Weekly Column: Owning Probability and Betting Under Federal Oversight

In this week’s column, California Sports Lawyer® CEO and Managing Attorney Jeremy M. Evans examines the growing conflict between federal commodities regulation and state sports betting laws as prediction markets reshape the governance of sports wagering.

The negotiation is no longer limited to intellectual property rights or the commercialization of data, but extends to control and governance of the underlying market itself.

You can read the full column below. (Past columns can be found, here).

The battle over who controls sports-based prediction markets—federal regulators or state gaming authorities—is accelerating, with courts beginning to weigh in on whether these products are lawful futures contracts or simply sports betting in disguise.

Major League Baseball’s (MLB) $300 million deal for three years with prediction market exchange company, Polymarket follows a host of similar agreements with professional sports leagues in the United States. As part of the agreement, Polymarket gains exclusive rights to use official MLB branding, logos, and data.

Polymarket is taking a federal approach to sports futures contracts by operating under a commodities framework that may preempt or avoid traditional state sports betting laws and regulations—an approach already drawing resistance from several states. States want their oversight and, most importantly, the tax revenue that comes from sports betting, which sports futures contracts in prediction markets are not currently subject to. There is also a broader policy concern regarding expanded access to sports-related wagering products and the potential impact on gambling addiction.

Per MLB.com, Commissioner Rob Manfred “signed a memorandum of understanding (MOU) with Michael S. Selig, Chairman of the Commodity Futures Trading Commission (CFTC), one year after MLB wrote a letter to the CFTC calling for strong integrity protections in the rapidly evolving prediction market space. MLB pursued this agreement with the CFTC to further protect the integrity of baseball by ensuring swift response to incidents and anticipating emerging trends more strongly.” MLB recognized early that this market was developing and sought to centralize league-level control—preventing individual franchises from entering inconsistent agreements, while establishing uniform rules and guidance to protect players and the integrity of the game.

The CFTC, MLB, and other professional sports leagues have effectively created a parallel system to traditional sports betting—one governed by federal commodities law rather than state gaming regimes, and therefore not subject to the same licensing, taxation, and consumer protection frameworks. The federal framework for sports futures offers scale and uniformity, and may present a path forward in jurisdictions like California, where tribal gaming interests have historically opposed the expansion of commercial sports betting. In this structure, professional sports leagues are not only monetizing data, but increasingly influencing the markets themselves.

Going forward, the central debate will focus on the balance between states’ rights and federal authority. At the core is the legal distinction between sports futures and sports betting—and whether that distinction is substantive or merely semantic. Proponents argue that the CFTC regulates a fundamentally different market centered on commodities and risk transfer. Critics, however, question whether these products functionally replicate wagering on game outcomes. The fact that this framework has not historically been applied to sports does not mean it cannot—or should not—be applied now.

Sports leagues, teams, and players will also be required to navigate multiple roles: participant (even if indirect), benefactor, and self-regulator. The negotiation is no longer limited to intellectual property rights or the commercialization of data, but extends to control and governance of the underlying market itself. Ultimately, the question is not just who owns probability, but who regulates it—and whether the future of sports-related markets will be dictated by federal commodities law, state gaming regimes, or a coexistence of both.

About Jeremy M. Evans:

Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. An award-winning attorney and industry leader, Evans is based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.