Play Ball: The CFTC and MLB Strike a Historic Deal to Protect Prediction Markets

In a move that would make even the most seasoned sports fans do a double-take, the Commodity Futures Trading Commission (CFTC or Commission) and Major League Baseball (MLB) stepped up to the plate on March 19, signing a first-of-its-kind Memorandum of Understanding (MOU) between the federal derivatives regulator and a professional sports league. This groundbreaking agreement establishes a framework for both organizations to discuss, cooperate, and exchange information concerning issues of common interest, particularly protecting the integrity of professional baseball and related prediction markets.

The MOU provides a mechanism for the CFTC and MLB to exchange information in a manner consistent with applicable law, enabling both parties to more swiftly respond to incidents and better anticipate emerging trends in the prediction markets space. CFTC Chairman Michael Selig emphasized the agreement's collaborative nature. He noted that "the MOU is a collaborative step towards promoting the integrity and resilience of the prediction markets relating to professional baseball." 

The MOU's Key Provisions 

The MOU establishes a comprehensive framework for cooperation between the federal regulator and America's most historic professional sports league. The key provisions include the following.

• Purpose and Mission Alignment. The CFTC promotes the integrity and resilience of US derivatives markets; MLB protects the integrity and public confidence in baseball. Both recognize that cooperation and information exchange are essential to their respective missions.
• Cooperation Framework. Representatives will meet at least monthly to discuss issues affecting the integrity of professional baseball and related event contract markets, and will share information upon request.
• Confidentiality Protections. All shared information is presumed confidential. The receiving party must maintain confidentiality, and the information remains the record of the providing party.
• Permissible Uses. The CFTC may use MLB's information only for its statutory duties under the Commodity Exchange Act; MLB may use CFTC information only to protect baseball's integrity.
• Points of Contact. The CFTC designates Tyler Badgley, General Counsel, as its point of contact. MLB designates Quest Meeks, Senior Vice President and Head Counsel, Policy, Integrity & Compliance, as its point of contact. Each may designate up to two additional staff members.

Connection to CFTC Regulatory Framework: The Recent Advisory and ANPRM

The CFTC-MLB MOU represents a concrete implementation of the regulatory framework that the CFTC outlined just one week earlier. On March 12, the Division of Market Oversight (DMO) issued Staff Advisory Letter No. 26-08 (Advisory) to all designated contract markets concerning the listing and trading of event contracts, with particular emphasis on sports-related prediction markets. On the same day, the Commission issued an Advance Notice of Proposed Rulemaking (ANPRM) seeking public comment on the broader regulation of prediction markets.

The Advisory's Emphasis on Sports League Engagement

As stated in Katten's article on this topic, a central theme of the Advisory is the strong recommendation that DCMs engage with professional sports leagues. The Advisory specifically recommends that DCMs:

• engage in pre-self-certification communications with relevant sports governing bodies;
• include explanations of consistency with league integrity standards in product submissions;
• establish information-sharing and data arrangements with sports integrity monitoring organizations; and
• rely on official league data as settlement sources.

The Advisory notes that" proactive engagement with DMO staff [and] any relevant sports league or governing body may reduce the likelihood of Commission action." This strongly suggests that DCMs without relationships with major sports leagues may find it increasingly difficult to list sports-related event contracts.

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The CFTC-MLB MOU represents a watershed moment in the regulation of prediction markets. As the first agreement of its kind between a federal financial regulator and a professional sports league, it establishes a precedent for cooperation that other sports organizations may likely follow. The timing — just one week after the CFTC issued its Advisory and ANPRM encouraging DCM engagement with sports leagues — demonstrates the Commission's commitment to translating regulatory guidance into concrete action.

For market participants, the MOU signals that the regulatory framework for sports-related prediction markets is evolving rapidly. DCMs seeking to list sports-related event contracts should take note of the Commission's clear preference for cooperation with sports governing bodies. The ANPRM's 40 questions — with comments due on April 30, 2026 — will further shape this framework, and market participants should consider engaging with the rulemaking process to help define the future of prediction markets in the United States.