The NFL expressed its concern about the rise of prediction markets to a Congressional committee Thursday, stating that the league is particularly troubled by sports contracts being offered in states where traditional betting has not been legalized.
The league submitted written testimony to the House Committee on Agriculture for a hearing on oversight of prediction markets by the Commodity Futures Trading Commission, a federal agency. Oversight of prediction markets is a hotly contested legal issue. State gambling regulators, which oversee traditional sportsbooks, are locked in legal battles in multiple states with leading prediction market companies.
Prediction markets, which allow users to trade on the yes/no outcome of events, including sports, have increased in popularity over the past year. The NFL noted that prediction markets operate in all 50 states, while legal sportsbooks are in only 39 states and the District of Columbia.
“We are particularly troubled that several sports-related futures contracts have been launched nationwide, including in jurisdictions where sports betting has not been legalized,” Jeff Miller, an executive vice president for the NFL, wrote in the testimony. “These contracts fall outside the purview of state regulatory authorities and the safeguards they impose upon the industry.”
Miller warned that the amounts wagered on prediction markets could far exceed those at sportsbooks, creating “substantially greater risks to contest integrity.”
“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 wrote. “Those guardrails do not exist in prediction markets.”
Miller pointed to a prediction market accepting trades on whether phrases such as “concussion protocol,” “late hit,” or “roughing the passer” would be mentioned during game broadcasts last weekend.
“Congress and the CFTC should prohibit these and other types of objectionable bets among the many consumer and integrity protective measures needed before sports-related events contracts are legalized,” Miller wrote.
The newly-formed Coalition for Prediction Markets, which represents many of the largest operators in the space, disputed Miller’s testimony.
“This testimony is like saying the stock market has no rules,” a coalition spokesperson told ESPN in a statement. “The CFTC’s regulations on abusive or manipulative trading apply to prediction markets just like the SEC’s regulations apply to the stock market. This activity is strictly prohibited by both the CFTC and prediction markets, and we use a variety of tools before, during, and after people trade to prevent illegal trading and bring enforcement action when violations happen.”
Traditional sportsbook operators, including DraftKings, FanDuel and Fanatics, which are partners of the NFL, have announced they are launching prediction markets. The NHL and the UFC recently signed partnerships with prediction markets.
FanDuel and Fanatics declined 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.
