Giannis, Kalshi, and the Gray Area of Prediction Markets

By: Ben Paradis

Ahead of the NBA Trade Deadline last month, the public waited anxiously to see if Milwaukee Bucks star Giannis Antetokounmpo would be dealt to another team. After a tumultuous few years, many thought that the Bucks front office would be ready to start over and find the 10-time All-Star a new home.

The trade buzz was reflected online, with users on the prediction market, Kalshi, placing money on Antetokounmpo’s future. Leading up to the February 5th deadline, $23 million was placed on whether or not Antetokounmpo would be traded. However, to the surprise of many, when the deadline passed, Antetokounmpo was not dealt to a new team. But the real shock came the next afternoon, when the Bucks star forward took to social media to announce a new partnership with Kalshi.

This announcement was not well received. Across social media, many positioned this partnership as a conflict of interest, arguing that Giannis had unfair power to influence the market for personal gain. Melinda Roth, a professor of business and sports law at Washington and Lee University, stated that “the timing really puts a good spotlight on how prediction markets work, who is allowed to buy contracts, and who has inside information.”

Given the recent gambling scandals in the NBA involving Terry Rozier and Jontay Porter, as well as the NBA’s ongoing investigation into the Los Angeles Clippers’ deal with Aspiration, this partnership is particularly unsettling. Before we can dissect whether Antetokounmpo crossed a line, we have to understand what prediction markets like Kalshi really are, and how they operate under the law.

What are prediction markets?

Prediction markets are platforms where users buy and sell contracts related to the outcome of real-world events. These contracts are structured as simple yes or no questions – for example, “Will Giannis Antetokounmpo be traded?” Each contract is priced between zero and one dollar, with the price reflecting traders' belief about the probability of that outcome. As more users purchase these contracts, the market price moves to reflect the public sentiment.

For example, a “Yes” contract costing $0.25 indicates that 25% of users predict the outcome will occur. A trader investing $100 would purchase 400 contracts at $0.25 each – collecting $400 if the event occurs, for a $300 profit, or losing their $100 if it does not.

Importantly, when one user buys a contract, they are purchasing it from another user. This is how the public sets market prices. As news breaks and information reaches the public eye, traders react, and contract prices fluctuate. This process resembles the stock market, where valuations rise and fall based on real-world events.

This model is distinct from gambling, therefore justifying Kalshi’s existence. Traditional sportsbooks like FanDuel and DraftKings set the odds through their “house” and take the other side on every wager, profiting off of losing bets. By setting the odds internally, sportsbooks consistently collect more from losers than they pay out to winners. In contrast, in Kalshi’s user-to-user marketplace, the company only profits from a small “exchange fee” on every contract. Kalshi does not have any stake in the outcome on their markets – no matter which side wins, Kalshi profits all the same.

How is this legal?

Without a stake in outcomes, Kalshi builds its central legal claim: it is a platform for financial exchanges, not a gambling operation. In 2020, Kalshi gained approval from the Commodity Futures Trading Commission (CFTC) as a Designated Contract Market – the same federal classification used for traditional financial exchanges like the New York Stock Exchange. The CFTC establishes its authority under the Commodity Exchange Act, the federal law governing all futures markets. Under this act, Kalshi argues that its sports contracts are federally regulated financial instruments rather than wagers.

With this federal designation, Kalshi argues that Congress granted the CFTC exclusive authority over these exchanges, meaning states cannot regulate what happens on their platforms. While sportsbooks must obtain licenses to operate in states where sports betting is legal, Kalshi can operate in all 50 states without approval. Essentially, Kalshi is saying that the rules have already been made, and the states cannot change them however they please.

However, Kalshi has several problems in its legal framework. Under the very law that justifies Kalshi’s existence, the CFTC prohibits “gaming” as a type of futures contract. These contracts are only allowed if they are strictly financial. Under recent scrutiny in federal courts across the United States, Kalshi is desperate to prove that buying contracts on a sports game is not “gaming” but rather a financial exchange. In February, a federal court in Tennessee sided with Kalshi, while courts in Ohio, Massachusetts, and Maryland have found the situation absurd.

Giannis, the NBA, and evolution of prediction markets

Bringing this back to Giannis Antetokounmpo, it is important to establish that he has not violated any rules or laws. Under the NBA's 2023 Collective Bargaining Agreement, players can hold a stake of up to one percent in betting companies. Recently, commissioner Adam Silver verbally extended this ruling to prediction markets, saying Giannis's investment is "well within" the rules. Many athletes, including LeBron James, have partnerships with gambling platforms like DraftKings. On paper, everything checks out.

But the 2023 CBA was designed when only traditional sportsbooks were commonplace. Through an extensive connection between the league and the sportsbook, a web of monitors and regulators coordinates in real time to ensure integrity. In contrast, as Latham and Watkins noted in a March 2026 publication, Kalshi operates as a self-regulatory organization under the CFTC, responsible for policing its own markets.

The NBA has seen how important the current model of layered oversight truly is. Jontay Porter was banned after manipulating his playing time to benefit bettors – a scheme uncovered by sportsbooks. Terry Rozier faces federal gambling charges for similar conduct. In both cases, the regulatory infrastructure and policing provided by sportsbooks helped preserve the NBA's integrity. Without this level of coordination with prediction markets, the question is whether Kalshi has a strong enough infrastructure to prevent foul play.

As of February 5th, that infrastructure didn’t exist. According to Latham and Watkins, Kalshi appointed its first-ever head of enforcement on the same day as the trade deadline and implemented its first two insider trading enforcement rulings just three weeks later. Since, the CFTC has signaled it will coordinate with sports leagues on integrity. Still, that coordination did not exist while $23 million was being placed on Giannis's future.

The concern is not Giannis himself, because Kalshi's policies prevent him from trading on NBA markets. Instead, questions arise about the people around him. Without formal oversight of insider trading before February 5th, agents, coaches, and front office employees who knew he wouldn't be traded could have wagered on the platform with virtually no consequences. We cannot assume any wrongdoing here, but the situation reveals a gap that has yet to be formally closed.

As more professional athletes partner with prediction markets and trading volumes continue to grow, situations like this will become the new normal. While the legal framework of these platforms is still being written, fans, players, and front office executives alike would be wise to pay close attention. Only time will tell how the sports world deals with prediction markets.