CFTC Nominee Punts To Courts, Congress On Prediction Markets During Senate Hearing
I included a transcript of every question to and answer from Michael Selig. Gambling news roundup: Wisconsin sports betting bill hits speed bump.
The nominee to lead the Commodity Futures Trading Commission faced several questions about prediction markets in a Senate committee hearing on Wednesday. But he generally avoided the questions and deferred to courts and Congress on the future of sports event contracts.
Michael Selig’s nomination hearing in front of the Senate Agriculture Committee largely centered on cryptocurrency, agricultural issues, CFTC resources and Democratic representation on the commission.
Several Democrats on the committee probed Selig on sports betting that’s happening via prediction markets, but they weren’t able to get much out of him. The answers Selig gave made it seem like he wouldn’t be interested in reining in sports event contracts. Selig turned back questions multiple times by saying whether the markets continue to exist would be up to courts via lawsuits around the country, or Congress, if it decided to place limits on event contracts.
Sen. Cory Booker attempted to link the current sports betting scandals in pro sports to prediction markets, but didn’t really press Selig on the issue. Plans for President Donald Trump’s Truth Social to get into prediction markets also made a cameo.
Selig is scheduled for a confirmation vote tomorrow in the Senate Agriculture Committee.
Selig’s answers were perhaps a bit softer than Brian Quintenz, the former CFTC nominee who did get a nomination hearing but never got to a vote on confirmation. Quintenz more or less said the current law meant any event could be listed as a prediction market. Here’s Quintenz from June in responding to a senator’s question:
“I believe that the law is very clear about events that have commercial or financial or economic consequence, qualifying as commodities, because the act recognizes that therefore, a viable and invaluable futures market can be listed upon them, and afford people the opportunity for risk management, price discovery, and price dissemination, which are the three cited national interests for the Commodity Exchange Act.”
Here’s a rundown of all the questions and answers from the hearing around prediction markets:
Sen. Tina Smith: In 2018, the Supreme Court gave states the power to decide whether to legalize sports betting or not. I mean, in my home state of Minnesota, we have not done that. We’ve not legalized sports betting, but, of course, Minnesotans can bet on sports online anytime they want to through the so-called prediction market platforms. And as I’m sure you also know, through the Indian Gaming Regulatory Act, tribes have the authority to regulate gaming within their reservations, including sports betting.
So this is my question. It seems to me that there’s a bit of a conflict here because we’ve got these prediction market platforms, which are offering sports wagers on tribal land, with no tribal oversight. And now sports betting firms will argue that state and local, state and tribal laws don’t apply because they’re offering these event contracts, but seems to me that this could be a semantics difference without an actual practical difference. Certainly, people in Minnesota don’t know whether they’re doing a sports wager or an event contract wager.
So here’s my question. Putting aside this distinction between a sports event contract and a sports wager, current CFTC regulations clearly prohibit event contracts related to gaming from being offered.
So if confirmed, can you commit to enforcing that prohibition? Tell me, tell us a bit about how you see this issue.
Selig: Thank you, Senator. As someone who spent many years practicing law at law firms as well as studying the law and law school: These are complex issues as to interpretation of what it means to constitute “gaming.” And of course, I have the utmost respect for our judges that are working on these issues in the court system, and I intend to always adhere to the law and follow what judicial decisions tell me to follow.
I also believe that these types of issues are ones we can work through together. Some of them are Congressional issues as to whether we change statutes in certain areas. But of course, I was not at the CFTC at the time that this portion of the Dodd-Frank Act was drafted. I was not working in this committee or on the Hill at the time. And so these are just very challenging interpretive questions that I will look to the courts on.
Smith: Well, it seems to me that the CFTC’s prohibition on gaming is pretty unambiguous, and also Congress has made this clear that when it gave the CFTC authority to prohibit certain gaming contracts, that it intended to prevent gambling through these futures contracts. So, it seems to me that this is a semantics difference, and we should be able to count on CFTC to enforce the law.
Sen. Cory Booker: I wanted to get into some of the corruption we’re seeing in American sports right now. It would be hard to have missed that in this past month, the FBI indicted several NBA and MLB players who were trying to manipulate outcomes for profit. I’m a fan … But the bad actors are caught because regulated sportsbooks caught the suspicious activity.
