This week was a busy week on the prediction markets front. When is it not?
Even before the U.S. Court of Appeals for the Ninth Circuit published its 3-0 decision in opposition to sports event contracts on Friday, some of this week’s major storylines included:
- Connecticut suing Kalshi in state court after a federal judge denied Kalshi’s requests to stop the state’s enforcement
- DraftKings facing a class-action lawsuit in California over its Predictions product
- Gaming lawyers voicing their incredulity at the Commodity Futures Trading Commission’s defiance of court orders
What else happened in the last few days? As always, we sum up some of the notable developments in ‘Prediction Markets Weekly’.
Kalshi bites back at NYT over Trump Jr. claims
There was talk of political interference this week as the New York Times reported that Kalshi and Polymarket advisor Donald Trump Jr. had a word in the ear of Republican state attorneys general to ask them not to go after prediction markets.
The Times said that, while speaking at an event in New Orleans, the president’s son claimed that states are being misled by gambling companies who want to protect what he called their “monopolies” on gaming.
Kalshi responded to the story by accusing the NYT of ignoring responses it got from the company “that didn’t align with the narrative that was being pushed,” and by publishing a blog post that was positioned as an attempt to set the record straight. CNBC quoted a Kalshi spokesperson as labeling NYT’s reporting as “dishonest implications.”
The CFTC has sued nine states this year in a bid to protect its registrants’ sports betting-style prediction markets. All nine of those states have a Democratic governor and all of them except Kentucky have a Democratic AG.
Numerous Republican attorneys general, though, have signed onto amicus briefs supporting states’ gaming rights in prediction markets-related litigation in the last year. A total of 44 state AGs wrote to the CFTC in July to argue that the federal agency cannot regulate sports event contracts.
California preening as five MLB teams sign up Kalshi
Major League Baseball has been the league most willing to align itself with prediction markets. MLB has a league-wide official partnership with Polymarket, which also signed a deal with the New York Yankees, while new industry entrant Novig paired up with the New York Mets.
This week, Kalshi announced that it is now an official prediction market partner of five other MLB franchises:
- Atlanta Braves
- Boston Red Sox
- Los Angeles Dodgers
- San Diego Padres
- San Francisco Giants
The deals give Kalshi prominent visibility and reach, including in-stadium signage, online and in-person activations, and the ability to provide special offers to customers. The Dodgers partnership also includes renaming the stadium’s Gold Glove Bar after the company.
Notably, three of those deals are with teams in California, where not only is online sports betting illegal but tribal gaming entities have pushed back incessantly against sports event contracts, extending that fight to the courts. The Dodgers already have a longstanding partnership with one of California’s most prominent tribes, the Yuhaaviatam of San Manuel Nation. The team’s SVP of Global Partnerships called Kalshi’s prediction markets “an exciting new category” for the Dodgers to explore.
Meanwhile, Georgia also does not allow sports betting, while Massachusetts obtained an injunction against Kalshi from a state court in January that is currently under review by a higher court.
NFL injury markets: to offer or not to offer?
Unlike MLB, the NFL has not partnered with prediction markets, and does not seem likely to do so in the immediate future.
But some football-related news caught the eye this week, as Kalshi began offering player availability markets earlier in August and Polymarket self-certified similar contracts this week.
The main reason people picked up on this is that injury-related markets are one of the few subcategories of sports event contracts that CFTC Chairman Michael Selig flagged as potentially problematic in the agency’s proposed rulemaking for prediction markets.
The CFTC’s Public Interest Determinations published in March specifically noted that event contracts related to player health “raise serious public interest concerns”, citing dangers of creating “perverse financial incentives that could encourage or facilitate physical harm to athletes” as well as the potential for insider trading.
“It would be likely that event contracts that explicitly settle solely by reference to the severity, occurrence, or medical diagnosis of an injury sustained by a specific player would be found to be contrary to the public interest,” it summarized.
The CFTC’s website suggests that Polymarket withdrew its NFL availability filings soon after listing them. Kalshi still offered contracts on those markets as of the time of writing.
Novig ditches American betting odds
Earlier this month, the CFTC warned its registered prediction market operators that it might not be such a good idea to use American-style betting odds like +100 or -110 for their sports markets, suggesting that such labeling would be “likely to mislead market participants about the nature of the transaction into which they are entering.”
It seems that one of the new kinds on the prediction markets block took that to heart.
Novig co-founder Jacob Fortinsky said on Thursday that his firm has ditched American odds and will instead use only percentages. He said on X that moving away from sportsbook-style odds “is another step toward building a product that looks like what it is: a financial market.”
Essentially, it may all be part of the plan to try to draw a firmer line of distinction between sports betting and sports trading, given that is a fundamental issue underpinning the court battles that are taking place across the U.S.
Sportradar greatly expands deal with Polymarket
Among its various other partnerships, Polymarket has official data agreements with two of the biggest companies in that field, Genius Sports and Sportradar. This week, the latter firm announced it has expanded that collaboration to allow Polymarket to use Sportradar’s sports data, streaming, and integrity services across more than 20 sports leagues and competitions globally.
Under the U.S.-facing agreement, the expansion added major leagues such as:
- German Bundesliga soccer
- Euroleague Basketball and the Chinese Basketball Association
- Tennis Grand Slam tournaments
Polymarket and Sportradar already worked together on leagues including MLB, the NHL (another Polymarket partner), Major League Soccer (MLS), ATP Tour tennis, and Ultimate Fighting Championship (UFC).
Sportradar CEO Carsten Koerl said that prediction markets “represent a compelling adjacent growth opportunity” and that his company aims to provide “the foundational infrastructure” underpinning those offerings.
Earlier this month, Polymarket also expanded the breadth of its partnership with Genius Sports.
