'Betting on futures is functionally gambling'

The National Council on Problem Gambling weighs in on prediction markets with the CFTC. Roundup: It's deadline week for Kalshi in Nevada; Polymarket CEO goes to the White House

“Betting on futures is functionally gambling.”

That’s according to a new submission to the Commodity Futures Trading Commission from the National Council on Problem Gambling.

I’ll post the entire letter below, but here’s the key bit:

“Putting aside whether futures legally constitute gambling, from a problem gambling standpoint, betting on futures is functionally gambling. The line between purchasing futures and gambling has particularly blurred with markets offered related to sporting events. NCPG is concerned about a form of gambling taking place outside of the responsible gambling tools framework and problem gambling safeguards required by gambling regulators.”

The CFTC also advocates for the minimum age for trading to be 21, “especially on sporting events.”

I don’t think there’s a terribly good argument that it’s not gambling. Everyone knows what this is when they look at it. The questions are:

• Does any of the above matter legally? Even the NCPG notes that it’s not looking at it from a legal standpoint, just from an “if it walks like a duck” standpoint.

• Would the CFTC and/or Kalshi work to put in protocols for problem and responsible gambling? The NCPG wonders as much in the letter. From the agency standpoint, that seems kind of hard to believe. And if the CFTC isn’t going to mandate it, would Kalshi or an operator be motivated to act?

  • The more things the CFTC or Kalshi does to equate all of this to gambling, the more fraught all of it could become from a legal standpoint. Avoiding the “gambling” designation has been a strategy dating back to the first iteration of daily fantasy sports under FanDuel and DraftKings.

  • Of course, it already feels like Kalshi has crossed the Rubicon on this issue in many ways. Kalshi constantly markets much of the product as gambling, and says you can “bet on sports in all 50 states.”

Here’s the full letter:

Dear Acting Chair Pham and Commissioners:

I write on behalf of the National Council on Problem Gambling (NCPG), the sole national advocate for people affected by problem gambling and their loved ones, to provide brief comments on prediction markets and their relation to gambling for the Commodity Futures Trading Commission’s (CFTC) upcoming roundtable on prediction markets. NCPG’s mission is to lead state and national stakeholders in the development of comprehensive policies and programs for all those affected by problem gambling. Our vision is to improve health and wellness by reducing the personal, social, and economic costs of problem gambling. NCPG members include 36 state affiliate chapters and a wide variety of individuals and organizations— from counselors, prevention specialists and researchers to people in recovery from gambling problems as well as treatment clinics, gambling operators and vendors, regulatory authorities, sports leagues, and state human services agencies. NCPG is neither for nor against legalized gambling.

Putting aside whether futures legally constitute gambling, from a problem gambling standpoint, betting on futures is functionally gambling. The line between purchasing futures and gambling has particularly blurred with markets offered related to sporting events. NCPG is concerned about a form of gambling taking place outside of the responsible gambling tools framework and problem gambling safeguards required by gambling regulators.

NCPG and its affiliates collaborate with state legislators and regulators throughout the country to ensure state gambling laws and regulations are proactively prioritizing player health. This includes ensuring that players are given information on their play (wins, losses, and time spent gambling), can limit such play (requesting a time-out or a limit on the amount of time and/or money spent gambling), know how to get help for a gambling problem immediately should they feel they need it, and can easily access self-exclusion should they decide they no longer want access to gambling. These are just a few of the responsible gambling features most states require of their licensed sports betting operators. Futures, specifically on sporting events, should be regulated to ensure similar protections.

State and tribal regulators are experienced in regulating sports gambling. They are constantly updating their regulations and guidance to include best practices and work to balance the benefits of gambling revenue with the costs of gambling-related harm. Given this, the CFTC should either acknowledge state and tribal prerogatives or create a regulatory framework that also prioritizes players’ health. If the CFTC determines that it does not have the authority to require truly robust responsible gambling measures and problem gambling safeguards on par with state and tribal regulators, it should not allow these markets.

Further, most states have limited sports betting to 21+ years of age. Young people are at additional risk of developing a gambling problem as their brain is still maturing. NCPG strongly supports all gambling being limited to 21+ and believes the CFTC should ensure the same goes for futures, especially on sporting events.

Finally, we echo the concern raised by the American Gaming Association that futures on sporting events present sports betting as an investible financial product. Sports betting, like all forms of gambling, should be seen as entertainment, not a way to make money. The vast majority of bettors end up losing more money than they win. However, the growing overlap between sports betting and futures on sporting events may lead many to believe that sports betting is a reliable way to make money over time.

