Regulatory Agency Grants Prediction Markets Notable Victory in Stealth Move

Regulatory Agency Grants Prediction Markets Notable Victory in Stealth Move

Yo, Here's the 411 on the CFTC's Cancellation of Prediction Market Roundtables

The Commodity Futures Trading Commission (CFTC) has pulled the plug on a series of roundtable discussions about prediction markets, scheduled for later this week. The federal agency hasn't spilled the beans on reasons for the cancelation, leaving it to participants who were all set to attend, with flight reservations and hotels booked.

These discussions were much-needed, as they aimed to tackle balanced regulation for prediction markets, something dear to attendees like Kalshi, Robinhood, and Crypto.com. Now, it looks like these prediction platforms can keep on cruisin' without a care.

Why Should You Care?

Prediction markets have been creating a buzz lately, ever since Kalshi started offering event contracts for the U.S. Presidential Election. But things got real when they started betting on sports events. States like Illinois, Maryland, Montana, Nevada, New Jersey, and Ohio went ballistic, firing off cease-and-desist letters to Kalshi, Crypto.com, and Robinhood, labeling sports event contracts as nothing but gambling.

Ohio Casino Control Commission's honcho, Mathieu Schuler, said it best: "Buying a contract based on which team'll win a sports event isn't different than placing a bet through an old-school sportsbook."

But Kalshi ain't backing down and has fired back with lawsuits. Two cases have already gone in their favor, with circuit courts in Nevada and New Jersey deciding they were out of their league to rule on this. Only the CFTC's law can stop them from offering sports event contracts.

State regulators wanted to present the CFTC with their arguments during the roundtable discussions. Now, the cancellation feels like a major victory for prediction markets.

In the News:

Kalshi Slays it in Nevada Lawsuit

Michel Anderson

Kalshi Wins Injunction Versus New Jersey in Sports Gambling Case

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The CFTC's Pro-Prediction Market Task Force

On February 5, acting CFTC Chair Caroline Pham announced the roundtable discussions, but signs of what was to come might have been there all along.

In Pham's press release, she wrote: "I've been pressing for it since 2022, but current Commission interpretations regarding event contracts are a mess. Prediction markets are the future, a chance to tap into the wisdom of the crowds to determine probabilities. The CFTC needs to ditch its anti-innovation vibe and embrace the possibilities of prediction markets."

Pham isn't alone in this mindset. On February 1, Donald Trump named Brian Quentenz as his candidate to lead the CFTC. Quentenz is currently on Kalshi's board. Once he gets the green light, he may step down from Kalshi to focus on the CFTC, but his pro-prediction market feelings can't be dismissed smoothly.

Now, Pham's statement or Quentenz's position at Kalshi certainly doesn't mean they canceled the discussions, but without a reason from the CFTC, it adds flavor to the sauce.

Sources:

1. "CFTC Cancels Roundtables on Prediction Markets." Clear elaboration on the cancelation of the roundtable discussions, as well as some comments about the uncertainty it's causing.
2. "CFTC Delays Prediction Market Roundtables." Concise piece outlining the CFTC's intention to change the format of the roundtable discussions to a "forum or hearing" instead.
3. "Federal Judge Refuses to Enter Preliminary Injunction Against Kalshi CFTC Complaint." This article offers insight into Kalshi's lawsuits against the states, noting the company's victory in a case before a New Jersey circuit court.
4. "Kalshi Sues Ohio Over Sports Wagering Ban." Provides more details on Kalshi's cease-and-desist issues with certain states, like Ohio, and how the company is fighting back with legal action.
5. "CFTC Seeks to Ban 'Event Contracts' for Sports Bets." Explains the jurisdictional clash between the CFTC and various states over sports event contracts, as well as shows the implications for companies like Kalshi, Robinhood, and Crypto.com.
6. The Commodity Futures Trading Commission (CFTC) announced the cancellation of scheduled roundtable discussions on prediction markets, leaving participants like Kalshi, Robinhood, and Crypto.com in a state of uncertainty.
7. Amidst this cancellation, some are interpreting it as a victory for prediction markets, given that state regulators planned to present their arguments against event contracts on sports events during the discussions.
8. Ohio Casino Control Commission's chief, Mathieu Schuler, has expressed hostility towards prediction markets, stating that buying a contract based on sports events is no different than placing a bet through a traditional sportsbook.
9. In response to the regulatory pushback, Kalshi has filed lawsuits against states like Nevada and New Jersey, with courts in both States ruling in their favor, asserting they are out of their jurisdiction to rule on this matter.
10. The future of prediction markets may hinge on the CFTC's stance, as acting CFTC Chair Caroline Pham announced diverse CFTC support for prediction markets and named Brian Quentenz, currently on Kalshi's board, as a potential candidate to lead the CFTC, suggesting a shift in the organization's perception of prediction markets.

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