CFTC Asks Novig, ProphetX to Halt Sports Micro Contracts

It appears micro-betting for sports prediction markets won’t be coming quite yet.

The Commodity Futures Trading Commission has sent letters to Novig and ProphetX asking them to halt micro-contracts launched for the basketball season. In them, it describes these wagers as being easily manipulated, and exactly what the NBA and other leagues have warned the industry to avoid.

Micro-betting has been a major concern for leagues trying to protect their product's integrity. These wagers let bettors wager on single moments in a game, such as the outcome of a single pitch in baseball. 

The controversial wager type also presents a greater risk for bettors struggling with compulsive gambling. That’s because micro-betting lets them place many wagers on a single event. Combined with the fast pace, this can lead bettors to place far more wagers than they intended, often resulting in serious financial losses.

According to the CFTC, micro-betting isn’t likely covered under the Commodity Exchange Act. This led it to ask the two native-sports prediction platforms to halt those contracts while it reviews them.

CFTC, NBA Sign MOU

The CFTC’s request to Novig and ProphetX came shortly before it signed a Memorandum of Understanding with the NBA. The document shows a joint commitment to protect the league’s integrity and is another step toward the NBA accepting the prediction industry.

“I’m pleased the CFTC and NBA signed an MOU which continues the Commission’s commitment to increasing data sharing between the agency and professional sports leagues,” CFTC Chairman Selig said in a press release earlier today. “The NBA joins the MLB and NHL in taking a responsible step toward protecting sports integrity and market participants from abuses in prediction markets like insider trading and fraud. I thank NBA Commissioner Adam Silver for putting the integrity of professional basketball and America’s financial markets first and for working with the CFTC on this MOU.”