Thank you for the opportunity to submit these comments. If you have any questions about this recommendation, please do not hesitate to reach out to me at ColeW@NCPGambling.org.

Sincerely,

Cole Wogoman
Senior Manager, Government Relations and League Partnerships
National Council on Problem Gambling

Closing Bell

A roundup of prediction markets news:

• Deadline week in Nevada: Will we know what happens next regarding Kalshi and Nevada regulators? The latter issued a cease-and-desist letter to the former last week, putting a deadline of 5 pm on Friday for a response from Kalshi. What will happen in the wake of that deadline? Here are the possible scenarios that we can dream up, along with our perceived likelihood:

  • Kalshi pulls out of Nevada. We have a hard time believing that’s a likely outcome, but it’s not impossible. Pulling out of a single state blows a giant hole in the idea that federal law always trumps; Kalshi has maintained that federal regulation is all that matters.

  • Nothing happens. That also doesn’t seem terribly likely, but we’ll include it in range of outcomes. If Kalshi doesn’t respond and Nevada doesn’t do anything about it, thanks for following along, I guess!

  • Kalshi goes to court. No matter what you think about Kalshi, I think it’s clear they like legal clarity. And they have a lot of conviction that they are on the right side of the law. While a pain in the ass, Nevada’s action allows them to seek that clarity in court. We’d imagine you could see Kalshi seek a temporary restraining order or similar. Going to court also kicks the can of the state issue down the road years potentially as an appeals process plays out. And it lets Kalshi try to set the terms of engagement. If I am spitballing the scenarios, I guess something like this feels the most likely. I am not willing to take sharp action on this market, however.

  • Nevada enforces the order. Would Kalshi risk doing nothing and forcing Nevada’s hand? Again, if Nevada did all of this and wasn’t prepared to enforce it, that would be a wild outcome. That would essentially mean the C&D was a bluff and they just hoped Kalshi would leave. How enforcement might go is unknown, but you could similarly see this end up in court. Nevada noted that past and future violations by Kalshi could be met with criminal or civil penalties.

  • Again, it would be awesome if Kalshi put up a prediction market with all these outcomes so we could handicap it better.

• Kalshi CEO quiet: In the wake of the cease and desist from Nevada, Kalshi CEO Tarek Mansour has been uncharacteristically quite on social media. After posting about the situation in Nevada last week, he hasn’t posted again on LinkedIn. On Twitter/X, he reposted a tweet and that’s it. At least until there’s some resolution or next step in Nevada, it seems like Mansour might be keeping a lower profile. Or he’s just busy, but he’s usually quite active in public.

• DraftKings Predict: Over at The Closing Line, we broke the news that DraftKings had registered with the National Futures Association, the self-regulatory organization for the US derivatives industry.

  • What’s that mean? “We know precious little about what DraftKings has planned and I won’t speculate too much. A request for comment from DraftKings wasn’t immediately returned. What we do know is that 1. If you were thinking about getting into facilitating trades via prediction markets, this is a step you might take and 2. CEO Jason Robins has talked about prediction markets twice in the past month.”

  • One fascinating piece of data is that DraftKings had made this move back in July. That’s well before anyone had tried to do sports event contracts; indeed it’s well before Kalshi had beaten the CFTC in court on the ability to offer election markets. (That appeal is still ongoing). What DraftKings will end up doing here remains to be seen. But it’s another example of some of the foresight that DraftKings deploys in looking at what it might do down the road.

• Polymarket CEO Shayne Coplan announced in a March 6 tweet that he would be joining the White House Digital Asset Roundtable held on March 7, Benzinga reported. In that tweet, he said: "This (administration’s) commitment to collaboration with American innovators is revitalizing the American dream. The future is bright."

  • The roundtable was planned following President Trump’s executive order to establish a Strategic Bitcoin Reserve and a Digital Asset Stockpile. It’s an interesting move for Trump to include the CEO of Polymarket among the esteemed guestlist, considering it remains an offshore operator unavailable to U.S. customers since receiving a cease-and-desist order (and a $1.4 million fine) from the CFTC in Jan. 2022 for regulatory violations. That’s not to mention Coplan’s home was also raided by the FBI soon after Trump’s win based on allegations that the site allowed election trading by U.S.-based users.

  • The New Yorker also did a feature on Coplan and Polymarket this week that’s well worth a read: “Coplan may have correctly wagered that the law would change in his favor before he got in real trouble. “I mean, the plan is to build something that didn’t exist yet that needed to exist, that I cared more about than anyone else,” he said, acknowledging that he started Polymarket without consulting lawyers on the regulatory prohibitions. He sounds a lot like Kalanick, who launched Uber as a basically illegal taxi service, then fought bans around the world to win the right to operate. As Trump and Musk have shown in their ongoing campaign against the bureaucracy and the separation of powers, the rules don’t necessarily apply to those bold enough to disregard them, which might make the 26-year-old Coplan the emblematic entrepreneur of this new era.”

