At a Glance

• Prediction markets are expanding rapidly and cannot be ignored. New sports-focused prediction markets are surging in popularity and operate differently than the familiar state sports-betting frameworks. Gaming regulatory safeguards designed to address the state frameworks may not address the requirements of federal rules, giving rise to the need for new policies and procedures focused on federal regulations.
• The regulatory landscape is subject to change. Federal versus state oversight of sports-focused prediction markets is still being litigated (potentially reaching the US Supreme Court). Waiting for complete clarity before establishing new policies and procedures introduces risks to sports leagues and teams.
• In the face of uncertain regulation, some leagues and clubs are negotiating voluntary integrity agreements, data sharing, and monitoring arrangements. Some leagues and clubs have also advocated for new regulatory limits on prediction markets. 
• Many sports executives consider prediction markets, like sports betting, to be a present integrity issue. They seek to conduct internal risk assessments; update codes of conduct, policies and training to cover these new markets; and explicitly address event contract trading in compliance and integrity programs (similar to traditional bets). 
• It’s also wise to seek specialized advice (e.g., from legal counsel or integrity experts) to tailor your risk mitigation, policy updates, and regulatory monitoring to your organization’s unique needs.

Introduction

For years, sports leagues and teams worked with state regulators within the legalized sports betting framework. Now prediction markets operate pursuant to a different legal and regulatory structure. Unlike state-regulated sportsbooks, sports-based prediction markets are governed by federal commodity derivatives laws, which take a markedly different approach to market, product, and customer regulation. In response to that distinction, many leagues and teams have reviewed and revised their policies and procedures to address the integrity of the games in light of these markets.

Prediction markets have existed in various forms for decades, but sports-related event contracts are new—and growing rapidly. Global prediction market trading volume rose from under $16 billion in 2024 to nearly $64 billion in 2025, with sports contracts accounting for more than 80% of that activity. Super Bowl Sunday alone generated more than $1 billion in trading volume on a single market, with contracts spanning game outcomes, player props, halftime entertainment, and even advertiser predictions. Market analysts now estimate the US sports-related event contract market could reach $1.1 trillion in annual volume.

Leagues and teams have taken notice, but their responses have been inconsistent. The NFL and NCAA have asked regulators to pause or restrict certain prediction market offerings until comprehensive integrity protections are in place. MLB initially asked the Commodity Futures Trading Commission (CFTC or Commission) to impose sports-betting-style safeguards on prediction markets, then pivoted to select an exclusive official prediction market exchange and sign a first-of-its-kind memorandum of understanding (MOU) with the CFTC to create an integrity and information sharing framework. The NHL and MLS have entered multiyear licensing deals with prediction market platforms, securing integrity commitments in exchange for official data and intellectual property, and the NHL has also announced an MOU with the CFTC focused on integrity and information sharing with regard to hockey‑related event contracts. Every league is moving, but not in the same direction.

This alert provides a practical guide for sports executives—at the league, team, and ownership levels—navigating this fast-moving space, including:

1. how prediction markets work and why they matter for your organization; 
2. a survey of emerging league and regulatory responses; and
3. practical steps your organization can take now in an environment that is still taking shape. 

How Prediction Markets Work

Prediction market platforms are registered with and subject to the jurisdiction of the CFTC as designated contract markets (DCMs). Sports‑related event contracts generally operate as swaps with a binary payoff structure dependent on the occurrence or nonoccurrence of the underlying event. For example, a sports‑related event contract might allow participants to trade on whether a particular team will win a game, with the contract paying out if the specified outcome occurs and expiring worthless if it does not. 

At first glance, these contracts might appear to be economically equivalent to a typical moneyline bet (i.e., a wager on the outright winner of a game or an event). But the CFTC has taken the position that sports-related event contracts are swaps subject to the CFTC’s exclusive jurisdiction under the Commodity Exchange Act (CEA). They maintain that the CEA’s definition of “swap” is broad, covering “any” agreement dependent on the occurrence or nonoccurrence of an event associated with a potential financial, economic, or commercial consequence. The CFTC stated its position in a February 2026 amicus brief to the US Court of Appeals for the Ninth Circuit, asserting that when Congress has wanted to exclude specific products from the Commission’s jurisdiction, it has done so explicitly.

The CFTC’s position has important practical consequences for sports executives. Oversight of sports-related event contracts turns on the federal obligations applicable to prediction market platforms that are DCMs under the CEA and CFTC regulations. DCMs must comply with the CEA’s 23 Core Principles for DCMs, which, among other things, prohibit listing contracts readily susceptible to manipulation, require surveillance and enforcement capacity to prevent manipulation, and require rules promoting fair and equitable trading.¹ The CFTC’s regulations also prohibit fraudulent or manipulative trading activity and require DCMs to implement controls that protect traders from unfair and noncompetitive practices.² While the DCM, as a self-regulatory organization, serves as the first line of defense, the CFTC retains full regulatory and enforcement authority. As discussed below, the CFTC has also recently reminded DCMs that its anti-fraud and anti-manipulation authority applies to conduct such as fraud, manipulation, and certain forms of misuse of confidential information in connection with listed contracts.

