The National Basketball Association (NBA) has expressed its disapproval of the Commodity Futures Trading Commission’s (CFTC) recent rule-making concerning prediction markets. In a letter sent on Monday, the NBA aligned its stance with an earlier letter issued by the National Football League (NFL).
The CFTC's latest rules, introduced in June, aim to regulate sports-related contracts. However, the NBA has criticized them as inadequate, stating that they do not implement essential sports integrity protections. "[The rule-making] falls well short of requiring prediction market companies to comply with the most basic sports integrity protections," the league articulated.
As the landscape for prediction markets evolves, U.S. attorneys are advising participants like Kalshi and Polymarket to expand beyond sports betting to mitigate potential regulatory issues. According to Braden Perry, a partner at Kennyhertz Perry LLC and a former CFTC senior trial attorney, "A platform that is 80% sports volume is not a prediction market; it is a sportsbook with a preemption argument."
The NBA urged the CFTC to implement a blanket prohibition on trading sports prediction contracts by individuals under the age of 21. If such a prohibition is unfeasible, the NBA suggested an alternative measure to ban marketing directed at those aged 18 to 20. Furthermore, the league emphasized the necessity for it and other sports organizations to have input on which markets should be excluded from trading, citing potential manipulation risks. The NFL echoed this sentiment, highlighting concerns over contracts related to easily predictable events, such as the nature of the first play in their games or officiating decisions.
The NBA has previously raised alarms regarding contracts based on player trade outcomes. In its recent letter, the league referenced its concerns from an earlier communication with the CFTC. The topic has drawn attention recently, particularly with around $200 million wagered on contracts related to NBA star LeBron James’ future team.
In response to the rising concern over manipulation, the NBA stated, "Markets relating to officiating, injuries, league disciplinary actions, player or team transactions, or fan actions should be prohibited." The league further cautioned that these types of contracts are particularly vulnerable to exploitation and could undermine the integrity of the game.
Despite the criticism from the NBA and other leagues, the relationship between sports organizations and prediction markets is not uniformly adversarial. Earlier this year, Major League Baseball established a partnership with the CFTC while naming Polymarket as its exclusive collaborator. Similarly, Major League Soccer entered a partnership with Polymarket in January. The National Hockey League formed a multi-year agreement with Kalshi in October and also engaged with the CFTC regarding prediction markets in May.
Moreover, U.S. sports personalities, including Lionel Messi, have endorsed platforms like Kalshi on social media, highlighting a growing acceptance of these markets within certain segments of the sports community. Ahead of the World Cup, Messi even promoted Kalshi alongside fellow Argentine players Rodrigo De Paul and Nicolas Otamendi.