    • And more: “Americans trading on Polymarket is the alleged crime the FBI and the Southern District of New York are now investigating, according to multiple sources. And the fact that Polymarket has already been reprimanded once by the CFTC for this, and settled, could be a further strike against it. “They are bound by their own hands,” says a former regulator. “You know, or a reasonable person would know, that you are breaking the law.”

• So when is the prediction markets roundtable going to be? As of now, we’re still waiting to find out; we haven’t seen a public announcement of the roundtable, where it will occur or who will be involved.

• Here’s what the CFTC wrote about the timing: “The Commodity Futures Trading Commission will hold a public roundtable in approximately 45 days at the conclusion of its requests for information on certain sports-related event contracts.”

  • That deadline was Feb. 21, although we have seen a number of submissions come in after the deadline.

  • If we’re going strictly by all of that, it would be on or around April 7, which is 45 days later. “Sometime in April” seems like the smart bet at this point. We would at least put the “over-under” line on that date, with heavier vig on the over.

  • Right now the CFTC is under the leadership of Acting Chairman Caroline Pham. While Pham was the one to announce the roundtable, incoming chair Brian Quintenz is yet to be confirmed for the new role. I’d be curious to know if Quintenz (also a Kalshi board member) would want to be directly involved in one of the biggest things on the CFTC’s plate in the short term.

  • I’d also guess there’s a non-zero chance that the roundtable doesn’t happen at all. However, given the stakes and the amount of feedback the CFTC has gotten, it’s also hard to believe the agency could backtrack. But stranger things have happened.

• MLB weighs in on sports event trading: Again over at TCL, Dustin broke the news that Major League Baseball had weighed in ahead of the roundtable. Some of what MLB wrote:

  • “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. Currently, those protections are lacking. … 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.”

    • The letter was far from a declaration that prediction markets for sports shouldn’t exist. In reality MLB just said, if you do this, you need to do “x, y and z.” If the CFTC/Kalshi are willing to do “x, y and z,” then it appears MLB would back sports event trading. Of course, the willingness of the agency and the operator to “play ball” is unknown as we sit here.

    • We’ve also yet to hear from other leagues or the NCAA on the topic. At least publicly, MLB is on an island.

• Better Markets, a non-profit independent organization that aims to “promote the public interest in the financial markets,” put out a new fact sheet in response to DOGE reviving an old idea to merge the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The fact sheet is entitled “An SEC-CFTC Merger Would Not Save Money and Would Endanger Main Street Families.” In the accompanying presser, they said:

  • “The reason this idea has been rejected every time it has been raised is that the SEC and CFTC both play critically important but very different roles. This is why the Treasury Department rejected an SEC-CFTC merger during the first Trump administration. It concluded that merging the SEC and CFTC was unlikely to enhance efficiency or improve the current system. There is no reason to reach a different result today.

  • “The SEC regulates the securities markets and is primarily an investor protection agency. The CFTC regulates the commodities and derivatives markets and ensures that vital products are available to the American people at the right time, in the right amounts, and roughly priced based on supply and demand. As a result, the SEC could not do the job of the CFTC, the CFTC could not do the job of the SEC, and a combined entity would still have to carry out the functions of each agency…So while it sounds like combining the agencies would save money and improve efficiency, in reality, it would not lead to any cost savings and would instead endanger Main Street Americans’ wallets and pocketbooks as well as investors, retirees, markets, and financial stability.”

  • If prediction markets are set to expand (and expand into sports), having fewer eyeballs on the nascent sector would be subideal.

Sports market update

Here are the sports markets that Kalshi currently offers as of Thursday morning:

• Basketball, 25: NBA and college; overall league title and conference championship winners, plus recently added single-game NCAA basketball markets. Still just two women’s b-ball markets, for WNBA and NCAA championship winners.

• Soccer, 7: Only league champion markets at the moment, but we’ve also seen markets for single-game qualifier games.

• Tennis, 4: Champions of majors including both men’s and women’s French Open winners.

• Golf, 6: Tournament winners of various 2025 tournaments, including LIV Golf Singapore winner.

• Baseball, 3: World Series and league winner markets.

• Football, 2: College football champion and 2026 Super Bowl.

• Formula 1, 1: Drivers Champion.

• Hockey, 1: Stanley Cup winner.

• Video games, 1: League of Legends champion market.

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