Where Is The NCAA As March Madness Betting Expands Nationwide?
The NCAA has been quiet as Robinhood and Kalshi launch gambling on college games in 50 states. Prediction markets news roundup: CFTC federal case has new filing, roundtable will take place April 30.
If you subscribe to this newsletter, you’re probably well aware that Kalshi now has single-game betting for the NCAA basketball championships. And that Robinhood features the same, thanks to a deal with Kalshi.
Here’s my question heading into the real start of March Madness today: Where the hell is the NCAA?
The group that oversees college athletics has been barnstorming around the country telling everyone who will listen about the ills of regulated sports betting and trying to ban betting on college sports in full or in part.
But we’ve had some sort of college betting going on in 50 states via Kalshi for almost two months now, and we haven’t heard a peep from the NCAA. Major League Baseball sent a letter to the Commodity Futures Trading Commission that oversees all of this; there’s been no similar letter from the college group.
If the NCAA is going to decry legal sports betting because of integrity concerns, harassment of athletes, etc., it needs to speak up about prediction markets too.
Do you think Kalshi is stopping to check who is betting on all these games to make sure they aren’t affiliated with one of the teams, either as staff or a player?
People are able to get down $25,000 per “trade” on a game outcome. Does the NCAA not see a potential risk here?
Do you think people who lose their “trades” on these games aren’t going to harass players?
Does the NCAA understand that the interest in expanding college betting via prediction markets is not going to stop at just game outcomes?
I understand this is all new and the NCAA and others are still trying to wrap their heads around it. But the NCAA has made it clear it wants to be a leader on the issue of sports betting. We’re waiting, NCAA: Lead.
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Other odds and ends around March Madness markets
There’s been more than $23 million wagered on the men’s basketball tournament per Kalshi data at last check. The Super Bowl attracted $27 million in bets, by comparison.
About a million dollars has been wagered on the women’s tourney.
The functionality of Kalshi’s tournament betting is way better on the web than on the app. You can go to a bracket and pick which game to bet on from a browser. The UX is less intuitive on the app.
I don’t know if I am unique here, but the March Madness markets at Robinhood seem to work only sporadically for me. Most of the time when I log in on the app, I am greeted with a blank screen.
When it’s working for me, the UI on Robinhood is pretty cool. You can scroll around the brackets and choose what game you want to bet on.
Robinhood March Madness betting is only on the app, not on the web.
Perplexity, Kalshi prediction market partner on March Madness (Axios): “Perplexity will integrate betting odds from prediction market Kalshi as part of a partnership that kicks off with this year's NCAA basketball tournaments.
Why it matters: The move adds another source of real-time data to Perplexity's AI-based search engine and gives Kalshi new exposure.
Driving the news: Kalshi's data on the NCAA men's and women's tournaments will be integrated into Perplexity throughout the tournaments, with users being shown odds both before and during the games.”
I have a newsflash for everyone: The prediction markets are not going to be a “source of truth” for who is going to win every game in the NCAA tournament. It’s going to get plenty of outcomes wrong. That feels silly to have to type that, but we get hammered over the head about how valuable prediction markets are because Kalshi likes to hang its hat on the idea that markets get it right.
I posted a video that demonstrates the volume of trading going on at Kalshi this morning before the games began.
CEOs on the Robinhood-Kalshi deal
Robinhood CEO Vlad Tenev on Twitter: Today, we are launching prediction markets on Robinhood.
As a former mathematician and physicist, I am motivated by the search for objective truth. How can we make sense of all the information out there, and who can we trust?
Before we had the Internet, say in the 1970s, the answer to this question was simpler. We trusted Walter Cronkite and the CBS Evening News. There were problems with this of course — if Walter didn’t cover it, we didn’t hear about it. The news wasn’t comprehensive, and it was delayed.
Over the past few decades, we have made tremendous strides in solving these specific problems via social media and the Internet. However, we’ve created new problems. There are so many conflicting viewpoints out there that contradict each other — creating the sensation that we’re seeing two different movies playing on the same screen. Some even claim that objective truth may be an illusion, and the search for it a fool’s errand.
Enter prediction markets. At the most fundamental level, they are the application of capitalism to the pursuit of truth. Market incentives and the wisdom of the crowds sift through all the information out there to determine answers to well-specified questions and outcomes to important events — sometimes even before they happen. Consider the 2024 Presidential Election, where the markets priced a 95%+ Trump victory hours before the major networks called key swing states. Prediction markets are truth machines. We’re starting with politics, economics and sports, and we will continue to broaden the coverage over time. As with any market, they will become better the more liquid they are, and the more people participate.”I spoke more about Tenev’s comments over at my gambling industry newsletter, The Closing Line. Seeing as the initial rollout is for gambling on college sports, I found all of the above to be a bit much: "Look man, you launched prediction markets entirely based on March Madness betting: you’re not splitting the atom or creating a unified theory of relativity. It’s whether BYU or VCU is going to make the next round. Instead of ‘gambling,’ we’re just ‘pursuing truth.’ That sounds a bit dangerous to me."
