NFL Urges Supreme Court to Classify Prediction Markets as Gambling Apps

The National Football League is advocating for the Supreme Court to classify prediction markets as gambling applications. In an amicus brief supporting a legal challenge initiated by New Jersey and 39 other states, the NFL argued that platforms offering sports-related bets function as gambling operations and should be subject to similar regulations.

According to the league, football-related trading on prediction markets reached $1.8 billion on the first Sunday of the season, representing more than half of the total trading volume on these platforms. The NFL's stance aligns with efforts by New Jersey and other states to impose stricter oversight on prediction markets like Kalshi and Polymarket, including an age minimum of 21 and state-level taxation, mirroring rules for traditional gambling establishments.

Currently, these platforms are regulated as securities by the Commodity Futures Trading Commission (CFTC). Critics contend this classification allows them to sidestep gambling regulations, taxes, and penalties, while also permitting individuals as young as 18 to place bets. The NFL stated it does not oppose prediction markets but believes state-level regulation is more appropriate, citing concerns about insider trading and market manipulation.

The league expressed worries that participants could intentionally influence outcomes, such as a kicker missing a field goal or a receiver fumbling a pass, to affect specific market predictions. Bets concerning injuries and officiating are also viewed as vulnerable to insider trading, the NFL noted. The league supports a minimum age of 21 for participants, consistent with standard sportsbook rules.

A spokesperson for Kalshi disputed the NFL's claims, stating that the company has attempted to engage with the league without success. The spokesperson asserted that Kalshi's integrity is paramount and highlighted partnerships with other major sports leagues like MLB, NHL, and others. Kalshi also pointed to the CFTC's active oversight and rule-making processes, which they believe address the NFL's concerns and are backed by a federal enforcement system protecting substantial market transactions.

The involvement of major sports leagues in prediction markets is divided. The MLB, Major League Soccer, and UFC have partnerships with Polymarket, while the NHL collaborates with both Polymarket and Kalshi. The NBA, PGA, and NFL have not entered into such agreements, with the NFL maintaining an advertising ban on such platforms.

Commissioner Roger Goodell has previously stated the NFL's primary concern is safeguarding the integrity of the game, suggesting a patient approach to involvement with prediction markets. Federal appeals courts have issued conflicting rulings on whether these markets fall under state or federal jurisdiction.

New Jersey's legal challenge aims to overturn an appellate court decision that favored federal oversight, arguing this has created a national conflict between state and federal authorities. New York Attorney General Letitia James has also filed separate lawsuits against Polymarket and Kalshi, accusing them of operating illegal gambling businesses.

Kalshi and Polymarket have gained significant popularity since their respective launches in the US. These platforms allow users to wager on a wide range of events, from sports and politics to pop culture. However, they have faced scrutiny due to reported instances of insider trading, with government employees and business insiders allegedly profiting from betting on non-public information. Notably, former Rep. George Santos was banned by Kalshi for allegedly profiting from betting on his own attendance at the State of the Union address. Additionally, a U.S. Army officer was charged for allegedly using classified information to make substantial profits on Polymarket.

Both Kalshi and Polymarket have implemented policies aimed at preventing insider trading. The NFL did not immediately respond to requests for comment.