In the spirit of dedicated fan service, The Varsity is bringing back the hugely popular Brady Meter, which analyzed the GOAT’s choppy first year as an NFL broadcaster. Most weeks, we’ll train our sights on one televised sporting event and the talking heads and yammermeisters that called it. In today’s issue, The Varsity turns its eagle eye to Saturday’s first-round Game 7 between the Sixers and the Celtics.

With about five minutes left in the game, Celtics coach Joe Mazzulla challenged a foul call made on Sixers guard Tyrese Maxey. NBC almost immediately went to a replay that showed Mazzulla would lose the challenge—Maxey was, indeed, fouled. The broadcast then went to a replay that showed chaos on the Celtics bench, with Mazzulla listening to one coach advocating for a challenge over another coach pleading for him to save it for later.

That video turned out to be the highlight of an overall strong performance from NBC on Saturday night. And the 29-year-old Noah Eagle, who narrated the moment in a highly fraught contest given the Jayson Tatum pregame scratch, showed that he will be a long-timer in this business. Reggie Miller voiced a lot of strong opinions (who knows if his coaching from the sidelines would have altered the outcome or not), and Jamal Crawford was likable enough. In any event, networks should ditch the three-person booth for all basketball games outside of, maybe, the NBA Finals.

And now, the main event…

For decades, the sports world’s gambling problem was treated as a disciplinary matter: Pete Rose was banned, Tim Donaghy was suspended, etcetera—and usually at the discretion of league commissioners. Then the Supreme Court blew open the door for states to legalize sports betting, prediction markets arrived, and the gambling business entered a new, more legally treacherous era. Last month, federal prosecutors charged U.S. Army soldier Gannon Ken Van Dyke with commodities fraud after he earned roughly $400,000 by trading on Polymarket using classified information about Nicolás Maduro’s fate—the first time the government has pursued criminal insider trading charges related to a prediction market.

The sports world should pay attention. The Commodity Futures Trading Commission, once caricatured as the agency of Trading Places frozen-orange-juice-futures lore, could soon become a vehicle for regulators to go after athletes, coaches, trainers, front-office personnel… anyone trading on a sliver of informational edge.

Given the ongoing jurisdictional turf war between the C.F.T.C. and the states, none of this is straightforward. There’s also the unresolved question of whether existing fraud statutes are equal to the task. Consider the case of NBA guard Terry Rozier, whom federal prosecutors recently indicted over an alleged gambling scheme in which he would remove himself from games while associates sold that information to bettors. (Rozier has denied the allegations.) It’s been billed as an insider trading case, but the government’s charge is actually wire fraud conspiracy—and that distinction is doing a lot of work.

In a motion to dismiss, Rozier’s lawyers argued that the government’s theory rested on an obsolete premise—that sportsbooks were being deprived of “economically valuable information” needed to make wagering decisions. This “right-to-control” theory, they noted, was rejected by the Supreme Court in Ciminelli only three years ago. At the end of the day, they contended, the case amounts to bettors violating sportsbook terms of service—hardly the stuff of a federal fraud case. What the government is trying to do, they say, is convert behavior long regulated by state gaming authorities into a federal felony. This past week, in a Brooklyn courtroom, Rozier’s team pressed those arguments even as prosecutors signaled they might amend the indictment with new charges.

The government’s approach with Van Dyke, the soldier who bet on Maduro’s capture, is different. Instead of forcing insider betting into the ill-fitting box of wire fraud, prosecutors have reached for commodities fraud—imposing, in effect, a securities-style insider trading framework onto prediction markets. The question now is whether a court can be persuaded to treat these quasi-gambling instruments as commodities while also satisfying the statute’s other demands, including proof of intent to defraud. Only then might a durable enforcement model emerge—one that doesn’t depend on approval by Congress.

If that model does emerge, the ramifications for sports will be immediate. What has long been treated as a matter of league discipline begins to look like a federal crime. In an era of real-time injury disclosures, tightly controlled team information, and ubiquitous betting markets, the space between the locker room and the trading floor is getting way narrower.

Regulation isn’t just about bringing cases; it’s about writing the rules. In recent weeks, politicians, sports leagues, and even retail traders have put mounting pressure on C.F.T.C. chairman Michael Selig to do exactly that in the prediction-markets arena. He struck a defensive tone in a letter to The Wall Street Journal, writing, “Claims that ‘insider trading is rampant,’ and that our insider trading rules are ‘fuzzier’ than others are simply untrue.” At the same time, he’s flagged manipulation in sports-related contracts as the agency’s “biggest issue.” Meanwhile, the C.F.T.C. just closed a public comment period on how to proceed. Translation: The agency is getting ready to draw new lines—and once it does, it will have firmer footing to investigate and prosecute those who cross them.

How far might it go? It’s easy to imagine a more tailored definition of insider trading for event contracts, accompanied by data-retention mandates and stricter know-your-customer and source-of-funds requirements. That would move platforms like Kalshi and Polymarket closer to fully regulated exchanges—and strengthen the C.F.TC.’s argument for preempting state-level crackdowns.

But more ambitious proposals are already circulating: bans on participation by “event insiders,” blackout periods before outcomes resolve, and prohibitions on certain categories of contracts. In their own comment letter, the NFLPA, NBAPA, and other player associations urged the C.F.T.C. to prohibit contracts tied to “negative” outcomes—missed free throws, for example—on the theory that they invite manipulation.

The leagues themselves, notably, aren’t pushing back so much as angling for a seat at the table. Several have proposed that platforms such as Kalshi be required to use official league data—presumably at a price—and come close to suggesting that leagues should have veto power over which contracts are listed. The C.F.T.C. has, for now, encouraged a “pre-self-certification” process, but some leagues want that deference codified. As Major League Baseball’s senior vice president for integrity and compliance, Quest Meeks, put it, “Leagues are best placed to identify which markets … raise significant manipulation or insider trading concerns.”

There is more. NBA assistant general counsel Dan Spillane and others have urged that these platforms be required to cooperate with league investigations, including sharing data on traders and their transactions. MLB and the NBA have already entered into memorandums of understanding with the C.F.T.C., laying the groundwork for increased surveillance. Formalizing that arrangement would effectively give prediction markets a second regulator—one with a direct stake in the outcome of the games themselves.

Kalshi’s response is revealing. The platform doesn’t reject the leagues’ integrity concerns; it seeks to absorb them. Yes to surveillance, proscribing certain traders and types of contracts, and cooperation with the C.F.T.C. Not so fast on letting MLB or the NBA determine which markets can exist, which data must be used, or who can access trader identities as a matter of course. In other words, Kalshi is happy to be regulated like a market. It just doesn’t want to be refereed by the leagues.

Thanks, Eriq. I’ll see you all tomorrow.

John

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