Ahead of Super Bowl 60 in February, NFL Executive Vice President Jeff Miller appeared to warm up somewhat to the widespread adoption of sports event contracts without fully endorsing the shiny new toy.
In an interview with Front Office Sports, Miller described the asset class as “innovative”, while cautioning that the league needed more regulatory clarity before establishing a course of action. Last December, in written testimony to the US House Committee on Agriculture, Miller wrote that the league was “particularly troubled” that certain contracts fell outside the “purview of state regulatory authorities and the safeguards they impose upon the industry”.
This week, the NFL submitted a letter to the Commodity Futures Trading Commission before a public comment period for proposed rules on sports-event contracts closed on 27 July. The CFTC’s 267-page draft rule proposal released in June established a comprehensive set of guidelines for determinations on whether the contracts involve unlawful activity or are contrary to public interest.
Although the NFL believes the proposed rules contain several productive aspects, it still wrote that the draft fell “significantly short” of protecting the integrity of sports and the fans who participate in the markets.
The NFL is advocating for outright bans on micro-bets, player props and award markets it views as susceptible to manipulation by a single player. The league also called on the CFTC to establish stronger rules to curb insider trading and establish a registry for league-specific prohibited bettors.
“It is surprising that further common-sense integrity and consumer protection measures provided in the prior league comment letter were not adopted,” the NFL wrote.
The NFL also joined the NBA and NCAA in urging the CFTC to adopt a minimum age standard of 21 for trading on the contracts. All three have dealt with insider trading cases over the last 12 months.
A New York state of mind
The New York Mets made history Thursday by inking a commercial partnership with prediction market operator Novig. The multi-year deal between Novig and the two-time World Series champions marks the first partnership between a Major League Baseball franchise and a prediction market exchange to date.
It comes after the CFTC and MLB signed a first-of-its-kind Memorandum of Understanding in April aimed at safeguarding the integrity of sports prediction markets.
The MOU, according to CFTC Chairman Michael Selig, represented a collaborative effort between MLB and the derivatives regulator to shield baseball-related markets from “fraud, manipulation, and other abuses”. Selig also lauded MLB Commissioner Rob Manfred for taking a leading role in protecting the integrity of the markets.
In response to the deal, American University professor Matt Bakowicz told iGB that prediction markets are receiving so much attention because they “sit somewhere between finance, gaming, and fan engagement.”
“That makes them attractive to teams, but it also explains why regulators are watching them closely,” Bakowicz wrote in an email.
As pro sports franchises build larger entertainment businesses through sponsorships, media, gaming, and real estate, the challenge is making sure all of those pieces “fit together legally and strategically”, he added.
A mixed message by Cohen?
The Mets signed the partnership Thursday, one day before New York Governor Kathy Hochul and state Attorney General Letitia James announced a landmark suit against Kalshi. As part of the state’s crusade against prediction markets, the lawsuit seeks compensatory damage against Kalshi of $36 billion.
Months after securing a coveted downstate New York Casino licence, Metropolitan Park has been dogged by reports of construction delays. The $8.1 billion joint venture between Mets owner Steve Cohen and Hard Rock International will feature a casino with roughly 286,000 square footage of gaming space, with 18,000 square feet for a planned retail sportsbook. Is Cohen, a close friend of Hochul, hedging his bets with the Novig partnership?
“I do not necessarily view Cohen’s approach as mixed messaging,” Bakowicz said. “I see it as an owner pursuing multiple long-term business strategies that operate under different regulatory frameworks.
Serving as the director of the Kogod School of Business’ sports business management track, Bakowicz previously oversaw DraftKings Sportsbook and Racebook operations at Foxwoods.
At 47-63, the Mets entered Friday’s with the second-worst winning percentage in the National League. The Mets’ current season-win total at Novig is 69.5 victories.
Since 1996, the Mets have only failed to record 70 wins twice. The Metropolitans won only 66 games in 2003, before finishing 26-34 in the pandemic-shortened season of 2020. Cohen’s team has a 4% probability on Kalshi to make the playoffs; the offering is not available on Novig.
A long-simmering feud
James, who took office in January 2019, has repeatedly clashed with US President Donald Trump during her tenure.
As attorney general, James spearheaded a multi-year investigation into alleged asset inflation by the Trump Organization that resulted in fines of more than $400 million. A New York appellate court upheld Trump’s liability, but voided the financial penalties after deeming them to be excessive. Trump fiercely denied the allegations, while describing the lawsuit as a “politically motivated witch hunt”.
A federal grand jury indicted James in October 2025 on bank fraud, weeks before a Virginia judge dismissed the case. James’ attorneys characterised the actions as an attempt at political retribution by the Trump Administration.
Trump’s son, Donald Trump Jr., sits on the Board of Directors for Kalshi and Polymarket. In a Netflix documentary on prediction markets that first aired 26 July, Selig vehemently rejected any notions of conflicts of interest regarding Trump’s family. Selig also criticised James and New York on Friday in an X post.
“Rather than seek reasoned answers from the courts, James and New York seek to force an unprecedented sudden shutdown of prediction markets nationwide,” he wrote. “The CFTC has already sued to stop this and will continue to defend its jurisdiction.”
Lost tax revenue
According to a joint statement from Hochul and James, the lawsuit alleges that Kalshi’s sports markets meet the legal definition of gambling, because the outcomes are “uncertain” and outside the control of the individuals who enter into the transactions. By failing to obtain a New York licence, Kalshi has also sidestepped the same tax obligations faced by licensed casinos and sportsbooks, the statement reads.
This tax revenue from gambling regulation funds public schools, sports programs for underserved youth, and problem gambling education and treatment, the attorney general noted.
New York has generated approximately $3.5 billion in tax revenue since launching mobile sports wagering in 2022. Last year, New York led the nation with a sports betting handle of $26.3 billion, according to the American Gaming Association, nearly $11 billion more than Illinois, the next closest state. As of Friday, the AGA estimates that the rise of sports-event contracts has cost US states more than $1.2 billion in tax collections.
Batting .500 in the Midwest
Elsewhere, a Minnesota Federal Judge on Monday issued a preliminary injunction that blocked the state from enacting the nation’s first-ever outright ban on prediction markets.
US District Court Judge Kate Menendez delivered the ruling days before a 1 August law was set to take effect, allowing plaintiffs Kalshi and Polymarket to remain operational statewide. The case focused on federal preemption claims under the Commodity Exchange Act. In her ruling, Menendez determined that the plaintiffs showed that federal law supersedes Minnesota statues for certain event contracts.
“Today’s decision makes it clear: States cannot ban things that they don’t have jurisdiction over,” Kalshi spokesperson Elisabeth Diana said in a statement.
Two days later, a federal judge ruled that Wisconsin could resume enforcing state gambling laws against Kalshi and four other prediction markets. William Griesbach, a US District Judge for the Eastern District of Wisconsin, denied an injunction from the CFTC to halt state enforcement.
In April, Wisconsin Attorney General Josh Kaul noted that the state sought to shut the prediction market platforms down, rather than seek monetary compensation. Kaul, however, did not rule out the possibility of pursuing financial damages.
Matt Rybaltowski
Matt is primarily responsible for long-form feature coverage on complex sports betting scandals. He also provides coverage on finance, M&A and other technological developments.
Original article: https://igamingbusiness.com/prediction-markets/prediction-market-roundup-nfl-pans-cftc-integrity-draft-ny-seeks-36b-in-damages-against-kalshi/
