Comment on CFTC-2026-1189, CFTC-2026-1189-0001, George, Martinez

As an Arizona resident, I oppose these amendments and urge the Commission to withdraw them. Existing § 40.11 says registered entities “shall not list” covered contracts; this proposal replaces that guardrail with after-the-fact discretion. This proposal would convert CFTC registration into a nationwide gambling-law bypass. A wager does not become a bona fide derivative merely because a platform calls it an “event contract.” Congress separately used the phrases “based upon” and “involve,” and expressly identified “gaming” and activity unlawful under state law for heightened public-interest review. Proposed § 40.11 collapses those distinct terms by asking only whether settlement occurs within the underlying activity, disregarding whether the transaction involves unlawful wagering. State laws regulating the bet are then ignored precisely because the CFTC labels the bet a derivative. Proposed Appendix F also declares election results and political outcomes generally outside the Special Rule. This defeats the statute’s protective purpose and displaces longstanding state and Tribal authority without clear congressional authorization. The sports rationale is implausibly broad. The Commission says team and player bets offer “price discovery” because teams are economic enterprises and commercial actors might use the prices. Under that logic, virtually any popular wager has economic utility. A speculative secondary use cannot outweigh the product’s design and principal use: retail gambling. Player props also create concentrated manipulation and inside-information risks. Athletes, coaches, medical staff, and team personnel can know or influence minutes, lineups, pitch counts, availability, and strategic decisions. Calling each statistic an “aggregate” does not eliminate that influence. The proposal knowingly creates a regulatory gap. An event contract may begin trading after one-business-day self-certification; the Commission has up to 10 days to initiate a review lasting as long as 90 days, and the exchange need not suspend trading. Many sports contracts settle within hours. A harmful contract can trade and settle before meaningful review. The Commission admits that contracts later found contrary to the public interest may trade in the meantime and that delisting can erase customers’ hedges and unrealized gains. Voluntary restraint by an exchange earning fees is not an adequate safeguard. Most troubling, the Commission identifies precise retail harms at 91 FR 35857–58: addictive potential, loss chasing, continuous availability, frequent notifications, high-frequency losses, lower financial literacy, and longshot bias. It identifies safeguards such as position limits, cooling-off periods, notification restrictions, and self-exclusion—yet proposed § 40.11 requires none. It also lacks age protections consistent with state law, geofencing, deposit or loss limits, responsible-advertising rules, public customer-outcome data, and independent settlement appeals. “Could” and “might” are not consumer protection. The cost analysis is inadequate. OMB deemed this proposal economically significant, yet the Commission predicts only de minimis net costs. It does not quantify consumer losses, displaced state tax revenue, enforcement costs, Tribal gaming and compact impacts, or sports-integrity costs. Acknowledging IGRA and Tribal reliance on gaming revenue, then asserting exclusive jurisdiction, is not meaningful analysis. Election markets create separate democratic harms. Campaigns, officials, vendors, pollsters, media organizations, and foreign actors can possess or release market-moving information and influence the events being traded. These markets create financial incentives around official acts and can erode confidence in elections. Excluding them from the Special Rule is the opposite of public-interest protection. I urge the CFTC to withdraw the proposal. At minimum, any final rule should: 1. Treat staking value on sports, election, or entertainment outcomes as gaming regardless of the transaction’s label. 2. Require prior CFTC approval, public notice, and suspension before trading for all gaming and political event contracts. 3. Preserve state and Tribal age, licensing, geofencing, advertising, taxation, integrity, and responsible-gaming protections. 4. Prohibit player props and other contracts materially influenced by identifiable participants or insiders. 5. Make retail safeguards enforceable and require anonymized reporting of cohort losses, complaints, suspicious activity, and settlement disputes, with independent appeals. The CFTC is a derivatives regulator, not a backdoor national gaming commission. Innovation is not responsible when it erases enacted safeguards and makes the public bear the costs while platforms collect fees.