Due to increasing concerns over the widely popular prediction markets, the NBA has requested help from the Commodity Futures Trading Commission.
In a recent statement, the pro basketball league urged the CFTC to develop a regulatory framework for online platforms that provide sports-event contracts. The league is alarmed that these unregulated markets could jeopardise the integrity of the sport.
Letter from May 1, 2025
On May 1, 2025, the NBA published a letter, which highlighted its concerns over platforms like Kalshi. For instance, the platform allows users to buy contracts, which act like sports bets, on individual games and futures markets in all U.S. jurisdictions. However, sports betting is only legal in 38 states.
The letter was addressed to the CFTC stating:
“The NBA's support for legalised 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”
The NBA noted that many U.S. jurisdictions have dedicated sports betting regulators, but there’s no CFTC department or division to provide overarching, sports-specific oversight of these new betting markets.
The letter further read the following:
“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.”
Meanwhile, the pro league also called for a discussion on prediction market regulation with the CFTC, especially if these platforms would resume their sports-related events.
Concerns Over the Sport’s Integrity
The league is in favour of regulated sports betting, which at the moment is governed on a state basis. However, over a year ago, the basketball scene was shaken up by a betting scandal, as the former Toronto Raptors centre Jontay Porter got involved in a controversy. This led to a life-long ban for him from the NBA and federal charges against the former player.
The Porter scandal was uncovered by a regulated sports betting authority following suspicious betting activity. That is why the NBA wants to ensure the integrity of the league and prevent similar incidents from occurring in the future.
In the meantime, the NBA also shared its concerns that no entity or body is currently overseeing the sports prediction market for similar breaches. The league said that with no regulation of the specific circumstances of sports betting, the potential threat of integrity issues is more significant and more difficult to deal with by legal, lawful sports gambling.
In its letter to the CFTC, the NBA emphasised the gap in regulation between federal and state oversight of gambling:
“Exchanges and brokers may fall under the CFTC’s general oversight, but that broad financial regulation lacks the sports-specific controls and protections that define state gambling laws,” the NBA wrote.
Additionally, the NBA stated in its recent letter that prediction platforms can introduce more appealing markets without regulatory review, while licensed sports betting operators must obtain state approval before offering new types of wagers.
Risky Expansion of Unregulated Markets
The Porter incident from last year included prop betting, which is why the league is alarmed that these market platforms could soon offer individual player contracts.
The NBA further warned that unchecked prediction markets could extend to sensitive areas like player injuries, officiating decisions, and league rule enforcement, raising serious integrity concerns:
“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.”
Unfair Playing Field
The NBA’s call for help from the CFTC arrives after SportTrade urged the commission to award it nationwide access. SportTrade, which is a regulated sports betting exchange, argued that it was at a competitive disadvantage due to the unlicensed platforms like Kalshi, Robinhood, and Crypto.com.
For those unaware of Kalshi, the platform became quite popular during the 2024 U.S. presidential elections, and it later expanded to sports betting, offering wagers on Super Bowl LIX, March Madness, and now the NBA playoffs and MLB season.
Meanwhile, Robinhood teamed up with Kalshi to offer similar sports contracts, while Crypto.com also joined the prediction sports scene at the end of last year.
Legal Battles and Jurisdiction Disputes
However, Kalshi, Robinhood, and Crypto.com are not exactly licensed to operate in the U.S., and several states have taken legal action against them. These jurisdictions are not pleased with the fact that the platforms offer betting markets without a license.
In response, Kalshi has taken legal action, asserting that its markets fall under federal jurisdiction and are exempt from state gambling regulations. Surprisingly, Kalshi has prevailed in court, allowing it to continue operations despite mounting regulatory pressure.