And given these recent events, it’s all more concerning that sports event contracts are being offered without the same monitoring. All designated contract markets must comply initially, and an ongoing basis, with 23 CFTC core principles, specifically core principle No. 3, that requires contracts must not be readily susceptible to manipulation. And so, you’re gonna be right there, should you be confirmed, and I want to make sure that you have strong integrity in your monitoring systems in place, to ensure athletes, coaches, league employees, and referees, or any close family or friends, or such individuals, are not manipulating America’s pastime. America’s greatest sport, I’d say football, and more. And that’s something I wanted you to hear from me since we didn’t have a chance to meet privately.
The last thing I want to go over is the greatest state in America, is clearly, you agree with me, you can just nod your head — is New Jersey. It’s historic. Our great Garden State is the East Coast home of gaming in the US industry. Employs approximately 51,800 peoplem garnering close to $2 billion in revenue. America should be thanking New Jersey more for all of our great contributions in this republic, but one of them is, we really did the work to legalize sports betting across the United States. We were the ones fighting in court across this last decade to get that legalization.
But New Jersey also worked for years to bring sports betting into the legal fold. Then to be sued by those platforms, and waste taxpayer dollars fighting for the right to police this activity is frustrating for our state officials, and the 34 attorneys general. And so, again, it’s very important to me, and I’ll end with this, that the sports contracts have enforcement mechanisms. With over half of the country’s chief law enforcement officers saying these contracts break state laws that we’re seeing, it’s just frustrating that the CFTC hasn’t acted, and I’ll let that be my real question to you after my statements.
Selig: Senator, thank you, and I do look forward to getting the opportunity to meet. I know we were unable to connect yesterday. And New Jersey of course is a great state. …
I think it’s vitally important that the CFTC look to the courts on a lot of these issues. They’re, of course, being litigated across the country really, to the extent that any of these event contracts constitute gaming, of course, that’s a question for the courts. But if they’re trading in our markets, if the products are self-certified and the CFTC’s allowing them to trade in the markets, of course, it’s vital that the CFTC ensure that those contracts are not being manipulated, that they’re not readily susceptible to manipulation. It’s a core principle. And of course, if confirmed, that would be something that I would enforce.
Booker: Well, you know, judges might hand out a decision in agreement with Jersey and 34 state attorney generals, and I’m hoping that you will then follow those courts, order companies listing event contracts related to sports events to stop operating in states in which the judges find them to be contravening state gambling laws. So I’m hoping we can have a chance that you and I can discuss it. This, as you can see, is a committee that gets a lot of bipartisan agreement. And this is a space I hope you and I can have a dialogue on it. It’s such an important industry to my state.
Sen. Elissa Slotkin: On sports events, contracts, Senator Booker can talk all about New Jersey he wants. We’re the No. 2, Michigan is the No. 2 online casino and sports betting state …. The tribes and our licensed sports prediction markets are the ones who control that. My understanding is that the CFTC regulations are clear on this issue, that sports contracts shouldn’t be allowed because they are equivalent to betting, right? To gambling. In your opinion, should sports event contracts be listed through the CFTC? Thank you, Senator.
Selig: As I mentioned, this is a really complicated issue. It’s an interpretive question that’s working its way through the courts. And so I will respect the decisions of those courts. I also am very interested to work with this committee, to the extent that there are views that we need to change anything in the statute. But this is ultimately a question for the courts. And as a chairman of an agency, I will always look to the views of the courts and to Congress, as the Supreme Court has said, in the Loper Bright decision. You know, the deference of the agency is limited. We have to look to the courts.
Slotkin: Okay, I appreciate that. You had said yesterday you hadn’t met with the tribes. I encourage you to meet with the people who are in this business and just have, again, if you appreciate alternative views, it shouldn’t be hard to meet with these folks.
President Trump announced that he’s launching his own Truth Predict that would basically support event contracts, and that they be traded. If the President asks you for a carve-out or an exception, so that Truth Predict can be listed, how will you respond?
Selig: Senator, I will always uphold the law and stick to the law. I mean, to the extent that the President were to, in compliance with this ethics rule, submit an application, he would go through the same process as everyone else.
