The Commodity Futures Trading Commission (CFTC) announced that a roundtable to discuss sports prediction markets, scheduled for April 30th, will not take place.
Many stakeholders opposed to the spread of event contracts on sporting events were planning to use the meeting to air their grievances. The CFTC did not say whether the meeting would be rescheduled.
State regulators have grown increasingly frustrated with sites such as Crypto.com, Kalshi, and Robinhood offering markets on sports. Six states sent cease-and-desist letters to Kalshi after their March Madness markets.
The states accuse prediction market sites of offering unlicensed betting. Kalshi defended their case in court in New Jersey last week, arguing that the CFTC hold exclusive jurisdiction over their affairs.
CFTC remains silent on sports prediction markets
The meeting had been expected to bring clarity to the CFTC’s position on the sports-related markets. The CFTC has so far remained silent, despite Kalshi frequently arguing that it holds authority on the matter.
Speaking on the topic of state regulators issuing cease-and-desist letters, a Kalshi official said, “The CFTC has sole authority in these matters.”
“By attempting to impose their jurisdiction on Kalshi, state regulators threaten the entire regulatory scheme and authority of the CFTC, which was explicitly granted by Congress in the Commodities Exchange Act and regulates trillions of dollars in commodities markets across gold, oil, agricultural futures, and more.”
The CFTC’s silence will add to state regulators’ frustration. In addition to states issuing cease-and-desist orders, the Tennessee Sports Wagering Council sent a letter to the CFTC urging it to take a stance against the sports prediction markets.
The MLB also sent an email to the CFTC with concerns over markets, stating, “limited MLB event contracts available today do not carry the same integrity risks as prop bets even single-game bets, but we expect that equivalent offerings will arrive soon.”
Since then, Kalshi has started offering single-game bets, further encroaching on state-regulated sportsbooks.
Future of sports futures
Crypto.com and Kalshi show no sign of letting up in their expansion of sports prediction markets. As well as MLB matches, the companies created markets on the Masters, NBA playoffs, and NHL playoffs.
Particularly in states with no regulated online betting, the markets offer users the chance to bet on popular sporting events. Crypto sportsbooks, sweepstakes casinos, and offshore betting sites also allow betting, despite legal restrictions.
In February this year, Trump appointed Brian Quintenz, a Kalshi board member, as CFTC chairman. The CFTC’s position could then favor allowing Kalshi to continue expanding into sports markets. The markets have been profitable for the company. March Madness contracts saw over $400 million of trading.
Kalshi has said they will limit their offerings to events that have real-world financial consequences. However, CEO Tarek Mansour previously said he had little interest in sports contracts. That has changed and so too could their position of not expanding into other sports markets such as prop bets.
With the cancelation of the CFTC roundtable, we are no clearer on the future of prediction markets. Upcoming court decisions in the cases against Kalshi and Crypto.com could bring some clarity in the absence of the CFTC making any definitive judgment.
Explore more articles like this
Subscribe to the Markets Outlook newsletter
Get critical insights to spot investment opportunities, mitigate risks, and refine your trading strategies. Delivered every Monday
Cointelegraph is a free to read website, by purchasing a product through affiliate links in our content, we may earn a commission at no extra cost for our readers. Which will allow us to finance our operations and continue with our research work for our readers. We ensure all recommendations go through in-depth editorial checks to maintain accuracy and quality. You can learn more about this on Content Guidelines and How We Rate pages.
