Prediction Markets; Public Interest Determinations - Proposed Rules

The National Conference of State Legislatures (NCSL) supports the proposed action provided that the final rule defines prediction markets as "gaming" and upholds state authority to regulate them. They argue that prediction markets should be subject to the same state licensing and consumer protection requirements as sports wagering to prevent federal preemption of state laws.

CALinnovates opposes the proposed rules that would allow sports event contracts to be treated as ordinary financial derivatives. They argue that sports gambling products do not serve the core purposes of federal derivatives regulation and that including them undermines the credibility of the financial technology sector and the public interest.

Darrow AI, Inc. supports the Commission's proposed rules and requests specific clarifications regarding litigation-outcome event contracts. They argue that these contracts should not be considered to involve "Enumerated Activities" or "unlawful activity" because they settle on lawful adjudicative acts rather than the underlying historical conduct.

Mekko Brent Brown, Town King of the Thlopthlocco Tribal Town, submits comments on behalf of the federally recognized Indian tribe. The tribe supports the proposed rules but urges the Commission to strengthen the public interest determinations to ensure that prediction markets do not displace or circumvent state and Tribal-regulated sports wagering and casino-style gaming.

The Leech Lake Band of Ojibwe opposes the proposed rule, arguing that it threatens tribal sovereignty, violates the Indian Gaming Regulatory Act (IGRA), and lacks proper consumer protections for youth. They urge the CFTC to maintain existing categorical prohibitions on gaming-related event contracts and to engage in meaningful government-to-government consultation.

Tyler Young, a frequent user of prediction markets, supports preserving access to federally regulated prediction markets for sports and esports events. He argues that these markets should be regulated based on their specific structures and safeguards rather than being treated as unregulated gambling.

Kyutaro Matsuzawa, an assistant professor of economics at San Diego State University, supports the proposed action by recommending that the agency distinguish between prediction markets based on emotionally salient events and impersonal ones. He argues that the agency should consider restricting contracts tied to emotionally salient events, such as elections, to mitigate potential social harms like increased intimate partner violence and crime.