Original | Odaily Planet Daily (@OdailyChina)
On January 27, local time in the United States, Soccer United Marketing (SUM), the commercial arm of Major League Soccer (MLS), announced a multi-year partnership with the prediction market platform Polymarket. According to the agreement, Polymarket will become the official exclusive prediction market partner for the MLS league, MLS All-Star Game, MLS Cup Final, and the Leagues Cup, while MLS will require Polymarket to use official league data and a third-party integrity monitoring system, and will not allow betting markets that the league believes are susceptible to manipulation or involve insider information.
This is not the first time a sports league has partnered with a prediction market. As early as last October, the National Hockey League (NHL) reached multi-year licensing agreements with Kalshi and Polymarket; subsequently, Polymarket also reached an agreement with the Ultimate Fighting Championship (UFC) in November, becoming the official exclusive prediction market partner for UFC.
What does the term "official exclusive prediction market" mean? Does this imply that other unauthorized platforms will be unable to open related betting markets in the future? What impact will this have on future competition in the industry? Although there are currently limited mature cases of prediction markets collaborating with sports events, and the observable sample size is small, we can find similar answers to these questions from the sports betting market, which has a service effect that is very similar.
- Odaily Note: For more on the similarities in service between prediction markets and sports betting, as well as the regulatory differences and the regulatory games surrounding prediction markets, please refer to our article two weeks ago, “Shaking the Billion-Dollar Cake of the Gambling Industry, Prediction Markets Are Being Pursued by the Old Order.”
Exclusive Authorization ≠ Betting Market License
First, let’s address the most critical question — Does the existence of exclusive authorization mean that other unauthorized platforms will be unable to open related betting markets in the future?
The current state of sports betting is that since the U.S. Supreme Court overturned the federal law prohibiting commercial sports betting, the Professional and Amateur Sports Protection Act (PASPA), on May 14, 2018, states in the U.S. have gained the authority to decide whether to legalize sports betting within their jurisdictions. In other words, the legality of betting services depends on state-level licensing rather than commercial authorization from the league — in reality, when bookmakers open betting markets or provide betting services for various legal sports events, they do not need to obtain commercial authorization from the league operators.
However, in a few states like Tennessee, state-level sports betting regulators require bookmakers to use official league data when providing in-play betting services, unless they can prove that such data is not applicable or unavailable. This means that official authorization can factually influence the service scope of betting companies — only with data authorization can they provide the most comprehensive betting services.
But this logic does not currently apply directly to prediction markets. Given that the regulatory framework for prediction markets is still unclear (and objectively more lenient), Polymarket and Kalshi are not obligated to comply with similar requirements in betting regulations until the final ruling from the appellate court or even the Supreme Court is determined.
So while Polymarket has obtained exclusive authorization from MLS, at least at this stage, it does not mean that other platforms like Kalshi are prohibited from opening MLS-related betting markets.
Since it is not necessary, what is the significance of authorization?
Although it is not "necessary to obtain authorization to open a market," in actual commercial operations, there are indeed numerous commercial collaborations and authorization agreements between major sports leagues and bookmakers. For example, the NFL has signed a long-term cooperation agreement with Genius Sports, authorizing Genius as the sole official data provider to bookmakers for real-time event data, including rosters, game reports, technical statistics, and more.
For bookmakers, the main significance of authorization lies in their ability to directly obtain official data and brand authorization from the sports event operators through commercial agreements, thereby enhancing their service quality and user experience. If it is exclusive authorization, it can add an additional layer of exclusivity on top of that.
The core significance here naturally lies in the quality and completeness of the data. Compared to data scraping through third-party channels, official data obtained through authorization agreements is bound to be more accurate, timely, and comprehensive, which has a direct impact on improving the accuracy of betting odds, accelerating settlement efficiency, and expanding betting categories. As for brand and trademark authorization, it allows bookmakers to be more flexible in promoting related betting markets — they can use the league, team, and player identifiers while avoiding infringement risks.
Conversely, for sports events, reaching authorization agreements directly with bookmakers also helps reduce the possibility of market manipulation (which may sound somewhat abstract…). Both parties can standardize the betting scope and share abnormal betting data to promptly identify potential manipulation possibilities. For instance, in the collaboration between Polymarket and MLS, both parties have clearly stated that they must not open betting markets on red and yellow card penalties, which are easily subject to personal manipulation, or on matters like coach dismissals and player transfers, which easily involve insider information.
Given the high overlap in service effects between prediction markets and sports betting, the significance of authorization agreements in the sports betting market will similarly apply to prediction markets.
Head-on Confrontation of Leaders, Divergent Paths for the Second Tier
Sports betting has long been validated as a large-scale, steadily growing business, and within prediction markets, sports events have gradually become the category with the highest trading volume.
Dovey Wan, founder of Primitive Ventures (@DoveyWan), posted yesterday the proportion of various types of events on major prediction markets. Among them, the betting volume of sports events on Kalshi has exceeded 90%, while on Polymarket, the betting volume of sports events has reached 43% — clearly, sports events have become the core source of traffic for these two leading prediction markets.
In the face of a large existing scale and visible incremental space, market competition is inevitable. Currently, among the four major sports leagues in the U.S., only the NHL has signed authorization agreements with Kalshi and Polymarket, while the NFL, NBA, and MLB are still in a wait-and-see phase. It is expected that after Polymarket has successively secured exclusive authorizations from UFC and MLS, the two leading platforms, Kalshi and Polymarket, which occupy compliance and funding advantages, are likely to engage in more intense competition for authorization around various top sports events, and more exclusivity agreements are bound to emerge.
However, data also reveals another interesting phenomenon — perhaps due to cultural differences and user habits, emerging prediction markets on the other side of the world are taking a distinctly different differentiated path. As shown in the previous chart, the proportion of event trading volume related to the native cryptocurrency market on Opinion is far higher than that on Kalshi and Polymarket. While the leaders are engaged in head-on confrontation over the huge cake of sports events, choosing a divergent path may present an opportunity for second-tier projects to catch up.
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