NFL says CFTC draft falls short as New York sues Kalshi for $36bn

NFL urges tighter controls on sports-event contracts

With Super Bowl 60 set for February, NFL executive vice president Jeff Miller described sports prediction products as "innovative" while stressing that the league needs clearer regulatory clarity before settling on a stance. In December testimony to the US House Committee on Agriculture, Miller said the league was "particularly troubled" that some contracts sit outside the "purview of state regulatory authorities and the safeguards they impose upon the industry."

The NFL's formal response to the CFTC arrived before the public comment period for the regulator's proposed sports-event contract rules closed on 27 July. The 267-page draft, released in June, outlines how the CFTC will judge whether event contracts involve unlawful activity or run contrary to the public interest. The league credited the draft with several productive aspects but argued it falls "significantly short" of what is needed to protect sports integrity and the fans who trade these markets.

The NFL is backing outright bans on micro-bets, player props and award markets, which it says a single player could potentially manipulate. It also wants stronger insider-trading controls and a registry of individuals banned from league-specific betting. "It is surprising that further common-sense integrity and consumer protection measures provided in the prior league comment letter were not adopted," the league wrote. The NFL, NBA and NCAA have jointly urged the CFTC to set a minimum age of 21 for event-contract trading; all three leagues have faced insider trading cases in the past 12 months.

Teams and regulators close ranks

The same week brought the first partnership between a Major League Baseball franchise and a prediction market exchange, with the New York Mets announcing a multi-year commercial deal with Novig on Thursday. It follows the April memorandum of understanding between the CFTC and MLB, which CFTC chairman Michael Selig said would help shield baseball-related markets from "fraud, manipulation, and other abuses." Selig also praised MLB commissioner Rob Manfred for his leadership on market integrity.

Matt Bakowicz, a professor at American University's Kogod School of Business and a former supervisor of DraftKings Sportsbook and Racebook operations at Foxwoods, told iGB that prediction markets "sit somewhere between finance, gaming, and fan engagement." That combination makes them attractive to teams, he said, but also explains why regulators are watching closely. As franchises build out entertainment businesses spanning sponsorship, media, gaming and real estate, the difficulty lies in making those pieces "fit together legally and strategically," he added.

Bakowicz also weighed in on the timing of the Mets deal, which came one day before New York Governor Kathy Hochul and Attorney General Letitia James unveiled their lawsuit against Kalshi seeking $36bn in compensatory damages. Steve Cohen's Metropolitan Park project - an $8.1bn joint venture with Hard Rock International featuring roughly 286,000 square feet of gaming space and an 18,000-square-foot retail sportsbook - has already faced reports of construction delays, and Cohen, a friend of Hochul, could be seen as hedging his bets. Bakowicz disagreed. "I see it as an owner pursuing multiple long-term business strategies that operate under different regulatory frameworks," he said.

On the field, the Mets entered Friday at 47-63, the second-worst winning percentage in the National League. Novig lists their season win total at 69.5 victories, while Kalshi gives the team a 4% probability of reaching the playoffs; the postseason market is not available on Novig. The Mets have failed to reach 70 wins only twice since 1996, with 66 wins in 2003 and a 26-34 mark in the pandemic-shortened 2020 season.

New York's case against Kalshi

Hochul and James argue that Kalshi's sports markets meet the legal definition of gambling because outcomes are "uncertain" and outside the control of the people entering the transactions. They also say Kalshi, by operating without a New York licence, has sidestepped the tax obligations placed on licensed casinos and sportsbooks. That revenue funds public schools, sports programs for underserved youth, and problem-gambling education and treatment. New York has collected roughly $3.5bn in tax revenue since mobile sports betting launched in 2022, and last year's $26.3bn handle led the nation, nearly $11bn more than Illinois. The American Gaming Association estimates that sports-event contracts have cost US states more than $1.2bn in tax collections as of Friday.

Political feuds and dueling rulings

The New York lawsuit adds another layer to a long-running battle between James and the Trump administration. James led the multi-year investigation into Trump Organization asset inflation that resulted in more than $400m in fines, which an appellate court later voided as excessive. James herself was indicted by a federal grand jury in October 2025 on bank fraud charges; a Virginia judge dismissed the case weeks later, and her attorneys described the indictment as political retribution.

Donald Trump Jr. sits on the boards of Kalshi and Polymarket, and the issue surfaced in a Netflix documentary on prediction markets that aired 26 July. Selig dismissed conflict-of-interest concerns in the film and doubled down in an X post on Friday. "Rather than seek reasoned answers from the courts, James and New York seek to force an unprecedented sudden shutdown of prediction markets nationwide," Selig wrote, adding that the CFTC has already taken legal action and will continue to defend its jurisdiction.

In the Midwest, a Minnesota federal judge granted a preliminary injunction stopping the state from enforcing what would have been the first outright ban on prediction markets. US District Judge Kate Menendez ruled days before a 1 August law was set to take effect, allowing Kalshi and Polymarket to keep operating while the case continues and finding that federal law preempts Minnesota statutes for certain event contracts. "Today's decision makes it clear: States cannot ban things that they don't have jurisdiction over," Kalshi spokesperson Elisabeth Diana said.

Two days later, Wisconsin won the right to resume enforcing its state gambling laws against Kalshi and four other prediction market platforms. US District Judge William Griesbach denied a CFTC request for an injunction to halt state enforcement. Wisconsin Attorney General Josh Kaul said in April that the state was focused on shutting the platforms down rather than seeking monetary compensation, though he did not rule out financial damages.