CFTC and the NBA agree to share information on basketball prediction markets

The Commodity Futures Trading Commission and the National Basketball Association announced on 26 October that they have signed a memorandum of understanding to protect the integrity of professional basketball in prediction markets. The agreement sets up regular communication and information sharing between the regulator and the league.

What the agreement covers

The memorandum describes itself as a statement of intent to discuss, cooperate and exchange information on issues of common interest, such as the integrity of professional basketball and the event contract markets related to it. Cooperation is expected to happen mainly through informal consultations, periodic meetings and written requests.

Each side has named a point of contact: for the CFTC its General Counsel, Tyler Badgley, and for the NBA Dan Spillane, Executive Vice President and Assistant General Counsel for league governance and policy. Each may designate up to two staff members as additional contacts.

Information shared under the agreement is presumed confidential. The NBA may pass information from the CFTC to its Board of Governors, but not to its teams unless the CFTC agrees in writing; the document says both parties expect such consent where the information relates to an active NBA integrity investigation. The CFTC will use what it receives only for its duties under the Commodity Exchange Act.

The memorandum creates no legally binding rights or obligations, does not require either side to share anything, and leaves the CFTC’s enforcement powers unchanged. Either party can end it by giving the other written notice.

Part of a wider pattern

According to the CFTC, the NBA follows MLB and the NHL in signing such an agreement. “The NBA joins the MLB and NHL in taking a responsible step toward protecting sports integrity,” said CFTC Chairman Michael S. Selig, who named insider trading and fraud as the abuses in view.

For exchanges and brokers offering sports event contracts, the agreement gives the regulator a direct channel to league information when it looks into suspicious trading. The CFTC has separately proposed bringing event contracts on sports and other events within the definition of a swap; read our brief on that proposal.