Polymarket CEO Shayne Coplan discussed the pivotal role of the prediction markets industry during the 2024 US Presidential Election in a Netflix documentary this summer. Following a significant court ruling, this platform allowed Americans to legally trade on political contracts, which culminated in a decisive loss for Donald Trump against Kamala Harris. While networks like NBC News predicted a close race, Polymarket assigned Trump a 58% probability as voting concluded on Election Night. A commentator on Fox Business remarked, "Polymarket was spot on the entire time." Coplan expressed his satisfaction during the program Instadoc: The Prediction Games, stating, "That was one of the most gratifying moments ever. From that moment on, there was a level of credibility that prediction markets changed entirely."
Fast forward two years, interest in event contracts pertaining to the 2026 US midterms has surged, prompting debate over whether crowd wisdom could overtake traditional polling methods. As of October 15, over $750 million in notional volume has been traded on these newer platforms, reflecting an almost eight-fold increase compared to trading for Congressional and state races in 2024. In the previous presidential race, $92.4 million was traded on other election contracts, but today, there are more than 21,000 midterm options on platforms like Kalshi and Polymarket. The Anti-Corruption Data Collective anticipates that trading volume on these races could reach $1.6 billion once the midterms conclude. James Surowiecki, an author featured in the Netflix program, commented, "These midterms are going to generate a lot of interest because there’s a lot at stake in them. In that way, this is one of the biggest tests for prediction markets."
In a bid to enhance the integrity of betting markets, the NBA and its licensed sportsbook partners announced on Friday a comprehensive ban on a specific category of prop bets. This decision comes as the league prepares for its season opener next week, during which the New York Knicks will unfurl a championship banner—marking the first time in over 50 years. The NBA currently faces numerous scandals linked to prop manipulation, with several former players awaiting trial.
According to the newly implemented rules, players expected to play less than 12 minutes will not have props offered on their individual statistics. Moreover, bettors will be prohibited from placing multiple bets on the statistical performance of one player, such as betting the "under" on LeBron James' points, rebounds, and assists in one game. While these prop bets have been restricted by the NBA, offerings remain available on Polymarket. For example, a $10, 3-leg combo bet for LeBron's debut with the Philadelphia 76ers offers a payout of $14.19. As of Friday evening, Kalshi had not listed markets for statistical under combos in NBA games.
Despite ongoing discussions with the US Commodity Futures Trading Commission about establishing an integrity framework for basketball-related event contracts, the NBA has not yet finalized a Memorandum of Understanding with the agency. NBA executive vice president Scott Kaufman-Ross acknowledged to ESPN on Friday that enforcing prop restrictions might be challenging in the absence of a formal agreement.
In regulatory news, the CFTC's recent announcements lacked the anticipated impact seen in previous weeks. As discussions continue regarding whether sports event contracts differ from legal sports wagers, the CFTC maintains its claim to exclusive jurisdiction over derivative regulations. This assertion has ignited significant disagreement among state attorneys general, potentially leading to a Supreme Court showdown.
On October 9, the CFTC issued a Notice of Proposed Rulemaking to redefine financial swaps; if adopted, this could classify sports and political event contracts as swaps. Numerous appellate courts have already rejected the argument that these derivatives should preempt state gambling laws. CFTC Chair Michael Selig, in his first interview following the announcement, affirmed the agency’s commitment to curbing detrimental practices in commodity markets, including methods like insider trading and fraud. Recently, Bloomberg reported that the CFTC and Justice Department are probing $2.6 billion in suspicious oil trades linked to the US-Iran conflict.
In a separate report, the Wall Street Journal revealed that the CFTC is investigating around $5 billion in trading associated with Kalshi and bitcoin perpetual futures, with Kalshi strongly denying any allegations of wash trading on its platform. Selig reiterated his stance on event contract regulations during a Fox Business interview on October 15, asserting, "We regulate these in our derivatives markets every day, whether it’s oil or any type of commodity. My concern is that you can’t offer an order book in a casino, that’s not how these wagers work when they are placed with a bookie."
