The Commodity Futures Trading Commission (CFTC) has cancelled a planned roundtable discussion concerning the future of sports event contracts in prediction markets, a source with direct knowledge of the proceedings told InGame.
The discussion, which was planned for April 30, has not been rescheduled — at least not yet — according to the source. The event’s cancellation was first reported by Event Horizon‘s Dustin Gouker who wrote that attendees invited to participate were “told there was no update on when it would be rescheduled.”
An agenda for the roundtable was expected to be circulated this week, and when it did not materialize, murmurs began about a possible cancellation.
This is occurring as six states have issued cease-and-desist orders to some of the prediction operators — including Kalshi — that have been offering sports event contracts. Kalshi, in turn, has countered with their own lawsuits in three of those cases — in Nevada, New Jersey, and Maryland, prevailing for now in Nevada where a federal judge granted the company’s motion for a preliminary injunction while the case proceeds.
The roundtable was announced by the CFTC back on Feb. 5 of this year with the goal of the discussion to “develop a robust administrative record with studies, data, expert reports, and public input from a wide variety of stakeholder groups to inform the Commission’s approach to regulation and oversight of prediction markets, including sports-related event contracts.”
And while the CFTC has not ruled on anything related to sports event contracts, the tea leaves were certainly being read by many as it being a foregone conclusion the commission would give operators like Kalshi — where Donald Trump Jr. is a strategic advisor and CFTC Chairman-in-waiting Brian Quintenz sits on the board — the green light.
Tea anyone?
“Unfortunately, the undue delay and anti-innovation policies of the past several years have severely restricted the CFTC’s ability to pivot to common-sense regulation of prediction markets,” said Acting Chairman Caroline D. Pham back in February. “Despite my repeated dissents and other objections since 2022, the current Commission interpretations regarding event contracts are a sinkhole of legal uncertainty and an inappropriate constraint on the new Administration. Prediction markets are an important new frontier in harnessing the power of markets to assess sentiment to determine probabilities that can bring truth to the Information Age. The CFTC must break with its past hostility to innovation and take a forward-looking approach to the possibilities of the future.
“As the preeminent federal regulator mandated to oversee the $400 trillion notional derivatives markets that drive the real economy and safeguard the public interest, the CFTC is required to follow the rule of law and the Administrative Procedure Act to change course,” she continued. “This roundtable is a necessary first step in order to establish a holistic regulatory framework that will both foster thriving prediction markets and protect retail customers from binary options fraud such as deceptive and abusive marketing and sales practices. The CFTC appreciates the proactive engagement from market participants and looks forward to working together to support innovation while ensuring robust customer protection in our markets.”
Quintenz, while a commissioner at the CFTC in 2021, was even more direct, writing that “since the derivative markets’ historical use is the hedging of commodity price risk associated with economic activity, contracts relating to the outcome of sporting events could now have a legitimate economic and hedging purpose for businesses in these states.”
He was referencing a case involving ErisX, a cryptocurrency and derivatives exchange that sought to offer NFL event contracts.
In the meantime, while operators and regulators wait for the CFTC to weigh in, the future of sports event contracts will be played out in the courts.
