- The NBA recently submitted comments to the Commodity Futures Trading Commission
- Sports prediction markets pose greater integrity risks than regulated sports betting
- No requirement that brokers reporter potentially suspicious trades or trading patterns to the NBA
Sports event prediction markets pose a serious integrity risk to the NBA, far more than the legal and regulated sports betting industry, a league official told the Commodity Futures Trading Commission.
Alexandra Roth, Vice President and Assistant General Counsel, League Governance and Policy of the NBA, submitted official comments from the league to the Commodity Futures Trading Commission (CFTC) decrying the purveyance of sports event prediction markets throughout the country.
“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,” Roth wrote.
No Safeguards in Sports Prediction Markets
The NBA is concerned with the lack of safeguards brokers provide through sports event prediction markets. Broad-based financial oversight does not include sports-specific controls and protections that regulated, licensed sports betting operators can provide, Roth wrote.
“Likewise, as sports betting prediction markets exist today, we are not aware of any requirement that either exchanges or brokers report potentially suspicious trades or trading patterns to an affected league or cooperate with any league-run investigations into such suspicious activity; nor are we aware of any mechanism that would require ongoing information sharing between exchanges and affected leagues,” she wrote.
The NBA has little ability to monitor and understand integrity risks and issues without these requirements, according to Roth.
The league relies on sports betting operators to report suspicious betting behavior. Operators identified suspicious betting behavior last year surrounding Jontay Porter of the Toronto Raptors, which led to an investigation that revealed Porter and several other individuals manipulated games he played in by betting heavily on his unders.
As sports event prediction markets become more popular, Roth noted the NBA anticipates risk arising from the limited safeguards and visibility surrounding the markets.
“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 when it is legal and subject to robust, sports-specific regulation.”
To date, the MLB and NBA have submitted comments to the CFTC against the sports prediction markets.
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The CFTC is still accepting comments from interested parties on sports event prediction markets, despite having cancelled a roundtable to discuss the new offerings.
The CFTC last week cancelled the roundtable – which had originally been scheduled for Wednesday, April 30 – but did not provide a reason for the cancellation or an update on when, or if, it will be rescheduled.
The much-anticipated meeting was announced in February by the commission with the goal of developing “a robust administrative record with studies, data, expert reports, and public input from a wide variety of stakeholder groups to inform the Commission’s approach to regulation and oversight of prediction markets, including sports-related event contracts.”
The CFTC was expected to gather information from all parties involved in the sports event prediction markets and eventually release an opinion on the legality of the contracts. Several lawsuits have been filed by Kalshi in response to state cease-and-desist notices, as the company has said it will not stop offering the market unless directed to do so by the CFTC.
The NBA recently made headlines by taking a firm stance against sports prediction markets, which have been growing in popularity in recent years. These markets allow fans to bet on various outcomes of games, such as the final score or which player will score the most points. While some see these markets as a fun way to engage with the sport, the NBA has expressed concerns about the potential negative impact they could have on the integrity of the game.
One of the main reasons the NBA is against sports prediction markets is the risk of match-fixing. By allowing fans to bet on specific outcomes of games, there is a fear that players, coaches, or referees could be influenced to manipulate the results in order to win bets. This could not only damage the reputation of the league, but also undermine the fairness and competitiveness of the games.
Another concern raised by the NBA is the potential for insider trading. With sports prediction markets offering real-time odds and information, there is a risk that individuals with inside knowledge of the game could use this information to gain an unfair advantage in their bets. This could create an uneven playing field and erode trust in the integrity of the sport.
In response to these concerns, the NBA has taken steps to crack down on sports prediction markets. The league has implemented strict rules and regulations to prevent players, coaches, and officials from participating in these markets. Additionally, the NBA has worked with law enforcement agencies to investigate and prosecute any instances of match-fixing or insider trading related to sports prediction markets.
While some fans may be disappointed by the NBA’s stance against sports prediction markets, it is important to remember that the integrity of the game should always come first. By taking a strong stand against these markets, the NBA is sending a clear message that it will not tolerate any behavior that threatens the fairness and competitiveness of basketball. Ultimately, this decision is in the best interest of the sport and its fans.
