NCAA Wants Prediction Markets to Halt College Sports Contracts
The NCAA on Wednesday officially called on the federal government agency in charge of overseeing prediction market makers to stop those operators from offering markets on collegiate sporting events until it can implement “a more robust” set of regulations.
That request came in a letter from NCAA President Charlie Baker to Michael Selig, the chairman of the Commodity Futures Trading Commission (CFTC). Selig became the commission’s 16th chairman last month after the Senate confirmed his appointment by President Trump.
Protecting the well-being of student-athletes and the integrity of competition are of the highest priority to the NCAA, and the growth and haphazard nature of collegiate sport prediction markets pose a significant threat to both.”
NCAA President charlie baker
Prediction markets have seen their businesses rise significantly in the past year, thanks in large part to the Trump Administration allowing operators overseen by the CFTC to offer contracts on the outcome of sports events after Trump took office nearly a year ago.
Previously, the CFTC prohibited such opportunities, citing the federal Commodity Exchange Act. The law, which dates back to 1936, bars market makers from offering contracts tied to “gaming.” Gaming has long been defined to include the outcome of sporting events.
Prediction Markets End Run Around State Regulations
The NCAA’s stance is not new. For years, the body overseeing major collegiate sports has called on state gaming regulators where sports betting is legal to ban wagers involving collegiate athletes. That includes player prop markets, which Ohio and several other states banned two years ago.
Other states, like New Jersey, prohibit licensed sportsbooks from offering wagers on any in-state team.
The rationale for such bans is to protect collegiate athletes from harassment stemming from their performance, solicitation for information, or coercion to fix the outcome of an event.
However, while sportsbooks must abide by each state’s regulations, prediction market operators like Kalshi and Polymarket, regulated by the CFTC, can offer college sports markets in any of the 50 states. Additionally, prediction market operators may self-certify their contract offerings, meaning they do not need regulator approval first.
“Prediction market operators are offering collegiate sport moneyline, total and spread markets that mirror markets offered by sports wagering operators,” Baker wrote. “Recently, large sports wagering and daily fantasy operators have announced their entry into the prediction marketplace.”
While the NCAA wants the CFTC to act, several states have already filed lawsuits to block the federally regulated operators from offering contracts on sporting events. Meanwhile, lawmakers in some states, including New York, have filed bills to prohibit such activity as well.
Gaming Industry Groups Want Congress To Intervene
Baker’s letter comes just two days after the American Gaming Association and the Indian Gaming Association sent a letter to Congress urging them to include more rigid prediction market guidelines – including an outright ban on contracts for sporting events – in legislation currently under consideration for cryptocurrency.
The two industry groups noted that states where wagering is legal mandate sports betting operators have numerous safeguards in place, including ones for money laundering, bettor identification and self-exclusion programs.
“These contracts are being offered in flagrant disregard of state laws, tribal sovereignty, the Commodity Exchange Act, and CFTC regulations,” the letter stated. “They mislead consumers into believing that a sports bet is an investment, fail to protect the young and the vulnerable, open the door to money laundering, match fixing and insider trading. They rob state budgets and tribal finances while simultaneously forcing states and tribes to expend massive legal resources to defend their sovereignty.”
The letter also noted that Selig said at his confirmation hearing that he “would not rein in sports betting contracts” during his tenure leading the CFTC. Instead, Selig told senators he would defer to the ongoing litigation that is likely to end up before the Supreme Court a few years from now.
“However, Mr. Selig also said that the CFTC would follow Congress if they were to step in and speak on these contracts,” the letter stated. “Therefore, it is critical that Congress act swiftly.”
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