NFL & Sports Betting: Congress Addresses Prediction Market Concerns

The NFL noted that prediction markets operate in all 50 states, while sportsbooks are only present in 39 states and the District of Columbia.

The NFL raised concerns about the growth of prediction markets before a congressional committee on Thursday, saying the league is especially concerned about sports contracts being offered in states where traditional betting has not been legalized.

The league submitted written testimony to the House Agriculture Committee for a hearing on oversight of prediction markets by the Commodity Futures Trading Commission (CFTC), a federal agency. The supervision of prediction markets is a highly controversial legal issue. State gambling regulators, who oversee traditional sports books, are embroiled in legal battles in several states with major prediction market companies.

Prediction markets, which allow users to trade the outcome of events, including sports events, have increased in popularity over the past year. The NFL noted that prediction markets operate in all 50 states, while legal sportsbooks are only present in 39 states and the District of Columbia.

“We are especially concerned that several sports-related futures contracts have been launched nationwide, including in jurisdictions where sports betting has not been legalized,” NFL executive vice president Jeff Miller wrote in testimony. “These contracts fall outside the purview of state regulatory authorities and the safeguards they impose on the industry.”

Miller warned that amounts wagered on prediction markets could far exceed those at sportsbooks, creating “substantially greater risks to the integrity of the competition.”

“In each of these state-regulated markets, state regulators and legislators closely monitor betting activity and, in collaboration with professional sports leagues, can determine what bets and betting levels are acceptable,” he wrote. “Such safeguards do not exist in prediction markets.”

Miller mentioned a prediction market that accepted trades on whether phrases like “concussion protocol,” “late hit” or “quarterback assault” would be mentioned during broadcasts of last weekend’s games.

“Congress and the CFTC should ban this and other types of objectionable betting, among the many consumer and integrity protections needed before sporting event contracts are legalized,” Miller wrote.

The newly formed Coalition for Prediction Markets, which represents many of the largest traders in the sector, refuted Miller’s testimony.

“This testimony is like saying the stock market has no rules,” a coalition spokesperson told ESPN in a statement. CFTC regulations on abusive or manipulative trading apply to prediction markets just as SEC regulations apply to the stock market. “This activity is strictly prohibited by both the CFTC and prediction markets, and we use various tools before, during and after trades to prevent illegal trading and take enforcement action when violations occur.”

Traditional sports betting operators including DraftKings, FanDuel and Fanatics, which are partners of the NFL, have announced the launch of prediction markets. The NHL and UFC recently signed collaboration agreements with prediction markets.

FanDuel and Fanatics declined to comment to ESPN. DraftKings, which was named the official sportsbook and odds provider of ESPN earlier this month, did not immediately respond to a request for comment.