Developing The NBA's Kalshi and Polymarket Deals Put the Rulebook in a Contract, Not the CFTC Memo

Editor's note: TrueEdge builds odds tools that price Kalshi and Polymarket alongside licensed sportsbooks, and earns affiliate commissions from sportsbooks that compete with the exchanges in this piece. Our standing position is that states should not criminalise federally registered exchanges. Weigh the conflict.

On Monday afternoon the NBA named Kalshi and Polymarket its "Preferred Prediction Market Exchanges," widened its DraftKings deal to cover DraftKings' prediction-market product, and announced a memorandum of understanding with the Commodity Futures Trading Commission. The regular season is six days old. Aldrin Research, quoted by Covers, counts more than $1.29 billion in NBA-related exchange volume last week, behind only the NFL, and $17.4 billion since December 1, 2025.

Most of the coverage leads with the CFTC memo. It is the weaker half of the announcement. The league's grip on what NBA markets trade comes from the commercial contracts, and those contracts are what make Monday matter.

The memo binds nobody

We have not seen the NBA memorandum. Nobody outside the two parties has. But it is the third of its kind, and the first two are public. The CFTC's March 19 release on the MLB memo describes a framework to "exchange information in a manner consistent with applicable law." Dechert's May 27 analysis of the NHL version, signed May 21, quotes it as saying it "does not create any legally binding obligations." Sharing is at each side's discretion, and no third party can enforce it. The NBA's own release on Monday describes the new memo in the same terms: "cooperation and information sharing."

That is useful. A regulator that can call the league's integrity office when a strange order lands on a backup centre's rebounds is better than one that cannot. But a memo of that kind cannot remove a market, ban a contract type or require an exchange to do anything. If the NBA wanted the opening-tip market gone from Kalshi, the memo would not get it there.

The contracts can

Go back ten days. On October 16, ESPN's David Purdum reported the NBA's memo to its sportsbook partners. It bans parlays combining unders on the same player, opening-tip markets, bets on a player missing specific shots, unders on players projected for fewer than 12 minutes, and alternate unders at bigger payouts. The parlay ban targets a bet type that ESPN says "appeared in the federal cases involving NBA players Jontay Porter and Terry Rozier." The league enforced it the only way it could, through commercial agreements with books that, by its own estimate, take "upward of 99%" of U.S. handle.

In the same story, NBA executive vice president Scott Kaufman-Ross conceded that applying those restrictions to prediction markets could be hard without formal agreements. On Monday the league signed them. Its release promises "restrictions on permissible markets" for Kalshi and Polymarket, a ban on league and team personnel trading NBA contracts, and obligations to share information on suspicious trading and investigations. Future authorised operators get market restrictions "aligned with the NBA's latest sports betting restrictions."

Put the two weeks side by side and the order is plain. October 16 set the rules for sportsbooks. October 26 bought the means to extend them to exchanges. The price was IP rights, marketing activations and official Sportradar data, which Kalshi says will be used to settle its NBA markets. Kaufman-Ross told ESPN the league had held off "waiting for that moment where we felt like we had all of the proper pieces in place."

So the effective rulebook for NBA event contracts is now a private contract between a league and two exchanges. It is not a CFTC rule, and it is not a state licence condition. That is a real change in who decides, and nobody voted on it.

The league is hedging, and says so

Adam Silver's line, repeated in Kalshi's announcement, is that the NBA has "roughly 40 different jurisdictions regulating us right now." Covers reports that the league prefers national CFTC rules. Yet Kaufman-Ross was careful with ESPN: "We'll let the courts decide," and "The jurisdictional issue is not our issue. Our issue is the way that our game is impacted." He also said the Kalshi and Polymarket contracts cover the case where exchanges can no longer list sports markets, and that the league had "certainly" considered it.

That clause matters. New Jersey's petition asking the Supreme Court to decide whether states can regulate sports event contracts is pending. Thirty-nine attorneys general backed it with a brief arguing that the Commodity Exchange Act "comes nowhere close to providing the clear text required to take the States' power away." The NFL, which has no exchange partner, filed in support earlier this month. New York, where the NBA is headquartered, sued KalshiEX on July 31 (our October 24 piece covers the subpoena fight that followed). The NBA has now signed with the defendant while saying it takes no view on the case. If the states win, the contracts unwind on terms the league wrote in advance. If the exchanges win, the NBA already holds the integrity rights. It does well either way.

The best case against the deal

The strongest objection comes in two parts, and the second is the better one.

The first is legitimacy. The NBA is now licensing its marks and data to products that New York's attorney general calls "gambling platforms, plain and simple." Her suit alleges those products accept 18-to-20-year-olds, whom state law bars from sports betting. Thirty-nine states say the products are illegal where they operate. A league that sells data to both sides of a legal dispute is not neutral. It is getting paid by both sides.

The second is that a contract is a poor substitute for a regulator. State licensing produces public rules, public enforcement actions and public fines. Monday's deal produced a press release saying there are "restrictions on permissible markets" and never listed them. We do not know whether Kalshi's NBA menu will drop opening-tip contracts, whether the 12-minute under ban carries over, or what happens when an exchange breaches the deal. The remedy, whatever it is, sits in a contract the public cannot read.

We accept the second half almost entirely. Integrity rules nobody can see cannot be checked, and readers should treat the league's word "restrictions" as a claim until the menus show it. We reject the first half. Kalshi and Polymarket were not going to stop listing NBA contracts because the league disapproved. They were already trading about $1.29 billion of NBA volume a week without a partner. The choice the league actually faced was between a contract with some leverage over that volume and none at all. The NFL took the second option and filed a Supreme Court brief instead. The NBA took the first. On integrity, the leverage is better. On legitimacy, the critics have a point, but declining the deal would not have made those markets any less real.

What would show the framework is real

This is testable, and soon. The October 16 memo named five market types. If within the next few weeks Kalshi and Polymarket stop listing NBA opening-tip contracts and stop offering unders on fringe-rotation players, the contract is doing what the press release says. If those markets are still trading at Thanksgiving, "restrictions on permissible markets" was a marketing line. The memo will matter the first time the CFTC publicly credits league information in an enforcement action. We have found no such action under the MLB or NHL memos.

The other thing to watch is the "coming weeks" line. The NBA says more operators will sign on as authorised prediction-market partners with "enhanced integrity obligations specific to prediction markets." FanDuel, one of the authorised operators that received the October 16 memo, runs its own prediction-market product, FanDuel Predicts, and was not named on Monday. Whether it signs, and on what terms, will show whether the NBA is building a regime or a short list of preferred vendors.

Betting and trading on event contracts involve risk of loss. If gambling stops being fun, the National Problem Gambling Helpline is 1-800-522-4700.