The legal frameworks governing sports betting and prediction markets differ in important ways. In the state-regulated sports-betting model, integrity protections are often expressly imposed by statute or regulation and enforced through licensing, auditing, and direct gaming-regulator oversight. In contrast, the laws and regulations governing prediction markets impose more general obligations, requiring DCMs—as self-regulatory organizations—to design, implement, and enforce platform-level rules that satisfy those obligations. This approach is consistent with the CFTC’s long-standing “principles-based” regulatory regime, which allows its rules to apply to a wide range of products, including agricultural commodity derivatives, financial derivatives, and prediction markets.

Some prediction market platforms have adopted specific sports-related integrity controls, such as enhanced internal guardrails designed to preemptively block insiders from trading in markets tied to leagues with which they are affiliated; partnership with an independent integrity monitor to detect and report bad actors;³ participant eligibility criteria; and cooperation commitments.⁴

Even so, the structural differences in the applicable legal frameworks governing sports betting and prediction markets raise important questions for sports organizations about how to maintain consistent, integrity-focused standards.

How Leagues and Teams Are Responding

Sports organizations are pursuing a range of approaches with respect to sports-focused prediction markets.

Objections and Calls for Limits

Certain sports organizations have voiced concerns about sports-focused prediction markets through public statements, regulatory submissions, and correspondence with federal authorities. They have argued that certain offerings may be easily manipulated or involve sensitive subjects such as injuries or officiating. The NCAA, for example, has stressed the vulnerability of student-athletes and sought more comprehensive safeguards before permitting college sports event contracts, including age restrictions, integrity monitoring, regulatory oversight, and prop market restrictions.⁵

League concern with sports-related event contracts is not new. In December 2020, for example, a DCM filed a self-certification with the CFTC to list NFL futures contracts based on the moneyline, point spread, and total points for individual games. The CFTC stayed the certification and opened a public comment period, during which the NFL and other sports organizations raised concerns. Commission staff ultimately proposed an order finding that the contracts involved gaming and were contrary to the public interest; the DCM withdrew its submission just before the CFTC was set to decline the product certification.⁶

In March 2026, the NFL sent letters to prediction market operators urging them to refrain from offering contracts on occurrences that the NFL refers to as “objectionable bets,” including contracts on easily manipulated outcomes (e.g., whether the first pass is incomplete), officiating decisions, events knowable in advance, player injuries, and other “inherently objectionable” subjects.⁷ Similarly, the NFL sent a letter to the CFTC on May 15, 2026, requesting that contracts on certain events be prohibited.⁸ Further, the NFL requested that the CFTC impose heightened age restrictions and more robust information sharing and enforcement mechanisms.

Regulatory Response

Against this backdrop, the CFTC has signaled increased attention to prediction markets, particularly with respect to market integrity. On February 25, 2026, the CFTC’s Division of Enforcement issued an advisory stating that it “has full authority to police illegal trading practices occurring on any DCM.”⁹

On March 12, 2026, the CFTC’s Division of Market Oversight issued a Prediction Markets Advisory emphasizing that DCMs must comply with existing statutory core principles, including the obligation to list only contracts that are not readily susceptible to manipulation.¹⁰ The advisory highlights that sports‑related event contracts may present particular integrity considerations and underscores the importance of robust product review, surveillance, and monitoring. It also reflects the CFTC’s view that DCMs should take proactive steps—including engagement with relevant sports organizations—to address manipulation risk as prediction markets continue to develop.

The same day, the CFTC published an Advanced Notice of Proposed Rulemaking seeking public comment on whether to amend or issue new regulations governing prediction market event contracts.¹¹ The public comment period closed on April 30, 2026, with over 3,500 responses filed.

Additionally, on March 31, 2026, CFTC Director of Enforcement David Miller outlined the Commission’s enforcement priorities, starting with “insider trading (including in the prediction markets).”¹² Director Miller emphasized the CFTC’s expectation that market participants cooperate with enforcement investigations and signaled that prediction markets will remain a priority area for the Commission’s enforcement program.

CFTC Chairman Michael Selig reinforced these themes in his April 2026 testimony before the House Agriculture Committee, underscoring the Commission’s commitment to robust oversight of prediction markets and the importance of integrity protections for sports-related event contracts.

The CFTC has also moved to defend its jurisdictional authority in court. In February 2026, the Commission filed an amicus brief in the Ninth Circuit, representing its first formal judicial intervention in prediction market litigation. As we noted in a prior alert, the CFTC argued in that filing that event contracts are swaps subject to the CFTC’s exclusive jurisdiction and that state gambling laws are preempted as applied to contracts traded on CFTC-registered exchanges. When Arizona became the first state to file criminal charges against a prediction market operator, the CFTC and the Department of Justice sued to block the prosecution and a federal judge temporarily barred Arizona from enforcing its gambling laws against the platform. The CFTC has since filed similar complaints against Connecticut, Illinois, New York, and Wisconsin, each of which had taken legal action against CFTC-regulated entities.

