No Props For You!
Hawaii Senator Brian Schatz expects to file federal legislation to regulate prop bets, something leagues and operators are already trying to get out in front of.
The Bulletin Board
THE LEDE: Prop betting restrictions will be a topic of discussion in 2026.
NEWS: Massachusetts Gaming Commission draft rules for limiting bettors.
VIEWS: The case for prediction markets and logical fallacies.
AROUND the WATERCOOLER: Will the loss deduction cap get removed?
STRAY THOUGHTS: Online and land-based gambling are at different stages.
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The Lede: Will Prop Betting Bans Become a Reality?
Hawaii Senator Brian Schatz recently told Pablo Torre that legislation to regulate prop bets is likely to be introduced in 2026 (click the tweet below to hear the entire segment).
Of course, legislation being introduced doesn’t mean much. As I noted before the holidays, In the 118th Congress ~19,000 bills were introduced and ~275 were passed into law.
However, it’s hard to ignore the growing calls and support for prop betting restrictions, by states (Ohio, New Jersey, and New York), and from observers and pundits.
In an opinion column published in The Hill, Sheldon H. Jacobson, Ph.D., a computer science professor in the Grainger College of Engineering at the University of Illinois Urbana-Champaign wrote:
“Eliminating all such risks is straightforward: Ban microbets in all college sports. Since the Supreme Court legalized sports gambling by allowing states to regulate it, bets on the outcomes of games are not going away anytime soon. However, stretching bets on game outcomes to individual plays within games represents a line that the Supreme Court may not have envisioned.
“If the risks associated with sport gambling on college athletes is to be reduced, including the growth of gambling addiction, then microbets on individual player performance or plays during games must be eliminated. Such changes would not violate Supreme Court precedent, since states have the power to institute such changes. It would, however, affect profits earned by sportbooks, which can be counted on to oppose any such restrictions vigorously.”
As unlikely as a prop betting ban passing Congress is, leagues and sportsbooks are trying to prevent the conversation from even getting started at the state level by working with their partner sportsbooks to limit these wagers.
MLB: As previously reported: Major League Baseball has reached an agreement with licensed sportsbooks to limit certain types of prop bets:
“Major League Baseball (MLB) announced today the Commissioner’s Office has worked closely with its sportsbook partners to proactively create new safeguards to limit pitch-level markets. Effective immediately, all MLB Authorized Gaming Operators will cap wagers on pitch-level markets at $200 and exclude those bets from parlays.”
NCAA: NCAA President Charlie Baker released a statement on October 23, 2025, following the NBA indictments, affirming the association’s layered integrity monitoring for over 22,000 contests and commitment to pursuing violations. Baker has also reiterated his previous calls for restrictions on prop betting.
NFL: In response to betting scandals in other sports, the NFL has reinforced its gambling policies through internal communications and partnerships with betting operators. On November 14, 2025, the NFL sent a memo to team officials outlining restrictions on prop bets, particularly those related to officiating, injuries, or easily manipulable outcomes, as part of collaborations with betting partners to mitigate risks highlighted by issues in other leagues.
NBA: The NBA previously said it is reviewing its policies and expanding its internal investigation, requesting cell phones and other evidence from multiple teams, including the Lakers, amid federal probes.
More recently, the NBA announced it is “considering potential policy changes to address tanking, increase the frequency of injury reporting and restrict what sportsbooks offer, according to a memo obtained by ESPN that was sent to teams before the holidays.
Per the memo:
“Core to the NBA’s position is that sports leagues should have control over the types of bets offered on their games. Because leagues currently do not have such control, any changes will need to be pursued via negotiation with sports betting operators, requests to state gaming regulators, legislative action, or some combination of these avenues.”
According to ESPN, “The NBA plans to advocate for further restrictions on prop bets… including how much can be wagered, limitations on “under” bets, reducing the number of players offered by sportsbooks and eliminating bets that could be determined on a single play.”
For their part, sportsbooks are highlighting the availability of prop bets offshore, through gray market DFS sites, or through prediction markets.
As ESPN reported, the Sports Betting Alliance said any blanket ban on prop bets would push bettors toward illegal and unregulated platforms that “lack oversight, offer no consumer protections and refuse to cooperate with integrity investigations.”
“That creates a dangerous blind spot for regulators and leagues, preventing them from effectively identifying and addressing threats to game integrity,” Jeremy Kudon, SBA Chairman, told ESPN in a statement.
And as Dustin Gouker has noted many times:
“Banning all sports betting and/or prop bets at regulated sportsbooks doesn’t solve anything… Here’s a list of all the places you can bet on props in the US fairly easily that are not regulated sportsbooks: Offshore sportsbooks, Sweepstakes sportsbooks, Prediction markets, Fantasy pick’em apps… In any event, “banning prop bets” sounds nice as a talking point in a vacuum, but it’s pretty difficult to achieve here in the real world.”
News: MA Takes First-of-Its-Kind Action on Limiting
The Massachusetts Gaming Commission voted for a proposed rule change that would require sports betting operators to notify bettors that they’ve been limited and possibly the reasons why and in what specific markets they’ve been limited.
As InGame reports, “From here, the MGC will open a 21-day public comment period, as well as be required to file the proposed change with the secretary of state and file a public notice. The commission will also hold an in-person public comment hearing before its legal division proposes set language for a rule change. It seems likely the process could be completed in the first quarter of 2026.”
The MGC was given two options, and all Commissioners seemed to favor the expanded proposal over the limited version seen below:
(11) Procedures to provide timely notice to a patron that their wagering activity has been limited.
