NBA Tells CFTC Prediction Market Expansion Threatens Integrity
The NBA is concerned proliferation of sports event contracts on sites such as Kalshi and PredictIt could imperil league probity.
- League tells regulator fast-growing prediction markets could weigh on game integrity
- NBA concerned about expanding menu of sports contracts offered by prediction market operators
NBA Tells CFTC (Commodity Futures Trading Commission) Prediction Market Expansion Threatens Integrity
In a recent letter to CFTC Acting Director Caroline Pham, NBA Vice President and Assistant General Counsel Alexandra Roth expressed concern that prediction market operators have evolved their menu of sports offerings from futures wagers pertaining to an entire season to single-game bets. In highlighting the point that prediction markets firms made those moves without approval from regulators, Roth also speculated that it won’t be long before sports derivatives markets start featuring player propositions, among other highly specific wagers.
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,” wrote Roth to Pham.
The NBA attorney said prediction markets’ rapid expansion of game-specific offerings could eventually grow to include not only player props, but “officiating decisions, league rules, or player injuries” as well. Kalshi, one of the dominant names in the yes/no derivatives space, currently features markets on four NBA playoff series, the conference and league champions as well as four upcoming playoff games, but there are no player-specific wagers on the site.
NBA Taking Hard Line following Porter Scandal
The NBA has widely embraced regulated sports wagering and related partnerships with gaming companies since the 2018 Supreme Court ruling on the Professional and Amateur Sports Protection Act (PASPA), but that liberalization came with a cost.
Last year, former Toronto Raptors player Jontay Porter was banned for life from the NBA after an investigation revealed he altered his performance in some games and accepted cash from bettors that wagered on him. Though not explicitly mentioned by Roth in her letter to the CFTC, that scandal may be an impetus for the league applying scrutiny to the basketball menus of prediction markets.
The NBA responded to the Porter controversy by working with its sportsbook partners to bar “under” props on the league’s athletes with the lowest salaries. Under the league’s current wagering policy, players and league and team employers are barred from betting on anything related to the association, including NBA, G-League and WNBA games.
Even with those measures, Roth said the league is worried about the lack of regulatory pillars pertaining to proliferation of NBA wagers offered by prediction markets.
“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,” she wrote.
The NBA lawyer rightfully observes that when traditional sprotsbook operators want to feature new wagers, those efforts must be approved by state regulators — a hurdle companies like Kalshi don’t have to clear because they’re regulated federally.
Other NBA Concerns
In reiterating the league’s support for regulated, safe sports betting, Roth also noted the NBA is concerned that the CFTC, unlike state gaming boards, doesn’t have staffers that are dedicated to oversight of sports betting.
That implies the commission may need to bolster sports-focused employee ranks in anticipation of prediction markets adding more sports-linked derivatives.
“If the CFTC does ultimately decide to permit the continued offering of sports event contracts, we encourage it to close this gap and to adopt a comprehensive regulatory and oversight framework analogous to those governing state sports betting markets, and to impose meaningful limitations on the continued expansion, via self-certification, of these markets into ever more exotic and narrow event propositions,” concludes Roth.
The NBA is concerned proliferation of sports event contracts on sites such as Kalshi and PredictIt could imperil league probity.
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