Courtside Counsel Q3 2026

SPORTS GAMBLING AND PREDICTION MARKETS

Prediction Markets Face New Legal and Integrity Constraints

Prediction Markets Should Be Regulated as Gambling, Appeals Court Says

Polymarket withdraws market on Mahomes’ return from injury

What: Prediction markets are online platforms where users buy and sell contracts based on whether a future event will happen. A contract generally pays out if the user’s prediction is correct. In sports, these contracts can resemble traditional bets, such as predicting which team will win or whether a player will participate in a particular game.

Two recent developments highlight the legal and integrity questions surrounding these markets. First, a federal appeals court ruled that Nevada could enforce its state gambling laws against Kalshi’s sports-related contracts. Kalshi argued that it operates a federally regulated financial market and that its contracts therefore fall under the exclusive authority of federal regulators, specifically the Commodity Futures Trading Commission (CFTC). The court disagreed, concluding that Kalshi had not shown that federal law displaced Nevada’s authority over contracts that function as sports bets. The decision allowed Nevada to require Kalshi to comply with its gambling laws. 

Separately, Polymarket withdrew a proposed contract that would have allowed users to predict whether Kansas City Chiefs quarterback Patrick Mahomes would play in the team’s opening regular-season game. Polymarket said it withdrew the contract after the CFTC asked prediction-market operators not to offer contracts involving NFL player availability. The NFL considers such contracts injury-related and has raised concerns about markets involving injuries, officiating, or information that someone could know in advance or manipulate. 

Why this matters: These developments highlight a fundamental and unresolved legal question: are sports prediction markets a form of gambling subject to state gaming laws, or are they federally regulated financial markets under the exclusive authority of the CFTC? Prediction-market platforms generally argue that their contracts are financial products traded on federally regulated exchanges. State gaming regulators contend that contracts tied to sports outcomes operate like traditional bets and therefore must comply with state licensing, consumer-protection, and other gambling requirements. Courts have reached differing outcomes in related cases, leaving platforms, regulators, and sports organizations without a uniform national framework. 

The controversy also extends beyond which government regulator has authority. Even if a platform is permitted to operate as a federally regulated market, an individual contract may raise separate concerns involving nonpublic information, player health, competitive integrity, and manipulation. Markets tied to player availability may create incentives to obtain or misuse sensitive injury information, particularly when a limited number of people may know the answer before the public does.

The NFL has raised these concerns directly with the CFTC. In written correspondence, the league objected to markets tied to injuries or officiating and to offerings that could be known in advance or easily manipulated by one person. The NFL has also asked the CFTC to prohibit such markets and ultimately establish a process through which the league could provide input on whether particular sports-related contracts are appropriate before they are offered to the public. 

Trend Alert: The regulatory environment for sports prediction markets remains unstable and unclear. Platforms currently face differing court decisions and potentially overlapping federal and state oversight, making it difficult to determine which rules apply across jurisdictions. The Ninth Circuit itself noted that courts considering related disputes have reached varied results. 

Expect state regulators to continue arguing that sports-event contracts must comply with gambling licensing and consumer-protection regimes, while the CFTC, leagues, and other integrity stakeholders increasingly scrutinize the design of particular markets. Contracts involving injuries, player availability, officiating, or other outcomes susceptible to advance knowledge or individual influence are likely to attract especially close attention. As the legal and integrity issues converge, prediction-market platforms may need more robust pre-listing review, information-integrity controls, and engagement with leagues and regulators before launching novel sports contracts.

PRIVATE EQUITY

Mark Walter selling Lakers for record $12.5 billion to Josh Kushner, Bob Iger - NBC Sports

What: The Los Angeles Lakers are for sale, again. Mark Walter, the current owner of the Lakers and the Los Angeles Dodgers, has agreed to sell the team to Josh Kushner and Bob Iger for a record $12.5 billion. Mark recently purchased the Lakers last year for $10 billion from the Buss family, who owned the team for 46 years. 

The announcement of this deal comes on the heels of a report from the Wall Street Journal in which it is alleged Mark Walter and his holding company, TWG Global, are tied to an alleged insurance fraud scheme. It is unknown whether the sale is related to the alleged federal investigation that has commenced of Mark and his business partners; however, if this sale is approved by the NBA’s Board of Governors, Mark Walter will receive a $2.5 billion profit in only a year and the storied franchise will be owned by Josh Kushner, who is the founder of a venture capital firm, Thrive Capital, and the brother of Jared Kushner, President Donald Trump’s son-in-law, and Bob Iger, the former CEO of The Walt Disney Company. It has been alleged that Mark Walter may also sell his majority ownership stake in the Dodgers; however, such reports have yet to be confirmed and verified. 

Why it matters: This acquisition is record- setting in the sports industry, coming at a time when professional franchise valuations are at an all-time high. If approved, the transaction will carry significant implications for ownership groups seeking to acquire the forthcoming NBA expansion teams, including the prospective franchise in Las Vegas. The deal is also expected to have a positive effect on the valuations of existing NBA teams, potentially catalyzing further acquisitions and investment activity across the league. 

Internally, the Lakers organization should anticipate a period of transition following such a significant change in ownership. Executive turnover, whether through resignations or terminations, is likely, and operational restructuring may follow. A franchise of the Lakers'’ stature is well- positioned to navigate these challenges, but the suddenness of this shift represents a notable disruption, both internally and externally, that has caught many in the industry off guard.

ARTIFICIAL INTELLIGENCE 

AI continues to enhance the NFL viewing experience and now adds weekly AI picks 

Self-learning AI releases NFL picks 

Artificial intelligence impacts football

What: As in many other domains, artificial intelligence (AI) is having a major impact on football, from broadcasting to predicting game outcomes. With respect to broadcasting, Amazon has increasingly integrated AI to improve the fan viewing experience. The Amazon AI model also provides real-time analytic insights and player tracking.

Additionally, multiple self-learning AI tools are generating weekly game predictions. Microsoft Copilot AI and SportsLine AI are being used to predict the weekly outcomes of the games. SportsLine uses cutting edge artificial intelligence and machine learning techniques to analyze the games.

Each week, the Copilot AI chat box is given a prompt to predict the results of every game for the 2026 NFL season and explain its logic for each prediction. Copilot is able to evaluate defense, continuity, home-field advantages, and offensive performance. These tools are learning from team historical data, evaluating opponents'’ strengths, and are likely to improve over the season. 

Why it matters: Like in many other industries, AI is transforming pro football, as technological enhancements allow for quick stats, in in-game tracking, and weekly outcome predictions. It will be interesting to track the performance of AI tools against human analysts as the season continues.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.