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NBA Warns CFTC: Extending Prediction Markets May Endanger Game's Integrity
Posted on: May 4, 2025, 04:00h.
Last updated on: May 3, 2025, 10:26h.
Tag: NBA vs. Prediction Markets
(On the NBA's concerns about the proliferation of sports prediction markets and their potential impact on game integrity)
The NBA versus the Expanding Prediction Market World
The NBA has raised concerns about the swift growth of sports prediction market operators, such as Kalshi and PredictIt, and their possible influence on the sport's integrity.
In a letter to the Acting Director of the Commodity Futures Trading Commission (CFTC), Caroline Pham, NBA Vice President and Assistant General Counsel, Alexandra Roth, expressed deep worry about the rapid expansion of these markets, which she believes lacks adequate oversight.
Roth highlighted that these companies have moved from offering seasonal futures wagers to single-game bets, a shift that has taken place without seeking regulatory approval. She also anticipated that in the near future, sports derivatives markets would feature player-specific wagers, officiating decisions, league rules, and player injuries. As of now, Kalshi, one of the go-to derivatives platforms, showcases markets for four NBA playoff series, conference and league champions, and four upcoming playoff games, but no player-specific bets are available.
The NBA has been progressive in embracing regulated sports wagering and related partnerships since the 2018 Supreme Court ruling on the Professional and Amateur Sports Protection Act (PASPA). However, this liberalization has come with its price, as scandals like the one involving former Toronto Raptors player Jontay Porter have arisen. Porter was banned for life from the NBA after an investigation proved he manipulated his performance in certain games and accepted cash from bettors.
While the scandal wasn't explicitly mentioned by Roth in her letter to the CFTC, it could have served as a catalyst for the league's increased focus on the NBA's statistics being featured in prediction markets.
The NBA responded to the Porter controversy by collaborating with sportsbook partners to block "under" props on low-salaried league athletes. In addition, players, league, and team employers are already prohibited from betting on anything related to the association, including NBA, G-League, and WNBA games. However, even with these measures in place, Roth pointed out the need for more robust regulations concerning the 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," Roth wrote.
The NBA lawyer rightfully observes that traditional sportsbook operators must seek approval from state regulators to introduce new wagers; however, companies like Kalshi, regulated federally, aren't subject to such requirements.
Other Perspectives
In reaffirming its support for safe and regulated sports betting, Roth also raised concerns about the CFTC lacking dedicated staff members for sports betting oversight. If the CFTC decides to allow the continuation of sports event contracts, Roth suggested it should establish a comprehensive regulatory and oversight framework modeled on state sports betting markets and impose limitations on the expansion of these markets to increasingly specific event propositions.
Enrichment Data Summary:
- Sports prediction markets operate under CFTC oversight, while state-regulated sports betting operates under state-specific regulations
- Prediction markets offer exotic contract choices (e.g., single-game props), while state regulatory frameworks restrict proposition markets tied to individual performance
- Around six states have issued cease-and-desist orders against prediction markets, arguing that the event contracts constitute illegal gambling under state law
- The NBA's concern is that CFTC lacks sports-specific oversight, unlike state gaming commissions that collaborate with leagues to detect irregularities and have dedicated regulatory staff and tools
- The NBA, in a letter to the Acting Director of the Commodity Futures Trading Commission (CFTC), expressed concerns about the rapid expansion and lack of adequate oversight of sports prediction market operators like Kalshi and PredictIt, citing their potential influence on the sport's integrity.
- Alexandra Roth, NBA Vice President and Assistant General Counsel, highlighted that these operators have moved from offering seasonal futures wagers to single-game bets, without seeking regulatory approval.
- Roth anticipated that in the near future, sports derivatives markets would feature player-specific wagers, officiating decisions, league rules, and player injuries, a development that she believes warrants more robust regulations.
- The NBA has been progressive in embracing regulated sports wagering and related partnerships since the 2018 Supreme Court ruling, but has faced scandals, such as the one involving former Toronto Raptors player Jontay Porter, who was banned for life after manipulating his performance and accepting cash from bettors.
- ETFGodfather, one of the derivatives platforms, showcases markets for four NBA playoff series, conference and league champions, and four upcoming playoff games, but no player-specific bets are available.
- The NBA lawyer rightfully observed that traditional sportsbook operators must seek approval from state regulators to introduce new wagers, while companies like Kalshi, regulated federally, aren't subject to such requirements.
- Roth suggested that if the CFTC decides to allow the continuation of sports event contracts, it should establish a comprehensive regulatory and oversight framework modeled on state sports betting markets and impose limitations on the expansion of these markets to increasingly specific event propositions.
