“To put the argument in the simplest real-world terms: Senate Majority Leader Harry Reid of Nevada would never have consented to or passively accepted legislation supplanting an activity so central to his state’s economy and politics by allowing sports betting solely under the auspices of the CFTC,” Gensler’s brief states.
The courts have so far been divided; some ruled in favor of prediction market providers, while others ruled in favor of states.
The Third Circuit Court of Appeals ruled in April that the state of New Jersey could not shut down prediction markets, but the Ninth Circuit Court of Appeals panel seemed more inclined to rule in favor of the states.
It is likely that the Supreme Court will eventually take up the issue, and Congress is also investigating.
Amicus Memoirs
The CFTC, currently led by its Chairman Mike Selig, filed its own amicus brief in the case last month, arguing that any event contract traded by a designated contract marketplace overseen by the regulator is a swap.
Congress’ definition of a swap was broad, and the language in the statutes allows CFTC-regulated firms to offer their products, the regulator’s filing said.
Genler’s brief disagreed.
“The CFTC now offers hedging theories for certain sports bets that are, at best, only loosely related to reliable hedges of commercial risks. This connection is crucial, however, because Congress has only included event contracts that hedge risks in a manner similar to a swap and are sufficiently ‘associated with a potential financial, economic, or commercial consequence,'” Gensler’s brief states.