(11) Procedures to provide timely notice to a patron that their wagering activity has been limited, including a specific explanation for the attachment of the limit(s), and identification as to which market(s) are so limited.
The proposal comes after multiple hearings (including an extremely controversial one) and a study commissioned by the MGC that found only 0.64% of sports betting accounts were limited — a number that regulators believe is still too many, particularly if bettors are correct on the why.
Since no explanation was given, there is disagreement over the why, with operators saying the overwhelming majority of limited accounts are due to T&C violations and problem gambling concerns, while bettors believe they are being limited for being winning bettors.
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Views: Motte Meet Bailey, With a Side of Slippery Definitions
There is a growing chorus of people trying to justify sports contracts via prediction markets, and judging by the replies on social media (some are posted below), very few are making convincing arguments.
That probably has something to do with the many fallacies that are being deployed including the motte-and-bailey and the definist fallacy — sometimes together. If you know me, you know I love logical fallacies.
Prediction market cheerleaders will often narrowly define gambling (through some gobbledygook word salad) in a way that ignores sports contracts on prediction markets. When challenged, they will often shift to the easier to defend, ‘gambling is a ubiquitous term that is so broad it pulls everything under its umbrella.’
[The Bailey] Prediction markets aren’t really gambling and shouldn’t be regulated as such.
[The Counterargument] What about sports betting?
[The Motte] Well, everything involves some form of risk or speculation, so if prediction markets are gambling, then so are stocks, insurance, or everyday decisions.
In prediction markets debates, this tactic often overlaps with the definist fallacy — like redefining “gambling” to emphasize utility or intent — which can make the fallacy particularly slippery.
The definist fallacy utilizes an atypical definition of key terms to make one’s position easier to defend, often presenting it as the obvious true meaning… because it suits their argument.
FWIW, I like Jason, and have had great conversations with him.
Here are some of the responses to Trost’s tweet:
Here’s the thing (from where I stand): All gambling is risk; not all risk is gambling. What makes a risk gambling is the context it occurs in.
Risk is the broader category: it’s exposure to uncertainty or potential loss in any context. Gambling is when you voluntarily take on risk, typically for entertainment or profit, with clear stakes and probabilistic outcomes. In other words, risk often stems from necessity or external forces (the price of corn futures), but within the gambling subset, risk is a choice. It’s opt-in entertainment with engineered odds.
Risk can also be unavoidable or lack financial gain. Gambling is purposeful and has a financial reward/penalty, and here’s the key: a gamble has a winner and a loser. Risk isn’t always zero-sum.
For instance, crossing a busy road is an unavoidable risk if you need to get somewhere; it doesn’t involve gain beyond survival or convenience — Although, prediction markets would like to change that by letting you trade (gamble) on these outcomes, basically amplifying risk by adding gambling to it.
Prediction markets offer zero-sum bets on outcomes, with clear winners and losers.
Yes, there are financial instruments with gambling-like elements, but core investing is different.
And yes, I agree that there are similarities between some financial instruments and prediction markets (short sellers win when others lose), but I would stop way short of lumping the stock market and insurance in with sportsbooks.
Markets aren’t zero-sum. If the economy grows, most investors can win. Conversely, if someone buys stock in a company and it somehow goes to zero, there isn’t a winner. It’s the difference between value destruction (the stock market) and value transfer (sportsbooks and prediction markets).
Around the Watercooler
Social media conversations, rumors, and gossip.
In a Nevada Independent column, titled “OPINION: How an overstuffed omnibus bill birthed a ludicrous tax on gambling losses,” Michael Schaus, a Las Vegas-based PR expert took aim at the 90% loss deduction cap, and while the following analysis is spot on, as I’ve said this several times, for many lawmakers, this is a good outcome:
“Unsurprisingly, gambling professionals are less than thrilled about the change. As a result, casino executives, including Derek Stevens, have been sounding the alarm on the issue, warning that nonsensical tax bills could end up chasing gamblers away from the tables in Vegas and elsewhere.”
In a separate Nevada Independent column that is definitely worth a read, Mini Racker and Howard Stutz talked to several of the key players in the fight, including Nevada Rep. Dina Titus, and Nevada Sen. Catherine Cortez Masto.
But as STTP has noted in the past, the rhetoric around the effort is adding more weight to an already difficult lift, as evidenced by the following excerpts [bold mine]:
“The Republicans’ tax on gamblers is ridiculous and will be bad for Nevada’s economy,” Cortez Masto spokesperson Lea Hohenlohe wrote in a statement to The Nevada Independent.
Asked what she’d heard about [NV Republican Rep. Mark] Amodei’s efforts and GOP assurances [of a fix], Titus said, “We’re talking to all of them all the time, but you can’t trust those people. We’ll believe it when it’s signed. So, hopefully that’s true. And he’s on the committee, he ought to be helping us, helping Nevada, so let’s hope he’s got an inside with the chairman.”
Does she feel like Amodei has been helpful?
“Well, not yet. But he hasn’t tried to hurt us, let’s put it that way,” she said.
Titus was spot on with a separate assessment, “Republicans are hesitant to change the president’s signature policy achievement, especially if doing so means handing a win to the opposition.”
As such, any potential fix will likely come via an appropriations package or a different bill sponsored by a Republican.
Stray Thoughts
Outlier CEO Evan Kirkham made an interesting point during our podcast conversation, which is, online-first companies are in a growth stage, while their land-based counterparts are in a different part of their lifecycle. It’s akin to NBA purists with hand-checking and “Jordan Rules” vs. the new generation of three-pointers and Euro steps.