As the NBA continues discussions with a US federal derivatives regulator regarding an integrity framework for prediction markets, the league submitted public comments this week in connection with a comment period for proposed rulemaking.
In a four-page letter submitted to the US Commodity Futures Trading Commission, the NBA reiterated its position that sports-event contracts should be subject to comprehensive regulations aimed at safeguarding the integrity of the sport. Dated 30 April, the letter from Dan Spillane, the NBA’s assistant general counsel for league governance & policy, was submitted on the final day of a public comment period for Advance Notice of Proposed Rulemaking regarding prediction markets.
“There is no higher priority for the NBA than protecting the integrity of our games and preserving public confidence in our league and in our sport,” Spillane wrote.
The NBA submitted the letter days after Commissioner Adam Silver confirmed that the league has held discussions with the CFTC on a potential integrity framework for prediction-market trades involving basketball. As with several other professional leagues, the NBA’s willingness to potentially partner with the CFTC would represent a departure from its previous stance on prediction markets.
An emphasis on data
In general, sports event contracts appear on Designated Contract Markets (DCMs), otherwise known as regulated exchanges that list futures, options and swaps for trading. Spillane favours requirements on DCMs that would block athletes, along with game officials and other league and team personnel from trading any contracts on their league’s games and events.
Furthermore, he stressed that DCMs should be required to cooperate with integrity-related investigations conducted by sports governing bodies throughout the nation. For investigations on suspicious trading, the NBA has urged the CFTC to require DCMs to provide information to an inquiring league regarding the identity of specific traders.
Earlier this week, a U.S. Army Special Forces soldier who won approximately $400,000 on a Polymarket trade concerning the ousting of Venezuelan President Nicolas Maduro, pleaded not guilty to using classified intel on the transaction. The trade raises concerns as an archetype for the perils of insider trading. On Thursday, Polymarket announced that it has selected blockchain data platform Chainalysis to enforce its market integrity rules across the DCM’s DeFi platform.
Shortly after the historic PASPA decision, Spillane canvassed the nation, informing state legislators on the importance of using official league data throughout the bet settlement process. In his letter, Spillane referenced officially-verified league data on several occasions. In order to maintain consumer confidence, DCMs should be required to use official league data to settle sports-related contracts, he wrote.
Silver encouraged by CFTC’s emphasis on integrity
Speaking at an Associated Press Sports Editors event on 27 April, Silver lauded the CFTC for working with the leagues to priortise integrity. Although the NBA has yet to reach an integrity framework with the agency, Silver noted that a potential partnership would likely resemble a Memorandum of Understanding the CFTC signed with Major League Baseball in March.
Once complete, the framework could pave the way for the NBA to potentially sign a marketing deal with a leading prediction market operator such as Kalshi or Polymarket.
“We aren’t necessarily adverse to entering into licensing deals with them,” Silver said. “But again, the league’s number one role is to ensure the integrity of the competition. And that’s what we’re most focused on right now.”
Silver made the comments on the same week that two NBA figures appeared in Brooklyn federal court for matters related to a comprehensive illegal betting scandal. On Monday, Assistant US Attorney Kaitlin Farrell told a judge that prosecutors will likely file additional charges against former Miami Heat guard Terry Rozier. In an appearance before US District Judge LaShann DeArcy Hall, Rozier learned that he could face charges on honest services fraud and bribery in sports, later this month.
Rozier is facing charges in US vs. Earnest, a case involving a scheme to defraud several leading US sportsbooks. Damon Jones, another defendant in the case, pleaded guilty on Tuesday to two counts of conspiracy to commit wire fraud. Jones, a former unpaid assistant with the Los Angeles Lakers, admitted to providing inside information to a group of bettors to defraud a sportsbook out of money. Jones is scheduled to be sentenced next January.
Matt Rybaltowski
Matt is primarily responsible for long-form feature coverage on complex sports betting scandals. He also provides coverage on finance, M&A and other technological developments.
