In a significant move sure to attract the attention of Hollywood executives, the regulatory agency that oversees prediction markets is asking whether it should allow bets on reality shows, music competitions and other entertainment programming as they exist now.
The Commodity Futures Trading Commission on Wednesday published a Notice of Proposed Rulemaking seeking public comment on its rules and definitions, a move that would codify the its oversight of things like sports bets on prediction markets, and allow it to ban other sorts of markets.
It all hinges on the proposed definition of “gaming” being sought by the CFTC. Under federal law, the agency is empowered to block markets based on “terrorism,” “assassination,” “war” and “gaming” if it finds they’re contrary to the public interest. Here, the CFTC is arguing that a more nuanced definition of “gaming” is required to meet the moment.
And that means clarifying whether entertainment content counts.
Last month, Survivor crowned Aubry Bracco the winner of its 50th season, but users of Kalshi or Polymarket likely knew that well ahead of time. Before the season even premiered on CBS, Bracco’s odds on the prediction market were over 80 percent, suggesting that insiders, either at the network, production company or some other entity involved in the show, sought to cash in on their inside knowledge.
Jeff Probst, the host and executive producer of Survivor, was furious, saying that the prediction market companies were “incentivizing people to lie, cheat and steal to get ahead.”
So, given that context, what is “gaming”?
The CFTC says explicitly that award shows like the Academy Awards, Grammys and Emmys are not gaming.
“The outcome of these contests depends on electors’ judgment on who should receive an award based on a range of considerations beyond the participants’ luck, skill, or athletic ability displayed during the contest,” the CFTC writes. “Because the award turns on evaluative judgments, not on measurable occurrences dependent on the participants’ skill or athletic ability in the activity itself, it is a contest, not gaming.”
Betting on the outcome of political elections, similarly, are not considered gaming.
The CFTC also goes into great detail to clarify that sports bets (at least most sports bets) are allowed under its definition of gaming, but it does not do so for TV competitions that are not athletic events. So it is asking for the public for help.
“The Commission requests comment on its proposed definition of gaming. Commenters are invited to address whether the Commission should provide its views regarding whether other activities constitute ‘gaming,’” the CFTC writes.
“For example, should game shows, reality show competitions, pageants and similar events be considered to be ‘gaming’?” it continues. “The Commission notes that game shows are typically subject to varying standards intended to promote impartiality and fair competition. Other competitions may allow departure from such standards to enhance their entertainment value. Music and talent competitions often have similarities to elections. How, if at all, should the Commission consider these characteristics in the context of event contracts involving these activities?”
Of course, prediction market bets go far beyond just betting on reality competition show winners (like those on Love Island). There are markets on which songs will lead the Billboard charts, who will headline the Super Bowl halftime show, when Taylor Swift (or other artists) will release a new song or album, and whether characters on certain TV shows will say certain words in a given episode.
The CFTC seems acutely aware of the risk of insiders betting on events they know the outcome of, writing that some contracts “may create unique incentives for information leakage or misuse of material nonpublic information—for example, by encouraging individuals with privileged access to disclose or act upon such information, by incentivizing the unlawful acquisition of additional sensitive information, or by enabling third parties to pressure, solicit, or bribe such individuals to obtain it.”
“These incentives may present significant public interest concerns for event contracts involving Enumerated Activities, particularly where the information is highly sensitive and closely guarded, and meaningful insight into the underlying event is concentrated among a small number of individuals,” it continues, noting national security as probably the most significant example. Indeed, the outcome of an entertainment contract seems like small potatoes by comparison.
But for Hollywood, it still matters, and these rules could make a meaningful difference, though the comments from the CFTC certainly suggest that it could allow some entertainment bets, even if it disallows others.
And in fact, the CFTC suggests that entertainment companies could even use the price discovery from sports bets for its own purposes.
“For example, aggregated prices on sports outcomes can inform downstream decisions by sponsors, broadcasters, advertisers, or local businesses,” the CFTC writes.
“The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation,” said CFTC chairman Michael S. Selig in a statement. “This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward.”
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