Slotkin: That is true. I would hope that you would be very careful about exceptions and the perception of graft and because he’s invented this thing, and you’d be the only guy in the hot seat that he’d have to get an exemption from. So we’ll hold you to that.
Sen. Adam Schiff: In California, and across the country, prediction market platforms like Kalshi have been offering so-called event futures contracts on sporting events. I know you’ve been asked a great deal about this. I just want to drill down further. Right now, I can go on Kalshi and predict who will win tomorrow night’s Thursday night football game between the Bills and the Texans. If I spend a dollar predicting who the next coach will be of the New York Giants, I can make $6. Sounds a lot like gambling to me.
These prediction markets are trying, I think, to have it both ways, simultaneously marketing themselves as financial products and marketing themselves as sports betting. But there’s no economic utility to these contracts. There’s no price discovery being facilitated. They’re offering gaming products with no regulation, and I think that’s in violation of state law and tribal sovereignty.
The Commodity Exchange Act prohibits any event contracts from being listed, traded, or cleared if, first, the contract involves one of five enumerated activities, one of them being gaming, and second, the contract is deemed contrary to the public interest. The regulations implementing the CEA deem all five of these enumerated activities as contrary to public interest, that is, terrorism, assassination, war, gaming, or unlawful activity under federal and state law.
But we’ve seen a proliferation of sports betting contracts, sports event contracts, being offered this year, even though the vast majority of states say that offering these contracts violates state and tribal laws. Meanwhile, the CFTC has failed to issue any guidance on whether sports event contracts violate existing regulations.
I understand that you will defer to the courts, I would hope that you would defer to the courts and abide by court decisions. But what is your view on whether these are gaming, in violation, or these are some kind of different contractual obligation that has some kind of economic merit, intrinsic economic merit?
Selig: Thank you, Senator. And as you know, as a good lawyer, the answer always is “it depends,” and that’s why these are questions for the courts. They’re really complicated issues of interpretation.
Schiff: Let me make a simple one. Let’s talk about the Bills game tomorrow night. So I go on my phone, on one of these platforms, and I place a bet on who wins the game. Gaming? Sports gaming?
Selig: Senator, it would be irresponsible to prejudge that issue. I will...
Schiff: Let me ask, let me ask it this way. If I were to go into a casino, and make a bet, or a facility that offers legally offered sports gaming, and bet on the Bills game, should it matter whether I’m doing it in a licensed facility? Is it a different animal if I do it on my phone through an app? Does it change the nature of a gaming bet? What technology I used to make it happen?
Selig: Senator, I, again, would look to the courts on these questions of facts and interpretation of the law. It’s a complex issue. I will follow what the courts say, and to the extent there need to be changes, because the law was drafted in a way that it’s hard to comprehend, I’m here to help with that effort.
Schiff: Well, let me maybe even break it down more simply. If you and I bet on who wins the Bills game tomorrow, would you consider that gambling?
Selig: Senator, on this issue, I would look to the courts, so I would look to what the courts say about that issue, and I think it’s still working its way through. So once we have an outcome that we can rely on and that we can interpret within the agency.
Schiff: If betting on who wins or loses a football game is not gaming, is not sports gaming. What do you think sports gaming is? Can you give me an example that, okay, this is clearly gambling, sports gambling. There may be some gray areas and maybe some complex questions, as you say, but, okay, this is certainly sports betting. What would you say?
Selig: Many legal, lengthy, legal opinions have been written on one word and a statute, and I would really want the benefit of understanding what the judges think about the issue. This could be one that works its way all the way up to the top. And so I’ll look to the courts on the issue.
Schiff: So should I take it from your answer that you’re a tabula rosa on this? You are not coming into this position with any preset ideas as to whether a future events contract that predicts who wins a football game, you’re not coming into this with any preconceived idea whether that’s gaming or not.
Selig: I think it would be irresponsible for me to prejudge that issue, and so I will come into the issue at the commission if confirmed, with a blank slate and look to the courts.
Schiff: Well, I join with Senator Slotkin, urging you to meet with those deeply impacted by this issue, which includes the tribes as well.
