Major League Baseball (MLB) has weighed in on the debate around sports event contracts with a letter to the U.S. Commodity Futures Trading Commission.
In the letter, Bryan Seeley, MLB’s Executive Vice President of Legal and Operations, emphasized that “protecting the integrity of competition is, and always has been, MLB’s top priority.”
MLB’s Concerns Over Sports Event Contracts and Integrity Risks
He has urged that the CFTC establish integrity safeguards should the proliferation of sports events contracts continue. In addition to prediction markets, online sweepstakes casinos, lottery couriers, and crypto betting are hot topics among state regulators.
The letter emphasizes that the MLB has worked to “(1) incorporate strong integrity protections in state sports betting laws and regulations, (2) establish partnerships with legal sportsbooks that facilitate information sharing for integrity purposes, and (3) build collaborative relationships with state-level gaming regulators.”
Further, MLB has invested significant sums in integrity monitoring services, educational programmes on sports betting, and other compliance initiatives. Seeley adds: “These collective efforts have helped MLB detect, and in my cases prevent, violations of its internal sports betting policies and uphold game integrity.”
It asserts that recent sports event contracts have resembled sports betting. Although the events contracts currently offered by companies such as Kalshi “do not carry the same integrity risks as prop bets or even single-game bets,” MLB, however, expects that equivalent offerings will arrive soon.
“As the resemblance between sports event contracts and traditional sports betting markets continues to grow, so too does the need to replicate the integrity and consumer protections that exist at the state level,” continues Seeley.
The letter asserts that currently safeguarding protections are sorely lacking, citing that exchanges and brokers would not have to notify the league of any potential threats to integrity. It also adds: “MLB has been advised that some exchanges and brokers take the position that they are not even permitted to share information with MLB under current CFTC regulations.”
Kalshi’s Sports Betting Model: A Legal Loophole or a Regulatory Threat?
The letter concludes: “MLB has supported legal sports betting at the state level based on robust regulation and relationships in which sports leagues are viewed as partners and integrity of competition is considered paramount. If the CFTC decides to permit sports event contracts, this same integrity framework should be applied.”
Kalshi has often advertised claiming it offers legalized sports betting in 50 states and has consistently hinted it will start offering proposition-style events markets in the near future.
It seemed a matter of time before regulatory backlash, and the state of Nevada was the first to bite. It ordered Kalshi to cease all operations in the State or risk facing civil and criminal charges for breaching the state’s gambling regulations.
Major League Baseball and its Relationship With Crypto
Major League Baseball has had a rocky relationship with crypto, in particular. In 2021, it signed a five-year partnership with now-defunct crypto derivative exchange FTX.
At the time, FTX CEO Sam Bankman-Fried tweeted “It’s not the only partnership we were considering, but the enthusiasm and creativity of the MLB team made it the one we were excited for.”
The former-CEO is now behind bars, but made headlines this week when he appeared on a YouTube interview with right-wing political commentator Tucker Carlson. As a result of the interview, which was not improved by the prison, Bankman-Fried has been sent to solitary confinement.
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