The U.S. Commodity Futures Trading Commission received more than 1,500 responses to the proposed rule related to forecast markets, with some supporting the regulator and others calling for a tougher crackdown on the platforms.
The CFTC’s request for public comments on a March proposed rule that would allow it to amend or issue up-to-date rules governing event contracts in prediction markets ended Thursday after receiving responses from prediction markets, crypto companies and consumer advocacy groups.
Kalshi co-founder and COO, Luana Lopes Lara, supported the CFTC in: letter on Thursday, saying that existing rules are “well-designed and effective,” calling on it to issue guidance to ensure “that the entire world of event contracts can continue to be listed, traded and supervised by the Commission.”
The CFTC’s proposed rule aims to strengthen its authority over prediction markets, which have faced legal challenges from multiple U.S. states that accuse the platforms of offering unlicensed sports gambling.
Kalshi, Polymarket and Coinbase are among the companies that have been sued over their offerings in the sports prediction market and have argued that they are subject to the exclusive authority of the CFTC, a claim the regulator has backed by suing at least five state governments that have taken legal action against the prediction markets.
Polymarket US CEO Justin Hertzberg applauded CFTC Chairman Mike Selig letter for “reaffirming the CFTC’s long-standing exclusive jurisdiction over prediction markets,” adding that the company believes the regulator “should continue to exercise its exclusive jurisdiction over prediction markets.”
Mike Selig, whose photo appeared on the March podcast, threatened to sue any state that took action against forecast markets. Source: YouTube
Venture capital firm Andreessen Horowitz also supported the CFTC, arguing in its letter that “state actions to regulate or prohibit prediction markets impose a significant barrier to impartial access,” which is a key principle for companies regulated by the CFTC.
Meanwhile, gaming regulators in Tennessee, Missouri and Pennsylvania, among others, sharply criticized the CFTC for its defense of sporting event contracts, calling on the regulator to drop its support.
Pennsylvania Gaming Control Board Executive Director Kevin O’Toole he said CFTC Allowed Prediction Markets to ‘Masquerade as Unregulated Sportsbooks’ While Tennessee Sports Betting Board Executive Director Mary Beth Thomas he said The Board questions “that sporting event contracts offered on prediction markets are subject to the jurisdiction of the CFTC at all.”
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Michael Leara, executive director of the Missouri Gaming Commission he said that Congress “did not intend the futures markets to include gambling activities” and insisted that the CFTC “properly reserve jurisdiction over sporting event contracts to the states.”
Prediction markets have also come under scrutiny from some federal lawmakers who are concerned about platforms offering markets tied to geopolitical events and their possible utilize by insiders after making good bets on the Iran war.
Dennis Kelleher, CEO and co-founder of consumer advocacy group Better Markets and 12 other consumer groups, told the CFTC in a joint letter that it should “prohibit contracts for events that include elections or geopolitical events,” arguing that such contracts could influence government actions.
Kalshi and Polymarket said last week, after the U.S. Senate passed a ban on the utilize of prediction markets by its members and employees, that they would crack down on insider trading by banning or prohibiting certain users, such as politicians, from using their platforms.
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