Leagues, Players Associations Sound Off on Prediction Markets

• The Commodity Futures Trading Commission recently accepted comments for a proposed rule for sports-related event contracts
• The NBA, MLB, PGA Tour, and a group representing the players association for each professional league submitted proposals for the rule
• Leagues called for market integrity protections, safeguards for players, and cooperation with investigations, among other recommendations

Several professional sports leagues and a group representing professional sports players associations gave their suggestions to the Commodity Futures Trading Commission for its proposed rule for sports-related event contracts.

Thursday was the deadline to submit comments to the Commodity Futures Trading Commission regarding its proposed rule for sports-related event contracts offered by prediction market companies. The NFL, MLB, and PGA Tour submitted comments outlining their opinions on the proposed rule, while a group representing the players associations for the NBA, NFL, MLB, NHL, and MLS did the same.

The groups called for increased market integrity protections, increased safeguards for athletes, and continued cooperation with league investigations, among the submitted suggestions.

NBA Requests Increase in Trading Age

Dan Spillane, Executive Vice President and Assistant General Counsel, League Governance & Policy, outlined the NBA’s suggestions in a four-page letter submitted to the CFTC on April 30.

“There is no higher priority for the NBA than protecting the integrity of our games and preserving public confidence in our league and in our sport. While this letter takes no position on the legal question of whether sports prediction markets constitute gambling under federal or state law, we believe that such markets raise integrity concerns that are similar to those associated with sports betting,” he noted.

Among its suggestions to the CFTC, the NBA requested designated contract markets (DCMs), such as Kalshi and Polymarket, be required to prohibit athletes, game officials, and league personnel from trading contracts on their platforms, similar to current restrictions in place on online sports betting platforms.

Additionally, DCMs should be required to report any potentially suspicious trades or prohibited trades to the league for potential investigation, he reported.

The league also called for an outright ban on the following market types:

• Injuries
• League disciplinary actions
• Player or team transactions
• Fan actions

Event contracts based on player props should be prohibited pending the “development of appropriate and sensible restrictions to mitigate integrity risks,” Spillane noted.

Finally, the NBA formally requested the minimum age to trade sports event contract on DCMs be raised from 18 to 21.

“By contrast, legal sports betting is, in most states, limited to individuals over the age of 21. Like sports betting, trading in sports prediction contracts carries material risks (e.9., of financial loss) that may be particularly acute for younger individuals. The Commission should take formal note of this reality and should categorically prohibit trading of sports prediction contracts by individuals under 21. Short of that, the Commission should take action to restrict DCMs’ ability to directly market their sports products specifically to individuals in the 18-20 age range.”

MLB Asking For Specific Market Controls

Quest Meeks, Senior Vice President & Head Counsel, Policy, Integrity & Compliance, submitted comments to the CFTC on behalf of MLB, supporting an advisory asking for DCMs to engage in “pre-self-certification communications” with relevant sports leagues and consult with league integrity standards before listing a particular sports event contract.

“We strongly support this recommendation. Regulations codifying this concept could, for example, state that DCMs should not list contracts that a league has identified––through a public notice or other mechanism––as readily susceptible to manipulation or unfair trading practices,” Meeks noted.

Meeks reported MLB also strongly supports the advisory for DCMs to fully cooperate with any league-run investigations into potential manipulation or insider trading investigations. The league also emphasized that DCMs should established information-sharing agreements with professional leagues themselves, not just third-party integrity monitoring organizations.

The MLB also encouraged the CFTC to require all DCMs intending to list sports event contracts have an information-sharing agreement in place with the relevant league.

“As we wrote in our letter to the CFTC last year, information sharing and collaboration in the sports betting industry has been critical to enforcing league rules and upholding game integrity. We encourage the CFTC to carry over those best practices into the event contract space through formal regulations, not just advisories,” he wrote.

Finally, MLB supports increased regulations for sports event contracts aimed at “fostering responsible trading practices and protecting consumers.” These would include regulations prohibiting misleading advertising, requiring operators to adopt self-exclusion programs, ban wagering on credit, and create funding for treatment and research of problem gaming.

PGA Tour: Use Official League Data

Innovation should not come at the expense of competition integrity, Andy Levinson, SVP, Tournament Administration, of the PGA Tour wrote to the CFTC. Sports event contracts tied to PGA Tour events, he said, raises unique integrity, consumer protection, and public interest concerns that warrant “careful consideration.”

The PGA Tour encouraged the CFTC to require that all tour sports event contracts be settled exclusively with official PGA Tour data.

“A single authoritative settlement source that is objective, verifiable, and non-discretionary reduces the risk of settlement disputes, limits opportunities for manipulation, and promotes consistent outcomes for market participants,” he wrote.

Additionally, the PGA Tour encouraged the CFTC to require “robust integrity safeguards” for sports event contracts, establish effective know-your-customer standards, establish anti-harassment measures for the safety of its athletes, and also to increase the minimum age to trade sports event contracts to 21.

Protect All Professional Athletes

The NFLPA, MLBPA, NBPA, NHLPA, and MLSPA unions submitted a joint letter to the CFTC, urging increased protections, safety, and anti-harassment measures for the athletes they represent.

Similar protections should be afforded to athletes from DCMs as sports betting operators provide every season.

“The individuals targeting our members, however, do not distinguish between state-regulated wagers and contracts offered on prediction markets. From their point of view, a bet is a bet regardless of where it is placed. Therefore, we believe it is essential that, should the CFTC allow for continued offering of sports related contracts, it implements appropriate regulations that protect professional athletes and their families akin to those in place under the state regulatory regimes. The failure to do so not only increases the risks facing our members, but also provides more latitude to those seeking to manipulate sporting events. Accordingly, we urge you to consider the following safeguards in any rulemaking process,” the unions wrote.

Protecting the safety of athletes and members of their family is the first priority of the players associations, the groups noted. Prediction market rulemaking for sports event contracts should include the following, at a minimum:

• Prohibition on sports event contracts based on a “negative” outcome that can be manipulated by a single individual
• Establish easy process to petition the CFTC to disallow and remove prohibited or problematic contracts
• Create a list of bad actors who are prohibited from particpating in event contracts
• Requiring all sports venues to enact and enforce specific fan conduct policies that prohibit prediction market-related harassment with significant penalties for violators

Additionally, the associations called for a CFTC ban on unauthorized use of non-public information and data relating to athletes’ health and performance.

“The CFTC should therefore ban the unauthorized use of such information in connection with those entities and activities that may fall under its jurisdiction. The failure to implement such protections would open the door to fundamental invasions of privacy.”

Finally, players should also be ensured full due-process in investigations into event contract manipulation, the associations noted. If leagues are being encouraged or required to share information regarding potential misconduct with the CFTC and DCMs, affected athletes and their association representatives should receive the same information at the same time.