A court fight over who can play college sports this fall could create an unusual new headache for sportsbooks and prediction markets that have already taken wagers or event contracts on the upcoming season, a leading sports industry attorney said.
A federal judge in Colorado last month granted a preliminary injunction allowing a class of Division I athletes who began competing during the 2022-23 academic year and exhausted four seasons of eligibility to seek a return for a fifth season. The NCAA appealed the ruling, leaving the status of players and rosters unsettled with the college football season approaching.
New York attorney Dan Lust said the uncertainty extends well beyond athletic departments scrambling to construct rosters. Sportsbooks have already posted college football futures, season win totals and individual game lines based on rosters that could still change, Lust said in an interview with Covers.
"If you're a bookmaker, you've got to be freaking out about this too," Lust said.
Court ruling leaves rosters in flux
The underlying case, Wisne v. NCAA, was filed July 8 in Colorado District Court by 12 athletes challenging NCAA eligibility restrictions. The antitrust lawsuit concerns athletes who began Division I competition in 2022-23 and subsequently completed four seasons in four years.
U.S. District Judge Charlotte Sweeney issued a class-wide preliminary injunction July 31. The NCAA subsequently appealed and sought to stay the ruling, arguing that additional athletes returning to college competition could displace players who made decisions based on existing eligibility rules.
The NCAA's appeal has left open the possibility that players currently benefiting from the injunction could eventually lose that protection. Lust called the eligibility litigation one of the most pressing legal issues facing college sports because of how late in the offseason the uncertainty has persisted.
The consequences extend to NIL arrangements and roster construction. Lust said schools and affiliated interests may have already allocated money to athletes whose playing time could be affected by the unexpected return of veteran players.
"I'm not aware of the time period in college sports where rosters were in flux so late," Lust said.
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Sportsbooks already dealing with bets
The timing creates an additional complication for the regulated U.S. sports betting industry.
College football futures have been available for months, including national championship and conference markets. Sportsbooks have also begun offering season win totals and lines for individual games.
Those odds incorporate assessments of roster strength that can change when a coach leaves or a significant contributor transfers, suffers an injury, or becomes ineligible.
"You have win totals. You have all this money and all of these potential bets situated," Lust said. "This could change dramatically based off of the outcome."
That doesn't necessarily mean sportsbooks face direct financial losses from every eligibility change. Betting lines routinely move in response to injuries, transfers, and other developments. But the scope and timing of the current situation distinguish it from normal roster turnover.
Lust described the situation as "unprecedented" from a roster-construction standpoint, particularly because some affected athletes were starters last season and could still find new teams.
Prediction markets create further complications
Prediction markets introduce a different potential problem.
Unlike conventional sportsbooks, federally regulated prediction platforms operate event-contract exchanges where participants can buy and sell positions. That structure can make the speed at which information reaches the market especially important.
College campuses also contain potentially hundreds of people who could learn about consequential roster developments before they become public. Lust said the eligibility litigation magnifies that concern because even the mechanisms governing player movement remain uncertain.
Because of their proximity to college athletes and athletic programs, some students between the ages of 18 and 21 may have access to information about player developments before it becomes public. These students can't bet on sports, but they can potentially trade event contracts.
The problem could become more significant as sports prediction markets expand. Information that previously mattered principally to coaches, players, reporters, and conventional sportsbooks can now potentially be traded almost immediately through event contracts.
For prediction markets, that means the legal uncertainty surrounding college sports is increasingly becoming market-making uncertainty as well. Lawmakers have considered action as a separate wave of legal battles continues. But prediction platforms will enter the upcoming football season without certainty - or key government regulatory tools - for dealing with the unique nature of nonpublic information.
“The ability to move a market with inside information, I think, is at an all-time high," Lust said.
Wait and see
For now, the NCAA, bookmakers, and prediction market operators have little choice but to wait.
Lust said collective bargaining could eventually provide another mechanism for establishing enforceable rules, but he believes federal legislation may have to come first. Congress could eventually provide a more uniform framework for college athletics, and Lust said recent movement on federal legislation offered signs that lawmakers could ultimately act.
But even that route remains uncertain as lawmakers attempt to address an increasingly broad collection of issues involving eligibility, transfers, compensation, and college sports governance. Until - or if - Congress provides a more uniform framework for college athletics, sportsbooks and prediction markets will have to account for the possibility that eligibility rules could change before or even during an athletic season.
Even then, a federal solution may not fully resolve these issues for the sportsbooks or athletes.
"My fear is that it does too much," Lust said of the latest congressional effort. "But it might be a necessary evil to just kind of try to put some structure over the space."
