The Early Line: CFTC Responds To Senators' Questions On Sports Event Contracts
Gambling news roundup: ESPN talks pivot from ESPN Bet to DraftKings; Ohio governor regrets legalizing sports betting.
The Early Line offers a look at the top stories heading into the week, along with some analysis.
CFTC answers Senators on sports betting via prediction markets: Caroline Pham, the acting chair of the Commodity Futures Trading Commission, sent a letter to Sen. Catherine Cortez Masto (D-Nev.) in response to the senator’s questions on prediction markets. Cortez-Masto and six other Senators sent a letter in September asking Pham why the CFTC was allowing sports betting to happen under the agency’s rules.
The Closing Line has seen a copy of the letter; Pham’s response basically says designated contract markets are doing nothing wrong under current law. Pham on several occasions pointed the senator to Staff Letter No. 25-36, where the CFTC acknowledged the existence of sports event contracts. It also says any investigations “are non-public and confidential.”
Here are some of the most relevant excerpts; I’ll offer the tl;dr version afterwards if you don’t want to read the actual responses:
3. How many designated contract markets have filed a self-certification with the CFTC for an event contract related to what has historically been sports gaming activities? How is the CFTC advising firms that seek approval of sports gaming activities as event contracts?
CFTC Response: The CFTC’s Product Review Program is responsible for analyzing new products and product rules submitted for self-certification or Commission approval by designated contract markets (DCMs). A DCM intending to self-certify a product must do so according to the process set forth in CFTC regulation § 40.2. That process requires that the DCM file the submission with the CFTC at least one full business day preceding the product’s listing for trading. The certification must include, among other details: 1) a copy of the rules setting forth the contract’s terms and conditions, 2) a certification by the DCM that the product to be listed complies with the Commodity Exchange Act (CEA or Act) and CFTC regulations, and 3) a concise explanation and analysis that is complete
with respect to the product’s terms and conditions, the underlying commodity, and the product’s compliance with applicable provisions of the Act, including Core Principles, and CFTC regulations.
The vast majority of new products are self-certified; 2,393 DCM products (for all types of contracts) were certified between 2022 and 2024. During that period, only one product was submitted by a DCM for Commission review and approval. The number of self-certifications has grown steadily in recent years. To date this year, there have been 1,913 additional contracts self-certified by DCMs.
With respect to event contract markets, 1,653 DCM products were certified from November 15, 2024 through November 15, 2025. However, DCMs listing event contract markets often list multiple individual contracts under a single product filing.
Under the self-certification process, a DCM, as a self-regulatory organization, is responsible for ensuring that the product certification is complete and consistent with the Act and CFTC regulations. Pursuant to CFTC regulation § 40.2(c), if a product is self-certified, the Commission can only stay the product listing “during the pendency of Commission proceedings for filing a false certification or during the pendency of a petition to alter or amend the contract terms and conditions pursuant to Section 8a(7) of the Act.”
8. How is the CFTC ensuring that athletes, referees, team employees, and others do not manipulate outcomes? How does the CFTC enforce the anti-manipulation requirements of sports event contract marketplaces? How often does the CFTC examine against those requirements?
CFTC Response: The CEA and CFTC regulations require that all DCMs comply with 23 Core Principles on an ongoing basis. DMO (Division of Market Oversight) is responsible for DCM oversight, and evaluates a DCM’s compliance with certain integrity-related core principle requirements related to its self-regulatory program, including Core Principle 2 (Compliance with Rules); Core Principle 4 (Prevention of Market Disruption); Core Principle 12 (Protection of Markets and Market Participants); and Core Principle 13 (Disciplinary Procedures). DMO performs rule enforcement reviews (RERs), CFTC regulation § 38.5 requests, and quarterly update calls.
