The National Basketball Association sent a letter to the Commodity Futures Trading Commission (CFTC) on Thursday listing the league’s concerns about sports event contracts. It’s the latest league since Major League Baseball to submit comments for the now-canceled prediction markets roundtable.
First, the NBA is concerned about the self-certification process, which allows prediction market exchanges to list new markets without consultation with the CFTC first. The CFTC can review those markets after the fact, often pausing trading in those markets until a public interest review is completed. The NBA’s letter reads:
“…exchanges can launch new, more exotic sports prediction markets via self-certification, which puts the burden of initiating any post-launch review on the CFTC and allows most contract markets to simply proceed unchecked. But for legal sports betting operators, affirmative regulatory approval from the applicable state gaming regulator is required before a new betting market can be [launched] in the first place.”
State sports betting regulators outline the types of approved wagers from licensed sportsbooks. It’s how some states prohibit prop bets on college player performances or other specific markets. The CFTC has not indicated that it plans to limit sports contracts, so it’s possible that prediction markets could eventually offer individual player prop markets regardless of state laws prohibiting them. That’s just one of many concerns leagues have expressed.
NBA wants access to unusual data
The NBA’s second major concern is its disconnection from data about suspicious trading activity. The section that directly follows its concerns about self-certification reads:
“Likewise, as sports betting prediction markets exist today, we are not aware of any requirement that either exchanges or brokers report potentially suspicious trades or trading patterns to an affected league or cooperate with any league-run investigations into such suspicious activity; nor are we aware of any mechanism that would require ongoing information sharing between exchanges and affected leagues.”
Sportsbooks share suspicious betting information with major leagues to help leagues combat match-fixing and other forms of corruption that can infiltrate sports. The New York Times reported that Jontay Porter, a former Toronto Raptors player, “privately told a sports bettor he was injured, removed himself from a game to control prop bets on his own play and placed his own wagers on NBA games.”
This is a sports-specific problem that prediction market platforms could solve and one Kalshi is working to address. Marketing partnerships could include the kind of data-sharing that one of Kalshi’s partners, Integrity 360, identifies in sports markets.
Echoes of old sports betting concerns
Sports leagues have come a long way from opposing sports betting to citing sports betting regulations favorably. The NBA was among a list of professional leagues that opposed New Jersey’s sports betting law before its constitutionality was upheld by the Supreme Court. NBA commissioner Adam Silver wrote an op-ed supporting regulated sports betting in 2014, but many leagues raised the same integrity concerns during sports betting’s expansion as they’re raising now with sports trading expansion.
For example, NFL commissioner Roger Goodell said that the NFL would “ensure no improper influences affect how the game is played on the field.” In 2009, the NHL, NBA, NFL, MLB, and NCAA “successfully relied on PASPA’s prohibitions in seeking federal court intervention to halt the spread of government sponsored [sic] and/or regulated sports gambling in the State of Delaware.”
Since PASPA was overturned, many states have legalized sports betting. Major sports leagues have since formed lucrative partnerships with the sportsbook brands they would have opposed a decade or so earlier.
If or when major prediction market platforms like Kalshi engage with sports leagues, fans could see Kalshi, Crypto.com, and Robinhood advertisements alongside DraftKings, FanDuel and other sportsbook ads. However, the lucrative partnerships depend on sports contracts securing lasting legal victories. Sports leagues have proven adaptable as long as their integrity concerns were met, but they didn’t welcome sportsbook brands with open arms until sports betting began its rapid spread.
