CFTC, NBA Sign MOU to Oversee Prediction Markets, Prevent Insider Trading
Summary
- The U.S. CFTC and the NBA signed an information-sharing MOU aimed at ensuring fairness in sports prediction markets.
- The two sides will address insider trading and market oversight issues by sharing information that could affect the integrity of professional basketball games.
- The CFTC argues that products traded on sports prediction markets qualify as financial products, while some state governments have filed lawsuits arguing they are effectively gambling and should be regulated under state law.
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The Commodity Futures Trading Commission and the National Basketball Association are working together to help ensure the integrity of sports prediction markets.
Reuters reported on October 26 that the CFTC and the NBA signed a memorandum of understanding to share information related to sports prediction markets. The agreement was signed by CFTC Chairman Michael Selig and NBA Commissioner Adam Silver.
The two sides agreed to share information that could directly affect the integrity of professional basketball games. The move comes as concerns have grown over insider trading and market oversight surrounding sports betting.
More than 30 people were arrested last year during a federal investigation into illegal gambling. The NBA also handed down a lifetime ban in a related case.
The CFTC argues that contracts traded on sports prediction markets qualify as financial products and therefore fall under its jurisdiction. Some U.S. state governments, by contrast, have filed lawsuits arguing that such markets effectively amount to gambling and should be regulated under state law.
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