Senator Amy Klobuchar: I mentioned event contracts in my opening, and I know that some of my other colleagues have asked about this, but once again, we’re back to the resource issue, but do you think the CFTC has the resources to oversee this vast new market that presents different characteristics from the traditional derivative markets?
Selig: Senator, as I mentioned earlier, this is a critical aspect of the jurisdiction of the agency to the extent it’s added through the legislation, and the CFTC needs to take that seriously. It has an important mission of making sure there is investor protection, and that these markets are sound and safe. So I take that mission very seriously and if confirmed, we’ll take a very close look at our resources and make sure that we have everything we need to fulfill our mission.
You can watch the whole hearing here.
Before Wednesday’s hearing, American Gaming Association President Bill Miller sent a letter to the Senate Agriculture Committee. In part:
On behalf of the American Gaming Association (AGA), I write to urge the Committee to use the confirmation hearing of Michael Selig to fully-probe the nominee’s views regarding sports betting contracts offered by platforms registered with the Commodity Futures Trading Commission (CFTC).
The AGA represents the legal regulated gaming industry in the United States that generates $329 billion in annual economic impact, produces $53 billion in tax revenue, and supports 1.8 million jobs. As one of the most highly regulated industries, across the United States licensed gaming operators partner with nearly 8,400 state and tribal regulators to ensure transparency, work with leagues to protect game integrity, and maintain strict consumer safeguards and responsible gaming practices. It’s a proven framework that ensures local control and protects players and the public while delivering billions in community benefits.
In contrast, since December of 2024 the CFTC has stood by idly as prediction platforms have self-certified tens of thousands of sports wagers in contravention of state and federal law and the CFTC’s own regulations, which explicitly prohibit contracts involving gaming. The CFTC has not formally reviewed a single one of these contracts, allowing for an unchecked growth of these offerings into single game parlays, point spreads and prop bets offered across all 50 states to anyone 18 years and older.
And, here’s my latest roundup of prediction markets news:
Proxy betting and underage access
Randy and Anita describe proxy betting — a prohibited activity involving placing wagers on behalf of someone else, or using another person’s account for placing wagers. This clip explains different examples proxy betting, noting that it can be an avenue for underage access to gambling. To learn more about proxy betting and resources, visit Conversations About Betting.
Trusted Voices is designed to equip adults, including parents and coaches, with tools and resources to talk to young people about gambling, including information on warning signs and risks.
Gambling news roundup
New York regulator will reassess licenses of prediction market participants (SBC Americas): “The Chair of the New York State Gaming Commission (NYSGC) said on Tuesday that it’s time for the regulator to decide whether gaming licensees deserve to be allowed to do business in the largest U.S. sports betting market if they intend to offer prediction markets. Speaking at a meeting on Nov. 18, NYSGC Chair Brian O’Dwyer called prediction markets a direct threat to the commission’s authority, as well as to the regulated gaming industry. Two major sportsbook licensees in the Empire State have announced plans to begin offering sports prediction markets. Two fantasy sports operators are already offering contracts from Crypto.com and Kalshi within their apps through partnerships.”
“Given the dangers of prediction markets to both the state of New York and its citizens, it is now appropriate that this commission examine whether the participation of any of our present licensees in so-called prediction markets makes them unfit to maintain their gaming license,” O’Dwyer told the commissioners. “Our general counsel and staff shall examine this and make recommendations to this commission for the future.”
My latest roundup of prediction markets news:
Former Betfair Architect Talks Winning Predictions Race With Truist (Legal Sports Report): “A question & answer session from Truist with an employee involved with the June 2000 launch of the Betfair exchange provided fresh insight on what it will take to win in the predictions business. Tom Johnson is the founder and CEO of HoldCrunch, an analytics company that tracks online sports betting data, including the equivalent of handle at Kalshi. The interview focused on Johnson’s experience with Betfair, which he joined six months before launch. Putting legal issues aside – which is a big contingency for predictions since most assume the issue will wind up before the Supreme Court in ~two years – Johnson gave two scenarios on who will win the predictions battle.”
Prosecuting Mafia-Linked Sports Betting Crimes Is a Wager Itself (Sportico): “Last week’s charging of 14 people, including former college athletes, in New Jersey with felony crimes related to a Mafia-connected, multimillion-dollar sports betting scheme is the latest example of serious criminal statutes often reserved for major offenders intersecting with the playing of sports. The application of criminal law to rigged sports betting schemes could become more commonplace as more people seek ways to bet on sports and as federal and state law enforcement authorities crack down on illegal practices.
