“To put the argument in the clearest real-world terms: Senate Majority Leader Harry Reid of Nevada would never have consented to or passively accepted legislation that displaced an activity so critical to his state’s economy and politics by only allowing sports betting under CFTC auspices,” Gensler’s brief said.
Courts have so far been divided; some have ruled in favor of prediction market providers, while others have ruled in favor of states.
The Third Circuit Court of Appeals ruled in April that the state of New Jersey could not shut down the prediction markets, but the Ninth Circuit Court of Appeals panel appeared more inclined to rule for the states.
It’s likely that the Supreme Court will eventually take up the issue, and Congress is messing around as well.
Amicus briefs
The CFTC, currently led by Chairman Mike Selig, filed its own amicus brief in that case last month, arguing that any event contract traded by a designated contract market overseen by the regulator is a swap.
Congress’s definition of a swap was broad, and the language of the statute allows the CFTC-regulated firms to offer their products, the regulator’s filing said.
Genler’s card disagreed.
“The CFTC now advances hedging theories for some sports bets that are at best only tenuously connected to reliable hedges of commercial risks. However, that connection is crucial as Congress only included those 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 said.
