Nobody should ever be threatened with prison time because of a jurisdictional dispute between federal and state governments. That's antithetical to the rule of law, regardless of the specifics of the law or the jurisdictional dispute.

States have the right to enforce gambling laws, even if the defendant calls it something else.

They allegedly knowingly broke state law, how can state law exist if it was just always going to be overruled by federal jurisdiction?

Creating a company with the intent to circumvent the law is definitely something that should be punishable with stricter measures than simply breaking the law directly.

They're being threatened with prion time because they broke state law. That the federal government is looking one way while states another is not the cause of the jail time threat.

They should be thrown in prison for knowingly violating a law. Trying to play a semantics game (prediction market vs gambling) to get out of it is just scummy. Everybody knows it is gambling.