The NBA has sent a letter to the Commodity Futures Trading Commission (CFTC) about the risks of continuing sports prediction markets. The pro-basketball organization became the second major professional sports league to raise concerns about the spread of prediction markets on sites such as Kalshi, following the MLB, which sent a letter last month.
Alexandra Roth, the NBA’s vice president and assistant general counsel for league governance & policy, signed off on the letter, which highlights the lack of oversight compared to regulated sports betting.
In the letter, Roth stated, “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.”
The letter went on to add, “The NBA’s support for legalized sports betting has long been underwritten by our view that sports betting is made safer — both for our fans and for our league — it is legal and subject to robust, sports-specific regulation.
“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.”
Expansion of markets causing concern
Kalshi and Crypto.com recently began offering NBA single-match winner markets during the playoffs, and this expansion caused the NBA to raise its concerns.
Roth noted that, “This expansion, 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.”
Kalshi lawyers stated that they would refrain from entering into player prop bets and stick to events that have “real-world financial consequences”. However, the company’s CEO Tarek Mansour also said it had little interest in offering sports betting markets not long ago, but the popularity of the markets changed his mind.
Legal challenges
There have been growing concerns about the lack of oversight on the sports event contracts that are technically legal in all 50 states. In addition to the NBA and MLB, numerous states have challenged the legality of allowing users to predict and trade the winners of sporting contests. Michigan’s Gaming Control Board was the latest state regulator to contact the CFTC, urging greater oversight on the increased sporting markets.
In addition, six states issued Kalshi with cease-and-desist letters following their March Madness markets. Kalshi has responded by filing lawsuits and has successfully fought off legal challenges. Judges in Nevada and New Jersey both granted preliminary injunctions, which allow the company to continue offering its markets.
The CFTC had planned to hold a roundtable to discuss the growing concerns around the sports markets, but cancelled and has not yet rescheduled. The organization is under increasing pressure to take action and clarify its position.
Adam is an experienced writer with years of experience in the gambling industry. He has worked as a content writer and editor for five years on sites such as Oddschecker, CoinTelegraph and Gambling Industry News, bringing excellent knowledge of the world of sports betting and online gambling. Adam focuses on emerging stories in the ever changing landscape of betting in the US. Read the latest on prediction markets, changing legislation, and sweepstakes.