Kalshi CEO Tarek Mansour on LinkedIn: “Robinhood x Kalshi 🤝
We are incredibly excited to launch Robinhood (again), as the first broker to develop a prediction markets hub. They are starting with markets on March Madness and Fed rates, with likely more to come.
Together, we are bringing prediction markets to 25 million users.
Lior Hirschfeld, Rainer Sainvil, Noah Sternig, and team were up till 4:20am working to get every single march madness game listed after Selection Sunday. The Robinhood engineering team was working in lockstep with up to ensure a smooth launch at market open.
We did it with elections and now we will do it with sports. Together we will change the world of finance and trading.
If you are interested in working till 4:20 on some of the true frontiers of financial markets, dm me - we're hiring.
Welcome to the show, Robinhood”I am not sure that being up till four in the morning is the flex Mansour thinks it is. These games are up minutes after they are announced at many sportsbooks.
Robinhood white paper on prediction markets
Upon the announcement of the deal with Kalshi, Robinhood released a memo/short white paper on prediction markets that you can read here. The things I found most interesting:
“Sports. Sports prediction markets and event contracts are one subset of the broader predication markets that have recently gained popularity. Unlike sports gambling, in which there is a “House” and oddsmakers, sports event contracts are binary products traded directly between buyers and sellers in open, transparent, two-sided markets on federally regulated exchanges (known as “designated contract markets”). Various commercial entities, including team sponsors, media outlets, and vendors, can use sports event contracts to manage risks related to team performance. For example, team sponsors could hedge their risk of a team having a losing season. Consumer-focused businesses near a sports stadium may want to hedge the possibility of cancellation or lower attendance that would impact their revenue for the day. Similarly, the price discovery provided by these prediction markets can result in more accurate and valuable information which would, for example, enable consumer-focused businesses to better predict the labor and material resources they might need to successfully serve customers.”
“The Path Forward: Policymakers should adopt policies that continue to recognize that the prediction markets, including event contracts related to economic events, commodities, weather events, sporting events, and political events, have economic value and are generally in the public interest, as they can provide legitimate hedging, risk-management, speculative and informational benefits for individuals and businesses of all sizes. Moreover, policymakers should avoid rules that prohibit retail customers from taking advantage of the same opportunities available to institutional investors.”
CFTC vs. Kalshi federal case continues
A lot of people, myself included, believed that the federal court case between the CFTC and Kalshi would wind down under the Trump administration. Kalshi’s win in that case in October allowed it to offer betting on elections; the CFTC under the Biden administration had been trying to block election betting.
So far, there’s no evidence that the case — now with the US Court of Appeals for the DC Circuit — is stopping. We’ve seen two new filings in recent weeks.
First, the CFTC entered Nevada’s cease-and-desist letter from earlier this month to Kalshi into evidence, claiming the action bolsters its case.
Counsel for Kalshi responded to the CFTC filing with a letter of its own, claiming that the C&D from Nevada actually undermines its argument. Here’s the filing, obtained by The Event Horizon:
In its haste to spotlight the Nevada Gaming Control Board’s cease-and-desist letter, the CFTC overlooked that the letter undermines its position in this appeal. The letter asserts that “offering event-based contracts” — of any sort — “is unlawful in Nevada.” That conclusion, it says, follows from Nevada’s definition of “wager” as any money “risked on an occurrence for which the outcome is uncertain.” N.R.S. § 463.01962.
The Board’s pretensions to ban all event contracts should come as no surprise —Kalshi warned that overbroad definitions of “gaming” that equate the concept with “wagering” inevitably generate that absurd result. Appellee Br. 48-49. This letter illustrates the problem in action. What is surprising is the CFTC’s apparent endorsement of that logic, which it has attempted (albeit with difficulty) to renounce. The Board’s analysis confirms that reading the “gaming” and “unlawful activity” exceptions to sweep in elections would render every\ event contract “unlawful”—a construction of the CEA [Commodity Exchange Act] that “cannot be right.” KalshiEX LLC v. CFTC, 2024 WL 4164694, at *8 (D.D.C. Sept. 12, 2024) (recognizing that, under “the CFTC’s construction, all event contracts would be subject to review …because they all involve … risking money on … some contingent event with the hope of receiving a payoff”). And nothing in the letter supports the CFTC’s contrived definition of “gaming” as “staking something of value upon the outcome of a contest of others.”
The Board’s passing reference to Nevada’s election-betting ban is no help to the CFTC, either. Indeed, that statute’s express reference to elections only underscores the fundamental problem with the CFTC’s reading of the CEA, because the CEA — unlike Nevada state law — says nothing about elections.
Finally, the Board’s claimed authority over every “event-based contract” trading on a registered exchange contradicts the CFTC’s position that, “due to federal preemption, event contracts never violate state law when they are traded on a DCM.”
That last part is particularly interesting, as it’s the core of the argument for Kalshi et al moving forward, in Nevada and elsewhere. Does what the states do and say even matter?