But whether charging athletes, coaches and other sports figures with crimes that carry decades-long prison sentences deters wrongful acts is a wager itself. There’s a history in America, including long before widespread legalized sports betting, of criminal charges applying to sports-betting-related misdeeds, and yet those types of misdeeds continue to this day.”
Online sports betting in Wisconsin hits snag in Legislature (WPR): “A bipartisan effort to legalize online sports betting in Wisconsin hit a roadblock Wednesday, when it was pulled from the Assembly’s agenda hours before lawmakers were scheduled to vote on it. The betting bill would have allowed people to place bets online in Wisconsin as long as the computer server managing those wagers is on tribal property. Introduced just weeks ago, it faced fierce conservative pushback from a coalition including the Wisconsin Institute for Law and Liberty, Wisconsin Family Action and WISN-AM talk show host Dan O’Donnell.”
More here: “I don’t think we’re going to vote on it today,” said Assembly Majority Leader Tyler August (R-Walworth). “There’s really no rush on this. The Senate’s not coming back this week. I had a conversation with a couple members over the weekend that brought up some points that I hadn’t considered yet. So we’re going to work through those and I expect that we’ll be voting on it early next year.”
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Stake.us, 4 Other Sweeps Casinos Leaving Tennessee In Mass Exodus (Sweepsy): “A handful of well-known sweepstakes casinos are all leaving Tennessee in roughly the same timeline, suggesting a potential presence of cease-and-desist orders that haven’t yet been publicized. High 5 Casino, Stake.us, RealPrize, and LoneStar Casino are exiting Tennessee in November and December, Sweepsy has learned through various channels and sources. Lucky Bits Vegas is closing operations in the state, as well.”
Pulsz Becomes Biggest Sweeps Casino To Leave California, Will Finish Shutdown Dec. 15 (Sweepsy): “Pulsz, one of the oldest and most recognizable names among sweepstakes casinos, began its California exit process on Nov. 17. Owned by Yellow Social Interactive Ltd., both Pulsz properties — Pulsz Casino and Pulsz Bingo — are following the same exit timeline.”
The Big Bet: Casino giant aims to put landmark destination-resort in Dallas (NBC DFW): “The Las Vegas Sands Corporation wants to build a massive hotel, casino and convention resort in Dallas—but first, Texas would need to legalize gambling, and local officials would need to welcome the project. In an exclusive interview with NBC 5, company executives said they hope to replicate the success of the Marina Bay Sands in Singapore with a similar multi-billion-dollar investment in North Texas.”
“Dallas is the only other place in the world that we think can match Marina Bay Sands in Singapore. It’s that simple,” said Andy Abboud, senior vice president for Las Vegas Sands.
Florida Lawmakers Propose Crackdown on Non-Seminole Sports Betting (Yahoo/Covers): “An omnibus gambling bill is making progress in the Florida legislature and now includes a proposed crackdown on online sports betting and internet casino gambling that isn’t offered by the state’s Seminole Tribe.”
Gambling is everywhere in college sports — that’s what worries UConn’s David Benedict (CT Insider): “The nightmare scenario for UConn Athletic Director David Benedict, or any athletic director across the nation, is to learn that one of their university’s student-athletes was involved in gambling to an extent that it damaged their lives, put them in the crosshairs of the law or impacted the integrity of the sport they play. Benedict, chatting in his office last week, rapped his knuckles on the table in front of him. Knock on wood. To this point in time, there’s been nothing at UConn to address related to a student-athlete involved in gambling in ways immoral, illegal or unethical.”
“There’s nothing we can do to guarantee that doesn’t happen,” Benedict said.”
More PENN Insiders Hit Open Market To Buy, Sell (Legal Sports Report): “Two more Penn Entertainment insiders took to the open market this week, though they took their transactions in different directions. Penn’s stock is still trying to claw its way back to its pre-earnings price of $16.35 before its third-quarter results and the announcement of the death of ESPN Bet and its 10-year sports betting deal with Disney led to a more than 10% tumble.”