CFTC Proposal Would Turn Consumer Protection Agency Into Nation's Gambling Czar
Washington, D.C. — On Thursday, Demand Progress Education Fund, Americans for Financial Reform Education Fund and Public Citizen submitted a comment letter urging the Commodity Futures Trading Commission to reject any efforts to bring “events contracts” on sports, entertainment, policy or political outcomes traded on so-called “prediction markets” under the agency’s jurisdiction. Instead, the letter urges the CFTC to respect the authority of the states and tribal authorities to continue regulating what are essentially gambling bets.
The groups’ letter warns that prediction markets companies like Kalshi and Polymarket are trying to disguise gambling bets as financial derivatives in order to evade state gambling and tax laws — while at the same time exposing Americans to dangerous gambling platforms that are rife with corruption, manipulation, moral hazards and serious losses for everyday players. The groups note that the CFTC does not even have legal jurisdiction to regulate these types of event contracts in the first place.
“This proposed rulemaking is part of the CFTC’s ominous and dangerous first steps towards unfettered nationwide gambling,” said Demand Progress Education Fund Special Advisor Kate Oh. “Make no mistake about who's pushing for this: sophisticated insiders and big-time predatory traders who are rushing to exploit prediction markets before the law catches up, so they can extract as much money as possible from millions of amateurs. The CFTC must not greenlight their dangerous attempt to turn our financial markets into a wild, digital casino that threatens the financial system itself.”
“A number of companies that offer prediction markets (including Kalshi, Polymarket, Crypto.com and others) are now trying to open the floodgates of people gambling through event contracts nationwide — including in states that outlaw sports betting or gambling outright — while evading the state consumer protections and gaming regulations that have protected the public for generations,” stated the letter. “Their desired result would transform the CFTC from a financial markets regulator into the nation's gambling czar while stripping states of the consumer protections they have built for their residents over two centuries.”