NHL Commissioner On Prediction Market Deals: 'It Gives Us Control'
Gary Bettman talks about Kalshi, Polymarket. Roundup: CFTC responds to senators' questions; Galaxy Digital eyes market making; BofA says prediction markets create 'emerging credit risks.'
NHL Commissioner Gary Bettman talked about prediction markets on CNBC’s Squawk Box on Tuesday, explaining the league’s rationale for getting into business with Kalshi and Polymarket.
The most interesting thing he said about the deals is that “…it gives us control, because we have the ability to take down any contracts that we don’t think are appropriate.”
You can watch the segment here; the prediction markets discussion starts just after the six-minute mark:
Here’s a transcript:
Question: I’ve got to ask you about Kalshi and Polymarket and this whole prediction market space — you know, you’re moving into it with a partnership with them — how do you think about that versus DraftKings and FanDuel and everybody else on that side of things? And also, by the way, what you think of some of these cheating scandals and how you police all of this?
Bettman: Great question, so we have aligned with the prediction market because we believe our fans need to understand that if they’re going to execute those contracts, it’s based on real data. But more importantly, it gives us control, because we have the ability to take down any contracts that we don’t think are appropriate. And that goes to the second part of your question.
I don’t believe our game is susceptible in the way that some others might be. I have confidence in our players and our personnel, but this is something that we monitor every second of every game. We monitor the betting and prediction lines, and you can’t really get away with doing that kind of cheating anymore.
Being aligned with either the sports betting entities or the prediction market entities gives you the ability to have more control and to observe more closely exactly what’s going on. So I think it’s more protective than anything else by having these alignments.
Question: Do they all merge together, you think, in the end?
Bettman: I think they’ll morph. I don’t know if you’ll call it a technical merger, but I think they’ll all morph together and I think whether it’s FanDuel or DraftKings, they are looking to getting into the prediction contract business as well, so I think that’s the direction that it’s heading.
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Prediction markets roundup
CFTC Responds To Senators’ Questions On Sports Event Contracts (The Closing Line): “Caroline Pham, the acting chair of the Commodity Futures Trading Commission, sent a letter to Sen. Catherine Cortez Masto (D-Nev.) in response to the senator’s questions on prediction markets. Cortez-Masto and six other Senators sent a letter in September asking Pham why the CFTC was allowing sports betting to happen under the agency’s rules. The Closing Line has seen a copy of the letter; Pham’s response basically says designated contract markets are doing nothing wrong under current law.”
The boom in sports gambling and prediction markets is creating “emerging credit risks,” per Bank of America (Sherwood News): “If you’re worried that a society that indulges in speculative activities is indicative of cultural decline, Bank of America has nothing for you. But if you’re concerned that the proliferation of sports betting and prediction markets is creating new economic risks, you’re singing from their hymnal.”
“Easy access and gamified interfaces encourage frequent and impulsive wagers, which can lead to overextension of credit and rising loan defaults,” wrote a team of analysts led by Mihir Bhatia. “For investors this convergence of entertainment and speculative finance signals heightened behavioral risk that could pressure credit quality, increase delinquencies, and impact earnings for issuers and subprime lenders.”
Prediction markets dominate gaming summit in Boston (CDC Gaming): “Ten gaming companies traveled to Boston for the 13th yearly Truist Securities GLL Summit last week. Truist analyst Barry Jonas boiled the event down for investors in a November 24 report. The number-one topic, according to Jonas, was prediction markets. Diversified gaming operators were said to be opting for a wait-and-see stance, seeing how the online sports betting (OSB) leaders fared with event contracts.”
Novogratz’s Galaxy Digital ‘Experimenting’ in Prediction Markets (Bloomberg, paywall): “Mike Novogratz’s Galaxy Digital Inc. is in discussions with Polymarket and Kalshi Inc. about becoming a liquidity provider on their platforms, as prediction markets continue to capture retail demand and pique interest on Wall Street. Galaxy Digital, which has focused on providing crypto infrastructure for institutional players, would serve as a market maker on the exchanges, offering regular trades that would improve the liquidity on the platforms, Novogratz said in an interview.”
Kalshi Says It Can’t Be Sued By Wisconsin Tribe Over IGRA, As It Is Not Party To Tribal Compact (InGame): “Kalshi has filed a motion to dismiss a Wisconsin tribe’s lawsuit against the prediction market, arguing that the tribe has no grounds to sue because it is not a party to a tribal compact. The Ho-Chunk Nation of Wisconsin sued Kalshi — as well as its partner Robinhood — in August, arguing that the company offered illegal Class III gaming on tribal lands, in violation of the Indian Gaming Regulatory Act (IGRA). However, Kalshi late on Friday submitted a brief arguing that the complaint should be dismissed, which would effectively throw out the case if supported by the judge, barring appeal.”
When betting on football isn’t gambling: Prediction markets are battling to redefine wagers (MarketWatch, paywall): “When the Kansas City Chiefs play the Dallas Cowboys on Thanksgiving, people across America will be able to use Kalshi’s prediction-market platform to bet on which football team will win. Kalshi is allowing its users to place their wagers on the Chiefs or Cowboys by buying an event contract built on a yes-or-no question. The contract trades on the platform like a stock and pays out if the user bets correctly.”
Kalshi Is Taking Aim at Stock Exchanges. Why Not? (Bloomberg, paywall): “Kalshi Inc.’s Chief Executive Officer Tarek Mansour got my attention when he claimed last week that prediction markets could rival stock exchanges in a few years. Of course, this does not mean that people will buy and sell stocks on Kalshi, but that prediction markets will be where information is aggregated and prices set, with the New York Stock Exchange and its ilk relegated to processing orders. To some extent this has already happened. If you read a story on the direction of stock prices, it’s probably based on futures contracts rather than aggregating buys and sells of individual stocks. Will prediction markets exert a similar influence and become the first place traders take new information? And what would that mean for markets?”