Comment Text:
There are additional points I wish to add to my previous comment.
1) CFTC bringing broad gaming under its umbrella, not banning it broadly, will actually facilitate more integrity, not less.
This comment is partially a rebuttal to the NFL's position that the CFTC allowing event contracts related to its league could undermine its integrity but that couldn't be further from the truth.
For example, the NBA, under Commissioner Adam Silver, started advocating for legalized and regulated sports betting as early as 2014. Silver argued that a legal, regulated sports betting market would be better for the integrity of the games because it would bring more transparency, allow for better monitoring of betting patterns, and help identify suspicious activity more effectively than an illegal, underground market.
This came to fruition this year as a player was caught in a scheme to leave a game early. The bets were made on a legal platform therefore the scheme was found out.
The issue of election integrity also applies to election markets. Again, this year, there was a political betting scandal in the UK in which members of the Prime Minister's cabinet allegedly got news of a general elections date before the general public and placed wagers with a legal sportsbook. There is an ongoing investigation as I write this. Those "bets" were only discovered because they took place with a regulated entity.
This should not stop the CFTC from applying light conditions to regulated entities wishing to offer certain contracts. For example, requiring that entities void a "Who will be president?" event contract if one of the choices has been assassinated seems like an obvious but simple condition.
An entity wishing to offer event contracts around sports may be required to partner with an integrity-focused organization that has partnerships with leagues and authorities. Where CFTC needs to be careful is not to build out too many regulations that make it impossible for entities to offer such markets.
The more open that the world is to event contracts related to gaming, the better off we will be. Currently, I would speculate that over 80-90% of global event contract volume occurs by unregulated entities. This is become lawmakers and regulators are reluctant, perhaps for political or optical reasons.
As we move forward, event contracts will grow in demand as an increasingly social world coalesces around events: political events, sporting events, concerts, celebrities. We are all in tune all the time. Over $1 billion in event contract volume will take place around the current election cycle and that is for only one entity offering it.
A CFTC final rule now will cause strife for years to come as companies will try to find creative ways to meet billions of dollars of consumer demand for event contracts. And they will do it in an unregulated space. The CFTC should not step in the way of further innovation in this sector and delay with intent to greatly modify or eliminate this rule, if needed.
