Sports predictions are moving beyond games and into a sensitive corner of American sports: the private decisions of college athletes.
In recent regulatory filings, Kalshi signaled its intent to offer contracts tied to NCAA transfer portal decisions, pushing prediction markets into territory long banned by state sports betting laws. The proposal drew immediate pushback and questions about insider information and enforcement in a regulatory system multiple states are actively challenging in court.
According to self-certification filings submitted to the Commodity Futures Trading Commission, outcomes would resolve based on public confirmation, including athletes’ social-media posts, statements from athletic departments, or reports from major recruiting services. Under the contract rules, a player who announces an intent to enter the portal and later decides to remain at their current school would still trigger a “yes” outcome.
Insider trading prevention unclear
In a statement to LSR, Kalshi responded to remarks from NCAA President Charlie Baker, who “vehemently” opposed the proposal and blasted “unregulated” prediction markets for lacking the safeguards of traditional sportsbooks.
“We are a federally regulated exchange,” a Kalshi spokesperson said. “We have comprehensive internal policies to address trading integrity and responsibility issues, including in-house and third-party surveillance systems that monitor trading activity. We run Know-Your-Customer checks on everyone who trades on our platform.”
Kalshi, however did not provide details on how those controls would apply specifically to transfer decisions, which are often known privately among teammates, family members, or advisors well before any public announcement. Nor did the company explain how it would identify indirect trading based on nonpublic information shared outside the narrow categories of prohibited participants listed in the filings.
The filings were first reported by InGame.com.
A line sportsbooks have not crossed
While NCAA rules prohibit coaches at other schools from contacting athletes before they enter the portal, they do not regulate informal communication among non-institutional parties, allowing knowledge of a potential transfer to circulate privately before any official disclosure.
That information gap has widened in the NIL era. More than 2,700 Division I football players alone entered the transfer portal during the most recent cycle, a trend that’s accelerated since a 2021 rule change allowing multiple transfers without having to sit out a season.
States have long barred betting markets tied to college athletes’ off-field decisions. Many also prohibit wagers on individual player performance or on in-state schools.
The NCAA released a study in November that found 36% of Division I men’s basketball players receive abusive messages from sports bettors on social media. Those findings have fueled the organization’s push to get more states to restrict athlete-specific betting markets, which it says increase the risk of harassment and mental-health harm.
College athlete betting changes shape
Concerns about athlete-level betting markets have intensified as college sports have faced a series of gambling-related scandals tied to insider information and game manipulation.
In November, the NCAA permanently banned six men’s basketball players from multiple schools for betting-related violations, including sharing nonpublic information and discussing third-party wagers on their own games. Those cases were flagged through monitoring tied to state-regulated sportsbooks, which operate under integrity requirements that prediction markets are not currently subject to.
Recent NBA and MLB betting investigations have led Congress to press league commissioners on how they plan to deter insider trading and protect game integrity. Both leagues have urged the CFTC to adopt rules for sports predictions, arguing that they pose risks similar to traditional sports betting but operate without comparable safeguards.
Predictions gamifying everything
The uncertainty surrounding transfer portal markets comes as prediction markets have scaled rapidly, driven largely by their expansion into sports. Kalshi and rival platform Polymarket have reached multibillion-dollar valuations following their entry into sports trading earlier this year.
“The long-term vision is to financialize everything,” Kalshi co-founder and CEO Tarek Mansour said last month at the Citadel Securities conference, describing a future in which nearly any real-world outcome can be turned into a tradable contract, now inccluding highly personal decisions of college athletes.
Debate over how such markets should treat insider information has intensified in lock step. Last week, Coinbase CEO Brian Armstrong questioned whether insider trading should even be prohibited in event-based markets.
“If your goal is actually to get signal about what’s going to happen in the world,” Armstrong said at The New York Times DealBook Summit, “you actually want insider trading.”
Armstrong’s company offers prediction markets through a partnership with Kalshi and Armstrong has previously acknowledged influencing prediction markets tied to his own words.
Prediction markets rules fiercely contended
All of this is unfolding amid an unsettled legal fight over whether sports predictions should be regulated like sports betting or if they should even be allowed at all. While exchanges like Kalshi operate under the CFTC’s self-certification framework, state regulators argue that contracts tied to sports outcomes are functionally indistinguishable from sports betting, an area the Supreme Court ruled falls to states. Several states have moved to block prediction market offerings on that basis, setting off court battles that remain unresolved.
Roughly 90% of Kalshi’s trading volume has come from sports markets during the football season, according to data compiled by LSR. Last Sunday alone, the exchange generated more than half the volume of its year-long New York City mayoral election market entirely from 14 NFL games.
The CFTC, for its part, has largely stayed on the sidelines. It has not publicly objected to Kalshi’s sports-related filings, nor has it issued formal guidance clarifying where federal oversight ends and state gambling law begins. President Trump’s nominee for chairman said he will let the courts decide.
As sports predictions expand, that lack of intervention has left exchanges to test regulatory boundaries themselves, a posture that has drawn criticism on Capitol Hill, where lawmakers this week questioned whether the lightly staffed CFTC can function as a national betting regulator.
The result is a regulatory gray area that has become a defining feature of the industry’s growth as legal challenges play out. With little clarity from federal regulators and mounting resistance from states and sports leagues, prediction markets continue to push into increasingly sensitive territory, creating only more questions around integrity, enforcement, and jurisdiction.
