Prediction Markets and Uncopyrightable Facts

Prediction markets have drawn increased attention from regulators, courts and market participants as they expand into elections, politics, sports, finance and other events. Beyond regulatory uncertainty, these markets implicate questions common to industries monetizing factual data.

What Are Prediction Markets?

Prediction markets allow participants to trade event contracts—typically binary yes/no propositions—based on the occurrence of a future event (e.g., election outcomes, economic indicators, corporate actions). Unlike traditional opinion poll respondents, prediction market participants commit capital, creating financial incentives that may enhance predictive accuracy.

The modern prediction market traces its origins to the Iowa Election Markets (“IEM”), launched in 1988 as an academic experiment. In the 1990s, the Commodity Futures Trading Commission (“CFTC”) permitted IEM to operate as a research project, regulating event contracts as a form of a derivative. Some have said that prediction market contracts provide more accurate data than traditional opinion polling and surveying methods.

Today, commercial platforms offer event contracts across a wide range of topics and sell data, raising both regulatory and intellectual property concerns.

Regulatory Landscape

The CFTC asserts federal authority over prediction markets as derivatives. At one point, it barred certain election-related contracts as contrary to the public interest. In KalshiEx LLC v. CFTC (D.D.C. Sept. 12, 2024), however, the court held that the CFTC improperly prohibited those types of contracts, concluding that such contracts do not involve gambling or unlawful activity.

Several states have attempted to regulate or prohibit prediction markets under state gaming laws. Nevada, in particular, has taken an aggressive position, issuing cease-and-desist orders and obtaining a preliminary injunction against Kalshi in April 2026, asserting that offering event contracts requires gaming licensure. The CFTC has filed suit against several states seeking to prohibit state regulation of prediction markets, claiming the CFTC has exclusive jurisdiction to regulate them.

Copyright Limits on Predictive Data

Copyright protects original expression, not facts or ideas. Predictive data generated by trading activity—such as market-implied probabilities—might be understood as factual information and therefore not copyrightable.

While compilations of facts may receive limited protection to the extent they reflect original selection or arrangement, copyright does not extend to the underlying facts themselves. At least one court has suggested that factual compilations are vulnerable to the fair use defense.

Preemption and “Hot-News” Misappropriation Doctrine to Prevent Free-Riding

Efforts to control downstream use of factual information are often preempted by the Copyright Act, leading to the lack of control over facts. In NBA v. Motorola, the Second Circuit rejected attempts to restrict the dissemination of sports data under copyright, unfair competition or misappropriation theories, stating: “Defendants provide purely factual information which any patron of an NBA game could acquire from the arena without any involvement from the director, cameraman, or others who contribute to the originality of a broadcast.”

The NBA court stated that the narrow “hot‑news” misappropriation doctrine—derived from International News Service v. Associated Press (U.S. 1918)—is not preempted by the Copyright Act. That doctrine would allow limited control over uncopyrightable facts where (i) the factual information is time-sensitive, (ii) a defendant free-rides on another’s efforts, and (iii) the conduct threatens the plaintiff’s incentive to produce the information. Courts have applied this doctrine cautiously. The NBA court rejected application of the doctrine to the facts of that case.

Contract as the Primary Monetization Tool

Given the limits of copyright, contract law remains the most effective means of monetizing factual data. Most courts have enforced contractual agreements restricting the use and redistribution of non-copyrightable information, stating that the Copyright Act does not preempt the enforcement of contractual rights. Sports leagues, stock exchanges and data providers rely on contractual agreements to control access.

Prediction market operators similarly monetize data by using contractual limitations when providing it to media organizations, financial platforms and institutional users, rather than relying on intellectual property exclusivity.

Right of Publicity Risks

Generally, one has the right to control the use of one’s name, image and likeness for commercial purposes: this is called the right of publicity. Prediction markets may also implicate state right of publicity laws when contracts refer to identifiable individuals, including politicians, athletes or celebrities. Outcomes may depend on interpretation of the common-law right against misappropriation of name or likeness for a commercial purpose, jurisdiction-specific statutes and exemptions, as well as First Amendment protections for newsworthy or public-interest information. Various other common-law misappropriation of privacy torts may also be implicated and relied upon by individuals upset about their private lives being the subject of an event contract.

Notably, state laws vary. In comparing the exemption to a claim of right-of-publicity provided in Nevada to that of California, California specifically identifies “public affairs,” “sports broadcast or account,” and “any political campaign”; Nevada’s statute does not contain that language. Compare NRS 597.790(2)(c) with Cal. Civ. Code § 3344(d).

In Sum

Prediction markets operate at the intersection of financial regulation, intellectual property, publicity rights and privacy torts. As markets expand and data becomes more commercially valuable, there likely will be increased legal scrutiny.

Arthur Zorio aggressively represents clients in litigation of intellectual property and business disputes in addition to providing advice regarding protection and management of intellectual property assets. He has decades of first chair trial experience and has litigated disputes across the country.

---

This document is intended to provide you with general information regarding the interplay of prediction markets and copyright law. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.