having choices. They routinely deal with changing fuel costs, commodity prices, interest rates, supply chains and other forces that can affect whether they make money or lose it.
That is why the debate over prediction markets should not be reduced to whether someone likes or dislikes the product. The more important question is who gets to make that decision.
If a federally regulated market is lawful under federal law, should an established state industry be able to use state regulation to shut it out simply because it views the new entrant as a competitor?
That would set a troubling precedent.
Imagine applying the same principle elsewhere. An established industry could argue that a new technology, business model, or service should be prohibited because it might take customers away from existing businesses. Instead of competing on price, service and innovation, incumbents could turn to government and ask policymakers to protect them from competition.
That is not how a dynamic economy is supposed to work.
I saw the consequences of this mindset during my time in Washington. Industries that have benefited from government protection can become remarkably creative when it comes to explaining why that protection is supposedly in public interest.
But consumers and businesses are capable of making choices for themselves.
Florida’s entrepreneurs should be able to compete on a level playing field. Consumers should be able to decide which legal products and services they want. And policymakers should be careful about allowing established interests to use the government as a shield against competition.
This is not an argument against Florida’s gaming industry. It is an argument against using government power to protect any industry from lawful competition.
Florida has built one of the country’s strongest economies by welcoming entrepreneurs, investment and innovation. The state should be cautious about creating a regulatory environment where established businesses can dictate which new competitors are allowed through the door.
I learned my lesson in Nevada: competition is good for consumers, and incumbents should not get to write the rules simply because they do not like the competition.
Florida’s small-business owners understand that better than most.
They know that when a competitor shows up, you do not ask the government to make the competitor disappear. You compete.
Competition should be settled in the marketplace—not by using government policy to limit the choices available to customers and businesses.
