In recent weeks, the U.S. Supreme Court has been inundated with briefs urging it to address a significant issue regarding sports event contracts. This matter, which holds up to $1 trillion in notional value, is seen as a pivotal confrontation for the sports wagering and derivatives industries. On Wednesday, supporters of states' rights received a noteworthy endorsement when the NFL submitted an amicus brief to the Court.
The 32-page brief, co-authored by former U.S. Attorney General William Barr, urged the Court to review the case Flaherty v. KalshiEx, LLC. The NFL argued that clarity in sports prediction markets is essential to maintaining the integrity of professional sports and protecting market participants.
The NFL stressed the need for regulatory clarity, asserting that the current state of sports prediction markets could undermine the integrity of games and consumer protections. This statement comes as the U.S. Commodity Futures Trading Commission advocates for exclusive regulatory authority over derivatives. The league has been in talks with prediction market operators in the months leading up to this brief.
However, the brief highlighted the NFL's concern that the commission and various operators have resisted the league's calls for “appropriate safeguards” for sports event contracts.
In detailing its objections, the NFL listed several event contracts it finds problematic. This reiterates a stance the league took in a previous brief to the CFTC during a comment period for proposed regulations on derivatives. These objectionable contracts include wagers on whether a kicker will miss a field goal, the next penalty in a game, and non-game-related bets such as phrases used during broadcasts.
The NFL pointed out, "It is at best unclear whether the Commission has the appropriate regulatory framework, oversight capacity, and enforcement resources to ensure that prediction markets do not jeopardize game integrity."
Two significant players in the prediction market space, Kalshi and Polymarket, both contend that maintaining integrity is a priority for them. Polymarket stated that it shares the NFL’s goal of preserving game integrity, noting that it is continuously improving its market surveillance tools. Kalshi asserted its commitment to collaborative efforts with the NFL, expressing hope that the league would look to work together to enhance sports integrity.
During an exhibition game in Macau, NBA Commissioner Adam Silver addressed issues concerning integrity in prediction markets and emphasized the need for accurate data collection regarding "aberrational behavior" within those markets. Unlike the NFL, which advocates for state-level regulation, Silver supports federal standards.
The theme of market integrity was also prominent at the Predict 2026 conference in Midtown Manhattan, dedicated to the evolving asset class. A panel featuring Sean Patrick Maloney, President of the Coalition for Prediction Markets, extensively discussed strategies for combating insider trading. Maloney, a former New York Congressman, previously testified at a Senate hearing on sports wagering and predictions earlier this year.
His focus came after the arrest of U.S. Army special forces soldier Gannon Van Dyke on insider trading allegations. Charges indicate that Van Dyke obtained classified information for personal financial gain, notably placing about $33,000 on Polymarket trades concerning the potential ousting of Venezuelan President Nicolas Maduro, yielding approximately $400,000. If found guilty, he could face over 20 years in prison. Maloney supported strict penalties for individuals misusing sensitive national security information, stating, "You can throw away the key."
Jack Murphy, senior counsel at Akin Gump Strauss, mentioned that the Van Dyke case is closely monitored by defense firms in the predictions sector. He cited other high-profile insider trading incidents involving a Google engineer, a former White House teleprompter operator, and former Congressman George Santos.
In a related development, the Seminole Tribe of Florida has entered the fray, filing a 72-page lawsuit against DraftKings in Broward County, Florida, accusing the company of conducting illegal sports betting in violation of the tribe's 2021 gaming compact. DraftKings CEO Jason Robins is also named in the suit, which criticizes the company's "Super App" that merges various betting verticals, stating it undermines Florida's revenue and regulatory oversight.
In its defense, DraftKings maintains that its prediction platform abides by federal regulations established in the Commodity Exchange Act, expressing respect for the Seminole Tribe while standing by its legal approach to sports event contracts.
Meanwhile, Kalshi announced partnerships with four tribes, including three from California: the Kletsel Dehe Wintun Nation, the Alturas Indian Rancheria, and the Greenville Rancheria, as well as the Alabama-Quassarte Tribal Town in Oklahoma.
