As Super Bowl 60 approaches in February, NFL Executive Vice President Jeff Miller expressed cautious interest in the adoption of sports event contracts during an interview with Front Office Sports. He referred to these contracts as "innovative" but emphasized that the league requires greater regulatory clarity before proceeding. In December, Miller conveyed the league's concerns to the US House Committee on Agriculture, indicating that certain contracts raise alarms as they fall outside the regulatory oversight meant to protect the industry.
This week, the NFL submitted comments to the Commodity Futures Trading Commission (CFTC) regarding a 267-page draft rule proposal released in June that outlines guidelines on how to assess the legality of sports-event contracts. While the NFL acknowledged some positive elements in the proposed rules, it criticized the draft for not sufficiently safeguarding the integrity of the sport and the interests of fans engaging in the markets.
The league is particularly advocating for outright bans on certain types of bets, including micro-bets, player proposition bets, and award markets that it believes are vulnerable to manipulation by individual players. Additionally, the NFL has urged the CFTC to create stricter regulations to prevent insider trading and to maintain a registry of prohibited bettors specific to the league.
"It is surprising that further common-sense integrity and consumer protection measures provided in the prior league comment letter were not adopted," the NFL stated.
The NFL, alongside NBA and NCAA officials, also called for a minimum age requirement of 21 for participating in these markets, following several insider trading incidents within the past year.
In New York, the Mets made headlines as they entered a historic partnership with prediction market operator Novig, marking the first collaboration between a Major League Baseball team and a prediction market exchange. This multi-year agreement comes after the CFTC and MLB signed a Memorandum of Understanding in April, intended to ensure the integrity of prediction markets associated with baseball.
CFTC Chairman Michael Selig noted that this MOU symbolizes a joint effort by MLB and the regulatory body to protect these markets from potential fraud and manipulation, praising MLB Commissioner Rob Manfred's leadership role.
American University professor Matt Bakowicz remarked that prediction markets are gaining traction because they lie at the intersection of finance, gaming, and fan engagement. He highlighted the importance of ensuring that the diverse business strategies adopted by sports franchises fit legally and strategically.
The Mets' partnership was announced just ahead of New York Governor Kathy Hochul and Attorney General Letitia James revealing a lawsuit against Kalshi, which seeks $36 billion in damages. This lawsuit is part of the state’s ongoing battle against prediction markets, claiming that Kalshi's sports markets constitute gambling under state law and alleging that Kalshi has avoided obtaining a necessary license, thereby bypassing tax obligations owed by licensed casinos.
Tax revenue generated from regulated gambling supports essential public services, including education initiatives and programs for youth. Since mobile sports wagering was implemented in New York in 2022, the state has accrued about $3.5 billion in tax revenue, leading the nation with a sports betting handle of $26.3 billion last year, according to the American Gaming Association. The organization estimates that the emergence of sports-event contracts has resulted in more than $1.2 billion in lost tax revenue for states across the US.
Adding to the mix, a Minnesota Federal Judge granted a preliminary injunction preventing the state from implementing the first nationwide ban on prediction markets, just days before a law was set to take effect on August 1, allowing Kalshi and Polymarket to continue operations in the state. The judge concluded that federal law supersedes Minnesota law concerning specific event contracts. Kalshi spokesperson Elisabeth Diana expressed satisfaction with the ruling, asserting that it clarified state jurisdictions.
In contrast, a federal judge in Wisconsin permitted the enforcement of state gambling laws against Kalshi and other prediction markets, despite an injunction request from the CFTC aimed at halting such state actions. Wisconsin Attorney General Josh Kaul previously indicated the state’s intention to shutter prediction market platforms rather than seek monetary damages, although financial penalties remain a possibility.
