The NFL raised alarms regarding the burgeoning landscape of prediction markets in a recent congressional hearing, highlighting concerns over sports contracts being offered in states without legalized sports betting. The league submitted written testimony to the House Committee on Agriculture, which is examining how these markets operate under the oversight of the Commodity Futures Trading Commission (CFTC).
Prediction markets, platforms where users can agree on the outcomes of various events, including sports, have seen a surge in popularity, operating in all 50 states. In contrast, legal sportsbooks are available in only 39 states and the District of Columbia. Jeff Miller, an NFL executive vice president, articulated the league’s worries that the trading activities associated with prediction markets could pose significant risks to the integrity of sports contests, as they often fall outside the reach of state regulatory authorities.
Miller emphasized that the lack of regulatory framework in prediction markets could lead to a situation where the amounts wagered surpass those seen in traditional sportsbooks, potentially compromising the integrity of competitions. “In each of these state-regulated markets, regulators and state legislators closely monitor betting activity and, with input from professional sports leagues, can determine which bets and wager levels are acceptable,” he noted. He pointed out recent prediction market activities that allowed bets on whether specific phrases related to football would be mentioned during broadcasts, raising additional integrity concerns.
In a plea to Congress and the CFTC, Miller urged the prohibition of certain objectionable bets, stressing the need for robust consumer protections and integrity measures before any sports-related contracts are legalized in such markets.
The response from the newly established Coalition for Prediction Markets, representing several leading operators, was swift and defensive. A spokesperson argued that Miller’s testimony mischaracterized the regulatory landscape, stating, “This testimony is like saying the stock market has no rules.” They insisted that the CFTC’s regulations on abusive or manipulative trading extend to prediction markets, akin to the SEC’s oversight of the stock market. They claimed to employ a range of measures to combat illegal trading and enforce compliance.
Meanwhile, traditional sportsbook operators such as DraftKings, FanDuel, and Fanatics, known partners of the NFL, are also entering the prediction market space, further blurring the lines between these betting platforms. Recent partnerships were noted between the NHL and the UFC with prediction market entities, indicating that this trend is gaining traction across professional sports.
At this moment, FanDuel and Fanatics opted not to provide comments, while DraftKings did not respond to requests for further insights.
