The National Basketball Association (NBA) this week told the Commodity Futures Exchange Commission that the rapidly expanding slate of sports events contracts available on prediction markets like Kalshi could undermine league integrity.
The opinion was one of several high-profile submissions recently to a CFTC public comment forum.
NBA vice president and assistant general counsel, league governance and policy Alexandra Roth highlighted how Kalshi markets had evolved in six months from season-long futures-type “yes/no” markets to single-game offerings.
“This expansion,” she said in the submission, “which has proceeded entirely via the self-certification process, suggests to us that player proposition markets (i.e., markets focused on a player’s single-game performance) or other potential markets (e.g., markets focused on officiating decisions, league rules, or player injuries) are not far behind. This rapid expansion of sports prediction markets has occurred in the absence of the kind of robust, sports-specific regulatory framework that would aim to protect the integrity of the games being played.”
NBA commissioner Adam Silver (pictured above), was an early embracer of legal sports betting as a revenue stream after the fall of the Professional and Amateur Sports Protection Act in 2018, and the letter to the CFTC didn’t condemn prediction markets broadly. But last year the league endured one of the higher-profile sports betting scandals discovered since.
Former Toronto Raptors player Jontay Porter pled guilty in a wire fraud conspiracy last year after the NBA found he’d colluded with a gambling ring to underperform on a series of player-performance prop bets. The NBA’s investigation was assisted by legal sportsbooks. That experienced appears to have informed the NBA’s opinion regarding prediction markets, which are not licensed by states, but currently fall under the jurisdiction of the federal CFTC body.
From the NBA opinion:
“Without oversight and regulation tailored to the specific circumstances of sports wagering, the integrity risks posed by sports prediction markets are more significant and more difficult to manage than those presented by legal, regulated sports gambling. While exchanges and brokers operate under the general auspices of the CFTC, that broad-based financial oversight does not include the kind of sports-specific controls and protections that are the hallmark of state sports gambling regulations.”
The CFTC has not issued a definitive opinion on whether it will allow Kalshi and perhaps Sporttrade to keep offering sports event contracts nationally. A series of court victories have bolstered Kalshi’s position. An April 30 round table to discuss the growing controversy was canceled.
Ryan Rodenberg, a Florida State professor who has been following the surrounding litigation closely, thinks leagues will eventually embrace this new form of sports betting, too.
“The NBA’s new filing to the CFTC further evidences how closely sports leagues are monitoring the event contract space,” he told InGame. “Indeed, given the consumer engagement boost, a prediction market operator may consider demanding an integrity fee or surcharge to be paid by sports leagues who glean the benefit.”
