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Although California sports betting remains illegal, prediction markets have given fans of teams like the UCLA Bruins, USC Trojans, Stanford Cardinal, and Cal Golden Bears a chance to place money on the outcomes of games.
The NCAA, however, is calling for prediction market (PM) firms to put the brakes on college sports offerings.
On Jan. 14, NCAA President Charlie Baker sent a letter to the Commodity Futures Trading Commission (CFTC), the regulatory body overseeing PM operators. In it, he asks the agency to establish standards around college sports prediction contracts and to halt the offerings until the standards are in place.
NCAA seeks better monitoring, more protections
According to the NCAA, Baker told the CFTC:
“Just as we need Congress to stabilize eligibility, we need federal regulators to stabilize these markets. The answer cannot be the status quo. We need one set of fair, transparent standards.”
Baker called for “a robust system of safeguards and detailed its willingness to work with the regulatory body to assist with developing the necessary guardrails to protect student-athletes and college sports,” the NCAA reported.
Those include:
- Age and advertising restrictions
- Enhanced integrity monitoring
- Prop market prevention
- Anti-harassment measures
- Harm-reduction resources
The letter also expressed concerns about the lack of what it called “robust integrity monitoring” of PMs, contrasting it with the systems that sportsbook operators have set up to flag suspicious betting.
“While it appears that some monitoring occurs in prediction market trading, sport integrity monitoring is nuanced and requires heightened levels of review that don’t exist in many prediction markets. For example, tracing the geolocation of bettors is often critical data in determining a sport integrity matter but doesn’t appear to exist on prediction market platforms. There also don’t appear to be requirements for prediction market operators to report integrity concerns to other operators through a licensed intermediary to protect consumers.”
Kalshi wins first battle in California
A handful of PM companies – including Kalshi, Polymarket, DraftKings Predictions, and FanDuel Predicts – are operating in California.
Kalshi is currently involved in a legal challenge from three California tribes, which contest the PM company’s right to operate under the Indian Gaming Regulatory Act (IGRA).
Kalshi, however, cleared an initial hurdle when a preliminary injunction was denied by a US District Court judge. In the ruling, the judge determined that the Unlawful Internet Gambling Enforcement Act, and not IGRA, would apply to Kalshi’s activities in the state.
