CFTC proposal draws 11 comments on sports event contracts
Regulation2 min read
The CFTC proposal to classify sports event contracts as swaps had received 11 public comments, the agency said, with submissions due by 18 November. Most of the 10 submissions described in the coverage support federal oversight, while some seek clearer limits and safeguards.
A federal proposal to classify sports event contracts as swaps has drawn 11 public comments so far, according to the Commodity Futures Trading Commission (CFTC). Comments are due November 18.
The proposed swaps classification would also encompass contracts tied to politics, cultural events and weather under the Commodity Exchange Act. A related interim final rule adopted by the CFTC leaves casino-style gambling products outside that definition, including eligible wagers at state-regulated sportsbooks. The rules aim to address concerns from some courts that classifying sports event contracts as derivatives might also place conventional sports betting under federal oversight.
Unlike sportsbooks, which typically set odds and bet against customers, prediction markets derive prices from trades among participants. The CFTC and prediction market operators have relied heavily on the new rules in legal challenges to state gambling restrictions since the rules were published. Courts still face questions about federal preemption of state gambling restrictions and the legality of listing different types of sports contracts. Several petitions seek intervention by the U.S. Supreme Court, including one from New Jersey.
Federal oversight has support in almost all 10 submissions, though some commenters want tighter limits on prediction market offerings, according to the source. Some early commenters also seek more clarity on regulatory boundaries and additional protections for sports event contracts. A Utah trader said Robinhood stopped him from taking new positions in sports, politics and culture after legal developments in the state. He warned that limits could send traders to offshore platforms.
Major prediction market operators, state regulators and tribal interests have not yet submitted comments, according to the source, though earlier rulemakings brought a rush of submissions near the deadline. Earlier CFTC rulemakings on prediction markets received over a thousand comments.