The National Football League (NFL) has entered the debate against federal oversight of prediction markets, such as Kalshi and Polymarket, by submitting a brief to the U.S. Supreme Court as the case approaches a potential ruling.
League Aligns with States and Regulators Against CFTC
In a notable move, the NFL has allied with various state governments, former Commodity Futures Trading Commission (CFTC) chair Gary Gensler, and even a key author of the law relevant to prediction markets. They are advocating for local gambling regulators to oversee these platforms instead of the federal agency.
In its filing, the NFL expressed concerns to the CFTC about the practices of these prediction markets concerning sports betting. The league pointed out that its inquiries have gone unanswered, which raises issues regarding the integrity of the games and consumer protection. The NFL's legal brief supports the states' claim that they should have the authority to enforce local gambling laws on emerging prediction markets.
Kalshi has responded, stating that it has made multiple attempts to engage with the NFL constructively but has received no responses. Kalshi spokesperson Elisabeth Diana remarked, "We have consistently tried to engage proactively and constructively with the NFL to collaborate on market integrity with no response." Moreover, Kalshi highlighted its partnerships with other major sports leagues, including Major League Baseball and the National Hockey League, noting that only the NFL has not collaborated on data sharing. Diana added, "All but the NFL have been willing to share data and collaborate to protect game integrity."
The legal framework governing sports betting through prediction markets is currently at a crossroads. One federal court has supported Kalshi’s assertion that the CFTC should be its sole regulator, while two others have sided with the states, asserting that sports betting falls under their jurisdiction. This split in rulings creates a precarious legal landscape, as indicated by the NFL in its amicus brief.
New Jersey has urged the Supreme Court to take the case for a definitive ruling, while the CFTC insists that it has exclusive authority over the exchanges it regulates, including Kalshi and Polymarket, overriding state powers.
In addition to the NFL, former Senator Chris Dodd, who authored the Dodd-Frank Act, has voiced opposition to the CFTC's stance. Dodd described himself as "uniquely qualified" to address this issue and clarified that his legislation was never intended to authorize nationwide sports betting through derivatives markets or to undermine state and tribal gaming regulations.
Gensler, who previously led the CFTC during the implementation of Dodd-Frank, also criticized the current chairman's position. He stated that there was never an intention to transfer jurisdiction over sports betting from the states to the CFTC. Gensler noted, "When Congress amended the [Commodity Exchange Act] through Dodd-Frank, it was addressing the causes of the recent financial crisis, not undoing federal policy against sports betting and displacing traditional state and tribal regulation."
The NFL's filing argued that the CFTC is not enforcing standards as stringent as those imposed by state regulators. The league maintains that federally regulated firms lack the rigorous oversight of state gaming authorities. Since the introduction of state-regulated betting on football, the NFL has prioritized maintaining game integrity and protecting fans as legal sports betting expands across states.
The NFL contends that the CFTC's oversight has several shortcomings, including allowing betting that can be manipulated by individual players, permitting individuals under 21 to place bets, and lacking adequate staffing to monitor the markets effectively. In response, the CFTC stated that it has engaged with the NFL regarding its rulemaking agenda and policy priorities since day one. The agency described the NFL's choice not to establish a cooperative arrangement as "unfortunate."
In its brief, the NFL insisted that the CFTC has adhered to a more lenient regulatory approach compared to state authorities, prompting the league to urge the Supreme Court for a swift resolution. The NFL warned, "Billions of dollars will be bet on NFL games through prediction markets each season, and any delay from the court will result in increasing consumer harm and risk to game integrity."