"Kalshi's new letter to the appellate court in DC evidences the importance of Nevada's potential regulatory action in the prediction market space," said Ryan Rodenberg, a professor at Florida State University who has followed the litigation closely. "Most pointedly, the last portion of Kalshi's letter provides a preview of the important preemption issue that is likely to be front and center if Kalshi's opts to file a lawsuit in Nevada challenging the cease-and-desist order."
More on both Nevada and federal law in the roundup below.
Closing Bell
A roundup of prediction markets news:
About that prediction markets roundtable…: Here’s what The Event Horizon can tell you so far about the CFTC’s planned prediction markets roundtable.
The roundtable is scheduled to take place on April 30 in Washington, DC.
The roundtable is set to include representatives of the American Gaming Association and regulators from at least two states that have legal sports betting.
It sounds like there will be multiple facets/panels that will be a part of the roundtable discussion.
The roundtable is set to shape the contours of what’s to come. The Robinhood-Kalshi deal seems to enforce the idea that the CFTC is onboard with the expansion of prediction markets in general and sports betting in particular.
A variable in all of this is when incoming CFTC chairman Brian Quintenz will have his confirmation as he takes over the role from acting chair Caroline Pham. It’s not clear as we sit here that he’ll be in place before the roundtable.
What’s next in Nevada? The big cloud currently hanging over the future of Kalshi in the micro and prediction markets in the macro is what — if anything — happens in Nevada.
The state’s gaming control board sent a cease-and-desist to Kalshi two weeks ago for offering illegal gambling in the state.
Kalshi then asked for and received more time to respond to the order. I’ve inquired about how long that extension is and didn’t get an on-the-record answer.
What happens in Nevada is likely to have an impact on where all of this is headed. Does Kalshi comply with the order (unlikely) or ignore it (also seems unlikely given they asked for time to respond). Is Nevada actually willing to enforce the order? It still seems likely this heads to court, somehow. Other states have shown a willingness to copycat cease-and-desist orders in other verticals (see offshore gambling, sweepstakes casinos); any traction by Nevada might embolden such efforts.
Other federal laws in play? As everyone scrambles to figure out how legal Kalshi’s platform is, here is some interesting food for thought at the federal level:
Federal and State Gambling Laws Loom Large in Determining the Future of Sports Prediction Markets (Brownstein Hyatt Farber Schreck): “Although the ongoing Kalshi-CFTC case is about elections-based contracts, not ones involving sporting events, the case’s outcome (including any dicta relating to the sports examples) could be relevant to the future status of sports-based events contracts. However, even a favorable ruling from the court will not necessarily clear the way for Kalshi or similar companies to offer sports-based event contracts. This is because of the potential application of two federal laws, the Wire Act and the Illegal Gambling Business Act, both of which could apply to event contracts concerning sports.”
“…if events contracts can be said to involve the staking of something of value where a certain sum of money shall be paid or delivered to one of them upon the outcome of a sporting event, it seems likely that such conduct is betting or wagering. And if the wires (the internet) are used to facilitate such activity, the Wire Act would seem to be implicated.”
“Simply put, even if the Wire Act does not cover sports gambling via online event contracts trading platforms, IGBA might. If online prediction markets’ sports offerings violate the laws of any state — especially states with expansive gambling regulatory regimes — those state violations may also be a violation of federal law under IGBA.”
View From The Eighth Pole: Prediction Markets Pose Potential Challenge To Horse Racing (Paulick Report): “I have yet to find any horse racing contracts at Kalshi, but it's probably only a matter of time, especially with the Kentucky Derby on the horizon. And it seems unlikely that any permissions or approvals from racetracks or horsemen's organizations as required by the Interstate Horseracing Act of 1978 will be necessary. Remember, this isn't betting (wink-wink).”
A view on sports event contracts: Alex Ursa, the head of gaming at Betr, continues to post interesting thoughts on the world of prediction markets over at LinkedIn. I encourage every to give this one a read: “TL;DR: The Robinhood product is simple and intuitive with a lot of upside potential. However, pricing is confusing, and there’s no way for a retail customer to easily understand it.”
Sports market update
Here are the sports markets that Kalshi currently offers as of Thursday morning:
Basketball, 17: NBA, WNBA and college. Kalshi has now launched “who will advance to x round of the NCAA tournament” for both men and women. So while the answer is technically 17 at the top level, these markets are essentially moneyline bets on all 32 men’s basketball games that will be played over the next two days.
Soccer, 11: League futures for various international leagues, plus Champions League quarterfinal moneylines.
Tennis, 4: Champions of majors including both men’s and women’s French Open winners. Kalshi has been adding single-match markets for the WTA and ATP, as well.
Golf, 9: Tournament winners of various 2025 tournaments.
Baseball, 3: World Series and league winner markets.
Football, 2: College football champion and 2026 Super Bowl.
Formula 1, 3: Drivers Champion, Constructors Champion and winner of the Chinese Grand Prix.
Hockey, 1: Stanley Cup winner.
Video games, 1: League of Legends champion market.