One month after the abrupt cancellation of a highly-anticipated roundtable discussion between the Commodity Futures Trading Commission (CFTC) and a collection of gaming and gaming-adjacent stakeholders, it’s game back on, at least between certain tribal interests and the federal agency that oversees futures and derivatives trading in the U.S.
According to multiple sources, a senior representative for the CFTC sent a letter earlier this month to certain tribal groups inviting them to participate in a conference call on May 29 at 1 p.m. with Acting Chairman Caroline Pham.
The conference-call discussion, it appears, will serve as a more limited substitute for the broader roundtable that was to include stakeholders from tribal groups, commercial gambling companies, academics, professional sports leagues, and the American Gaming Association – a trade group that represents a range of entities within the regulated gambling world.
It is possible but unclear whether the CFTC will hold additional discussions with other groups with divergent commercial interests. The CFTC did not immediately respond to request for comment on Tuesday evening.
What’s at stake
The original roundtable, although never officially announced by the CFTC, was set for April 30 with a full agenda from 9 a.m. to 4 p.m., consisting of two separate sessions. Some stakeholders had booked flights and prepared statements for the record, only to learn that the agency had called it off roughly one week prior.
As for the actual stakes, tribal interests are deeply concerned about the possibility that Kalshi, Robinhood, Crypto.com and other holders of a Designated Contract Markets (DCM) or their partners will emerge from litigation in multiple states with federal courts having sanctioned sports events contracts across the entire U.S., based on the CFTC regulations and the Commodity Exchange Act (CEA) as currently constituted.
“CNIGA strongly urges the CFTC to make it clear that Sports Contracts are prohibited from being listed or made available for clearing or trading,” the California Nations Indian Gaming Association wrote to the CFTC in Feburary. “Trading of Sports Contracts is gaming, violates state and federal law, and is contrary to public policy for various reasons. Importantly, allowing Sports Contracts to be listed and traded will interfere with the sovereign right of tribes and states to exercise their police power to regulate gaming within their respective territories—a right long recognized by courts throughout the United States.”
The National Tribal Gaming Commissioners & Regulators called Kalshi’s event contracts a “wagering scheme” and a “direct threat to tribal communities,” in its letter to the CFTC during a public-comment period.
“Kalshi’s unregulated sports betting contracts have diverted substantial revenues from tribal economies, undermining investments in legal compliance and threatening tribal governments’ ability to serve their communities,” the group wrote.
The CFTC did not disclose any reason for the cancellation of the April 30 roundtable, which was expected to be live-streamed for the public. In fact, the CFTC hasn’t said much of anything since Kalshi and its ilk have rolled out a more diverse menu of event-contract offerings connected to sports contests.
Some observers have suggested to InGame that the roundtable was cancelled because the comments were expected to be overwhelmingly negative, if not steadfastly opposed to the possibility for prediction markets to have the ability to offer what is tantamount to sports bets across the entire U.S.
Meanwhile, public statements from Acting Chairman Pham as well as incoming Chairman Brian Quintenz, who is still awaiting a confirmation hearing, offer strong support and acceptance for prediction markets and sports-related event contracts. The juxtaposition of broad opposition in a public forum against the sanctioning of the controversial activity is what sources believe the agency was looking to avoid.
A multitude of tribal groups previously submitted comments for the CFTC’s repository of public comments about prediction markets, many expressing concerns about the violation of IGRA, a federal law passed in 1988. And multiple states including Michigan, Pennsylvania, and Tennessee expressed opposition and concern that state-level licensing, regulation, and taxation infrastructure would be completely bypassed if the CFTC allowed sports events contracts to proceed on their current course.
Meanwhile, federal courts in Nevada, New Jersey, and Maryland are weighing the merits of the legal dispute between those parties and Kalshi, which has sued officials in all three states when confronted with cease-and-desist orders in each of them. Kalshi has maintained that it is highly regulated — by the CFTC — which it says has exclusive jurisdiction over the markets traded on its platform.
In Nevada and New Jersey, Kalshi succeeded in securing a preliminary injunction while that is yet to be decided in Maryland. In New Jersey in a 16-page ruling, U.S. District Court Judge Edward S. Kiel said Kalshi “demonstrated a reasonable chance of prevailing” on the merits and found “that — at minimum — Kalshi has identified harms to its reputation and goodwill that are both likely without injunctive relief and not able to be remedied following trial.”
