NBA Warns of Potential Threat to League Integrity by Predictive Betting Markets
In a shake-up regarding sports prediction markets, the National Basketball Association (NBA) has voiced concern about their impact on game integrity. In a letter to the Commodity Futures Trading Commission (CFTC), the NBA expressed its apprehensions towards these markets, particularly as they rapidly expand without direct oversight.
Trivia: Prediction markets permit fans to wager on sports outcomes, some argue bypassing state gambling laws by operating under federal commodities rules
Alexandra Roth, NBA's Vice President, outlined the league's primary concern in her letter: "Our primary objective is to safeguard the integrity of NBA basketball and uphold public trust in our league and its sport." She emphasized that the current system poses "substantial integrity risks."
Fueling this debate are platforms like Kalshi, Robinhood, and Crypto.com, which allow users to trade futures linked to sports events. These platforms are analogous to traditional sports bets but leverage federal commodities regulations instead of state gambling laws. However, courts have yet to recognize this as a legal loophole.
Kalshi has been especially daring, following a legal battle with the CFTC over political betting. This led to an expansion into sports, triggering cease-and-desist orders from multiple state regulators. In response, Kalshi has filed lawsuits in various states and won temporary legal victories in Nevada and New Jersey.
A significant issue is the speed at which these markets emerge. Traditional sportsbooks must obtain state approval before launching a new type of bet. In contrast, federally regulated exchanges can self-certify contracts and start trading immediately, a gap Roth pointed out, stating, "Exchanges can introduce new, more exotic sports prediction markets via self-certification," while sportsbooks face extensive scrutiny before adding anything new.
The NBA is particularly alarmed by how far these markets might extend. Roth warned of player performance markets or contracts based on officiating or injuries, which are not too far from becoming a reality. This is a sensitive matter for the league given recent events.
Last year saw the lifetime ban of former Toronto Raptors player Jontay Porter due to betting-related misconduct. Porter manipulated games to affect player prop bets, leading to a guilty plea for conspiracy to commit wire fraud. Instances like these underscore the potential threats posed by betting products to fair play.
Roth also criticized the lack of data-sharing between exchanges and sports leagues. She argued, "We are unaware of any requirement compelling exchanges or brokers to report potentially suspicious trades or trade patterns." Moreover, she pointed out the absence of a mechanism necessitating ongoing information exchange between exchanges and affected leagues.
Without this transparency, she argued, it becomes more challenging for leagues to detect and manage risks. As these markets grow, the danger is likely to escalate.
- The National Basketball Association (NBA) has expressed concerns about the rapid expansion of sports prediction markets, as they operate without direct oversight, such as those offered by brokers like Kalshi, Robinhood, and Crypto.com.
- Alexandra Roth, the NBA's Vice President, highlighted the substantial risks these markets pose to the integrity of NBA basketball and public trust in the league, as they allow users to trade futures linked to sports events.
- In response to cease-and-desist orders from multiple state regulators, Kalshi, one of these platforms, has filed lawsuits in various states and won temporary legal victories in Nevada and New Jersey.
- The NBA is particularly alarmed by the potential creation of player performance markets or contracts based on officiating or injuries, which could escalate the risks to fair play, as seen in the case of former Toronto Raptors player Jontay Porter's betting-related misconduct.