Meanwhile, federal courts remain divided: The Third Circuit ruled in Kalshi’s favor against New Jersey, holding that the CEA preempts state gaming laws, but the US District Court for the District of Maryland denied Kalshi’s preliminary injunction, finding that Congress lacked a “clear and manifest purpose” to preempt state gambling laws when it enacted the Dodd-Frank Act.¹³ That appeal is now before the Fourth Circuit. As was the case in New Jersey, the District of Arizona found that the CEA preempts state gaming laws, concluding that granting a preliminary injunction in favor of the CFTC was necessary to “hold the State to the limits Congress set on its authority.”¹⁴

Tribal interests have pursued litigation as well. In Ho-Chunk Nation v. Kalshi, a Wisconsin federal court held that the Ho-Chunk Nation could proceed under the Indian Gaming Regulatory Act based on Kalshi’s alleged offering of sports-related event contracts on Indian lands without authorization under the Nation’s Tribal-State Compact and gaming ordinance. That court also found the Nation likely to succeed on the merits, underscoring that the federal preemption question is not limited to state gaming regulators.¹⁵

Currently, there are more than two dozen cases pending in state and federal district courts and on appeal between prediction market platforms and the CFTC on one side, and state and tribal governments on the other. A bipartisan coalition of 41 state attorneys general recently urged the CFTC to reaffirm that jurisdiction over sports gambling belongs to the states since, according to the coalition, “[s]ports event contracts fall outside the CFTC’s jurisdiction.”¹⁶ If a circuit split develops as more states enter the fray and courts provide their views on the scope of the CEA, the litigation could be headed for the Supreme Court. The outcome might significantly reshape the regulatory landscape for prediction markets and the sports organizations navigating it.

Engagement and Negotiated Integrity Guardrails 

To address integrity concerns in the near term, sports organizations have engaged directly with prediction market platforms, including through formal partnerships. To date, MLB, the NHL, MLS, and the UFC have entered such arrangements. These deals generally allow platforms to use official team logos, and names as well as other league intellectual property in exchange for voluntarily implementing integrity controls. Individual teams and ownership groups may also consider whether direct engagement with prediction market platforms—or internal policy updates—may be warranted even before league-level action.

The NHL was the first major US league to enter into agreements with prediction markets.¹⁷ These agreements granted the platforms access to official NHL data and league logos in exchange for certain consumer protection measures and brand visibility during game broadcasts.¹⁸

On May 21, 2026, the CFTC and the NHL announced that they signed an MOU intended to protect the integrity of professional hockey and maintain fair and transparent prediction markets. The MOU reflects an agreement in principle to share information confidentially and coordinate on integrity issues with regard to hockey‑related event contracts listed on CFTC‑regulated exchanges, including by designating representatives to communicate regularly.¹⁹

In January 2026, MLS announced a multiyear partnership with Polymarket as its official and exclusive prediction market partner for MLS and its All-Star and championship events.²⁰ As part of this agreement, Polymarket agreed to provide independent monitoring of trading activity and coordination between the league and Polymarket, as well as commercial benefits such as interactive, data-driven features intended to deepen fan engagement. 

In March 2026, MLB entered into a formal partnership with Polymarket and executed a first-of-its-kind MOU with the CFTC. The arrangements facilitate information sharing and coordination regarding baseball-related prediction markets and are intended to enable earlier detection of potential integrity risks, improve monitoring, and align contract design more closely with league standards.²¹

The NFL and the NBA, on the other hand, have not entered into similar arrangements with prediction market exchanges or the CFTC. 

Looking Ahead

There is a difference in the regulatory framework for state-regulated sports betting and federally regulated prediction markets. Litigation continues, additional regulatory guidance is likely, and Congress is considering potential legislation. Sports executives may consider steps to reduce risk and shape outcomes, including by:

• Reviewing internal policies, procedures, compliance programs, and training to address prediction markets. Players, coaches, and staff should understand that trading event contracts—or sharing nonpublic team information that could affect those markets—can create integrity and reputational risks, as well as potential enforcement exposure similar to that of traditional betting activity.
• Proactively engaging to help shape integrity standards. To impact any future market-design restrictions and integrity safeguards in a way that is practical for their sport, sports organizations may seek to engage with league offices, and leagues may in turn seek to engage with the CFTC, lawmakers, and prediction market platforms. 
• Coordinating and sharing information. Similarly situated sports teams, ownership groups and investors may seek to share intelligence about integrity standards as they develop, as well as regulatory and litigation developments and responses. 

WilmerHale is actively monitoring developments in this area and working closely with sports and gaming clients in evaluating these complex issues. For questions about the regulatory landscape of prediction markets, and for advice on how to navigate it, please contact the authors or their colleagues in WilmerHale’s Sports & Gaming Practice.