As prediction markets run by the likes of Polymarket and Kalshi operate more and more like sportsbooks (to the chagrin of the sportsbooks that don’t operate prediction markets), regulation is needed. The Commodity Futures Trading Commission has commenced the process of creating some rules for sports predictions — but apparently not many.
Via David Purdum of ESPN, the CFTC released a 267-page proposal on Wednesday with comprehensive potential regulations regarding the industry. As to sports, the CFTC’s proposal “would leave the door open for most but not all sports-related trades.”
The overriding question is whether a given prediction is “contrary to the public interest.” This includes markets regarding injuries, officiating decisions, and fights during games.
This leaves in-game props. As explained by Bill King of Sports Business Journal, the proposal includes “a ban of pitch-by-pitch micro markets in baseball but did not touch more popular player prop bets across all sports.”
The article later mentions that prediction markets on the outcome of specific plays also would be banned.
The CFTC has not proposed a ban on prop predictions arising from player performance, under the rationale that manipulation by insiders would be “detectable.” But even if the manipulation is “detectable,” the possibility for manipulation lingers. For now, the CFTC isn’t inclined to shrink the offerings based on such issues.
“We believe these markets are going to exist, whether it’s in the United States or elsewhere,” CFTC chairman Michael Selig told King. “So if we’re going to have them here in the United States, we want to set clear rules of the road to protect investors, to protect consumers and to make sure that the United States sets the gold standard for prediction markets.”
Gold is the key word. More prediction markets mean more predictions being made mean more money for the companies that offer prediction markets.
Whatever the vehicle for betting, the federal government — and the governments of most states — want to promote as much betting as possible. Which will further enrich those who facilitate the betting, regardless of the consequences for those who do the betting.
As Warren Buffett has said, sports betting is a “tax on stupidity.” Implicit with our inalienable rights is the freedom to do dumb things. Which, when it comes to betting, is being taken to the extreme in an environment of personal fiscal irresponsibility that feels less like the wisdom of Warren Buffett and more like the misadventures of Biff Tannen.
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