The sports leagues that argued for federal oversight of sports betting when the Supreme Court opened the door to its legalization eight years ago finally are getting their way, at least for now, thanks to the murky mechanics of sports prediction markets and a federal regulatory agency that has gone all-in on them.<\/p>\n
Major League Baseball dove headfirst into that rapidly evolving, unpredictable business last week, announcing a memorandum of understanding to work with the Commodity Futures Trading Commission on oversight and an exclusive deal that will make Polymarket the official prediction market exchange of MLB.<\/p>\n
The agreement with the CFTC calls for it and the league to share information in an effort to police prediction market exchanges for indications of insider trading or market manipulation, akin to the suspicious wagers that have led to criminal charges against pro and college players in the last year.<\/p>\n
The CFTC also will consider the league\u2019s assessment of which contracts listed on its exchanges \u2014 presented similarly to sports bets on apps from operators that include Polymarket, Kalshi and, more recently, DraftKings and FanDuel \u2014 come with higher integrity risks.<\/p>\n
Though it doesn\u2019t mandate any action by the CFTC or MLB, the MOU represents a first step toward corralling an increasingly popular version of sports betting operating outside the regulatory framework crafted in legalized states.<\/p>\n
Last week, Arizona\u2019s attorney general became the first to file criminal charges against a prediction market operator, accusing Kalshi of operating as an unlicensed bookmaker. Prediction markets are the subject of at least 20 lawsuits across the U.S. as state and federal regulators vie for jurisdiction over an activity that has emerged as a viable substitute for bettors in states that have not yet legalized sports wagering, including California and Texas.<\/p>\n
Polymarket\u2019s deal includes pledges to restrict markets that MLB views as integrity risks, including individual pitch results and umpire and manager decisions.<\/p>\n
Prediction market trading volume exceeded $60 billion last year, with more than 80% generated from sports.<\/p>\n
\u201cI think that in the period of time that it takes those legal issues to get resolved in a definitive way, it\u2019s incumbent on us to do everything we can to protect the integrity of the sport while this activity is ongoing,\u201d MLB Commissioner Rob Manfred said shortly before signing the MOU along with CFTC Chairman Michael Selig on March 18 in Miami, site of the World Baseball Classic. \u201cIt\u2019s not going to stop immediately even if the states win in all the litigation. Our view is that as long as it\u2019s operating out there, we need to be as proactive as possible in terms of protecting the integrity of the game.\u201d<\/p>\n
MLB\u2019s agreement came one week after the CFTC announced guidance reminding exchanges such as Kalshi and Polymarket of their responsibility to steer clear of offering contracts on events that are susceptible to manipulation, including injuries and officiating, recommending that they consult with relevant leagues on their integrity concerns. It also announced a 45-day public comment period that could inform updated rules governing prediction markets. <\/p>\n
\u201cWe need to understand and work together with the leagues to know what can potentially be easily manipulated on the field,\u201d Selig said last week. \u201cWe don\u2019t necessarily have all that information from our background as a derivatives regulator. But we\u2019re going to get it by working together with the league and getting this right.\u201d<\/p>\n
Selig said the CFTC also has begun talks with other leagues.<\/p>\n
Exchange Rate<\/p>\n
U.S. league-level deals with prediction market operators<\/p>\n
Major League Baseball: Polymarket<\/p>\n
Major League Soccer:
\n Polymarket<\/p>\n
National Hockey League: Kalshi and Polymarket\n<\/p>\n
Ultimate Fighting Championship: Polymarket<\/p>\n
MLB\u2019s deal with Polymarket largely mimics the structure the league put in place when sports betting legalized, crafting commercial agreements that include integrity guardrails such as the use of official data to settle bets and a say in which markets are offered.<\/p>\n
While Polymarket and the exchanges it powers will be the only ones granted use of MLB and club marks on its app, a second tier of yet-to-be-designated authorized operators will be able to sign team sponsorships and advertise during national and local game broadcasts, if they agree to MLB\u2019s integrity provisions.<\/p>\n
Polymarket\u2019s deal includes pledges to restrict markets that the league views as integrity risks, including individual pitch results and umpire and manager decisions.<\/p>\n
\u201cPartnering with a professional sports league is really important to lend legitimacy to the category,\u201d said Ari Borod, who joined Polymarket as president of sports business development in January after 4\u00bd years at Fanatics\u2019 betting unit. \u201cOur commitment is to build a long-term, prosperous prediction market exchange that allows customers to trade on a variety of derivatives. Anything that has short-term gain but hurts the credibility of the industry long term is not a hill that we would die on.\u201d<\/p>\n
MLB will treat predictions as its own sponsor category, separate of sports betting. Its two official-status sportsbooks, FanDuel and BetMGM, retain the right to use league and team marks on prediction market apps in spite of Polymarket\u2019s exclusivity.<\/p>\n
The league\u2019s multiyear deal with Polymarket allows MLB to exit if legal or regulatory frameworks around prediction markets change, a source familiar with the agreement said, adding that Polymarket has no such option if its customer base shrinks as the result of states legalizing sports betting.<\/p>\n
Asked to compare working with the CFTC to the league\u2019s dealings with state lawmakers and gaming regulators, Manfred not surprisingly leaned toward federal oversight.<\/p>\n
\u201cThe single biggest difference is [that] a federal regulatory scheme makes our life a lot easier as opposed to \u2026 sports betting, where you\u2019re going state by state,\u201d Manfred said. \u201cYou know how much time we spent in states. Our conversations [with the CFTC] have taken a lot less time.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The sports leagues that argued for federal oversight of sports betting when the Supreme Court opened the door…\n","protected":false},"author":2,"featured_media":558858,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[558],"tags":[64,63,4034,21944,591,48702,85,65363],"class_list":["post-558857","post","type-post","status-publish","format-standard","has-post-thumbnail","category-mlb","tag-au","tag-australia","tag-baseball","tag-gambling","tag-mlb","tag-print","tag-sports","tag-upfront"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/558857","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=558857"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/558857\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/558858"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=558857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=558857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=558857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}