Major Leagues Likely to Embrace Prediction Market Deals Due to High Value

It appears inevitable that major sports leagues will eventually secure their share of the prediction market sector, as these platforms are currently being monitored by all organizations.

Although the NFL maintains that its stance on prediction markets remains unchanged, the organization rarely ignores significant opportunities to enhance its commercial operations.

Given the current growth trajectory of prediction markets, they represent exactly that kind of opportunity.

Prior to the repeal of PASPA in 2018, the NFL publicly maintained a strong opposition to sports wagering. However, once legalization occurred across states, the league recognized the potential for legal gambling to increase revenue through improved fan interaction and sponsorship deals.

A similar situation is unfolding at present.

Prediction markets have effectively expanded the reach of sports betting to include all 50 states. Furthermore, by making sports event contracts accessible on financial trading platforms such as Robinhood and Crypto.com, they have engaged a fresh demographic of users.

Financial Incentives

Investment capital is flowing into prediction markets in the billions, with Polymarket and Kalshi recently achieving valuations in the eight-figure range. Just this week, Novig declared the completion of a $75 million funding round, which places the company's value at approximately $500 million, as reported by Sportico.

Such substantial figures naturally attract the interest of sports leagues.

"They are fond of large numbers," remarked Master, a former Vice President of Business Development at the NFL, referring to major sports entities. "While a significant portion will be allocated to product development, a large amount will also be directed toward marketing. If they are raising billions, it makes sense to capture some of that."

For Master, who currently advises firms on sports betting strategies and lectures on the subject at New York University’s Stern School of Business, this scenario mirrors the time when leagues chose to collaborate with sportsbooks.

"Their perspective is essentially, 'we might as well accept them as sponsors since we should be generating revenue from it,'" he noted.

NFL Clarifies Position on Prediction Markets

Recent remarks by NFL Executive VP Jeff Miller earlier this month were seen by some as a sign that the league is becoming more open to prediction markets. Miller highlighted the benefits regarding "fan engagement" that these markets provide.

However, a spokesperson for the NFL clarified to us that there has been no change in policy since Commissioner Roger Goodell stated in December, "That is not something we are about to enter into. We are going to see how things play out." During the same month, in written testimony for a Congressional hearing, Miller voiced the league's apprehension regarding the insufficient regulatory oversight of prediction markets.

"We remain in exactly the same position today," the spokesperson affirmed.

During the Super Bowl events in San Francisco this year, Miller emphasized that the NFL was the final league to engage with sportsbooks.

In a statement provided to Ex.casino by the NFL, parts of which were not included in the initial Front Office Sports report, Miller explained, "We did not rush into it immediately. We developed a strategy to define our priorities: Integrity of the game, integrity of the game, integrity of the game. Our partners reflect that in the way we collaborate with them.

"The same approach will be necessary if the Polymarkets and Kalshis of the world continue on this path toward becoming regulated businesses."

In a similar vein, during the NBA All-Star weekend, Commissioner Adam Silver mentioned that his league is "viewing prediction markets essentially in the same manner as we view sports betting markets or sports betting companies."

MLB Considers Partnership with Prediction Markets

While the NFL might be proceeding with caution, MLB seems prepared to make a move. According to an ESPN report, the league is exploring potential partnerships with prediction markets.

MLB Commissioner Rob Manfred is also publicly emphasizing the integrity of the game, rather than revenue or fan engagement, when discussing possible partnerships with owners, particularly following the game-fixing controversy involving Cleveland Guardians pitchers Emmanuel Clase and Luis Ortiz.

"We felt it was crucial to update the owners on how prediction markets differ from sports betting — and why we might consider doing business with prediction markets to safeguard our integrity and secure the necessary protections," Manfred stated regarding the briefing given to teams last week.

Could Prediction Market Sponsorships Diminish Sportsbook League Ties?

Although the NFL, NBA, and MLB have not yet committed, several professional leagues have already established partnerships with prediction markets.

The NHL led the way, finalizing simultaneous licensing agreements in October with both Polymarket and Kalshi.

Additionally, Polymarket has secured partnerships with MLS and the UFC.

These agreements likely irritate the sports betting partners of these properties, who already face a category that is frequently non-exclusive. (While the UFC lists only DraftKings as its official sportsbook in North America, the NHL and MLS maintain agreements with multiple operators).

Collaborations with prediction markets erode the value of sports betting sponsorships.

"Consumers are experiencing a lot of confusion," observed Master, who managed the sports division at Nielsen for nine years. "Ultimately, it comes down to the consumers, and if they cannot distinguish the difference, and no one can explain it, then I believe it slightly devalues the sports betting category."

Master explained that leagues are willing to fragment a sponsorship category if it results in increased revenue.

"It is similar to the automotive category. 'Well, we are the exclusive official domestic car.' Then, we have the official imported car," he said. "They are both cars. One happens to be a GM and the other a Toyota, but leagues treat them as two distinct categories. It is simply another method to monetize a category."