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Major League Baseball (MLB) has become the first U.S. sports league to step into the debate surrounding sports prediction markets, expressing concerns that federal regulations on financial trading could prohibit information sharing and threaten game integrity.
The league submitted comments to the Commodity Futures Trading Commission (CFTC) on Friday (March 7) as part of the CFTC’s process of holding a public roundtable on the expansion of prediction markets in the United States.
In the letter, Bryan Seeley, MLB’s executive vice president of legal and operations, said as sports betting has expanded in recent years, the league has worked to incorporate integrity protections into states' sports-betting laws, built relationships with gaming regulators in those states, and established partnerships with sportsbook operators to facilitate information-sharing.
“These collective efforts have helped MLB detect, and in many cases prevent, violations of its internal sports betting policies and uphold game integrity,” Seeley said.
The sports-event contracts that have been offered recently by exchanges, such as Kalshi and Crypto.com, “resemble sports betting,” Seeley said, and although the contracts that have been offered to date do not carry the same integrity risks as proposition bets or traditional single game wagers, MLB expects that “equivalent offerings will arrive soon”.
“As the resemblance between sports event contracts and traditional sports betting markets continues to grow, so too does the need to replicate the integrity and consumer protections that exist at the state level,” Seeley said. “Currently, those protections are lacking.”
One particular issue is that MLB is not aware of any regulations that would require exchanges to notify leagues of any concerning wagering trends indicating a threat to game integrity, or to cooperate with league investigations into player, coach or umpire misconduct.
“MLB has been advised that some exchanges and brokers take the position that they are not even permitted to share information with MLB under current CFTC regulations,” Seeley said.
The MLB executive did not cite any specific CFTC rules deemed to prevent information-sharing, but federal law and regulations generally prohibit employees from disclosing information to prevent risks of insider trading.
In his letter, Seeley said that MLB “has supported legal sports betting at the state level based on robust regulation and relationships in which sports leagues are viewed as partners and integrity of competition is considered paramount”.
“If the CFTC decides to permit sports event contracts, this same integrity framework should be applied,” he added.
The CFTC has yet to set a date for its proposed roundtable on the topic of prediction markets nor set its participants. A review remains in progress of the legality of the sports-event contracts, which is expected to conclude next month.