Rule Enforcement Review Program: DMO conducts examinations, known as RERs, of a DCM’s ongoing compliance with statutory core principles and related CFTC regulations through the self-regulatory programs operated by a DCM to enforce its rules, prevent market manipulation and customer and market abuses, and ensure the recording and safe storage of trade information. RERs normally examine a DCM’s trade practice surveillance, market surveillance, real-time market monitoring, or disciplinary programs for compliance with the relevant Core Principles and CFTC regulations.
After the on-site interview as part of a RER, DMO prepares a detailed report of findings and recommendations that is shared with the DCM. The DCM provides a written response to the report addressing how the DCM plans to correct any deficiencies and/or implement recommendations identified in the report (i.e., action plan). Following the issuance of the report, the DCM must provide DMO with documentation to demonstrate that each corrective action has been fully addressed.
Demonstration of Compliance – CFTC Regulation § 38.5(b): CFTC regulation § 38.5(b) is another mechanism used by DMO, outside of the RER process, to determine whether a DCM is in compliance with Core Principles. It permits DMO to request that a DCM file a written demonstration, containing supporting data and documents, that the DCM is in compliance with one or more Core Principles.
9. How is the CFTC ensuring that sportsbook companies comply with the Federal Wire Act when using geolocation data, anti-money laundering standards such as Know Your Customer, gambling addiction warnings and other requirements?
CFTC Response: The CFTC does not have enforcement authority under the Federal Wire Act.
11. Does the CFTC see sports betting as entertainment or investment products for financial gain?
CFTC Response: The Commission is aware of various forms of State regulatory actions, and pending and potential litigation concerning the legality of sports-related event contracts listed on DCMs.
📚 Reading the line: If you’re waiting for the CFTC to do something to stop sports event contracts, you might be waiting for a long time. Like, eternally. Or at least until a Democratic president takes office. Coupled with the comments from the new nominee to lead the CFTC, Michael Selig, on prediction markets, the CFTC is clearly going to leave it to the courts to decide. The only things that may change that calculus at all are, in some order:
A Democratic president taking office, which would change the leadership of the CFTC.
Democratic commissioners joining the CFTC (possible, but also unlikely to change anything).
Political pressure on the current Congress from state policymakers, regulators or law enforcement, or other focused lobbying efforts.
Democrats taking control of either half of Congress during mid-term elections.
And before we move on, my latest roundup on all things prediction markets:
Youth Prevention Toolkit
Trusted Voices: Conversations About Betting is designed to equip adults with tools and resources to talk to young people about gambling.
This specific resource is designed to raise awareness of the risks of youth access to gambling and provide guidance to parents and trusted adults on how to play their part to prevent underage gambling.
ESPN Betting Czar: Why We Pivoted From Penn to DraftKings (Front Office Sports): “There is optimism around ESPN that DraftKings will be a better fit as a gambling partner.”
“This is absolutely the best next step for us in the betting space,” ESPN VP of Betting and Fantasy Mike Morrison told Front Office Sports. “We want to be with a partner that’s scaled, that puts an emphasis on innovation, that has similar ways of operating as ESPN does.”
📚 Reading the line: There is no doubt that ESPN was not capable of growing a small operator into a big operator. Or, perhaps it was, and Penn Entertainment and ESPN weren’t willing to wait and find out, given the poor results to date.
I do agree with the premise from the article that DraftKings is a far better fit for ESPN. ESPN was most of ESPN Bet’s marketing funnel, as it tried to grow from an also-ran to a top-three position. In retrospect, that might have been an impossible task. ESPN helping DraftKings stay front-of-mind with the ESPN audience — some of whom already use DraftKings — is a pretty good value proposition for DraftKings. Some customer acquisition, some retention, some brand placement…that’s what DraftKings needs. ESPN Bet needed a lot of customer acquisition, which ESPN wasn’t capable of delivering for a variety of reasons.
Ohio Gov. Mike DeWine signed a law legalizing sports betting. He now says he’s opposed to it (Associated Press): “If Ohio Gov. Mike DeWine could turn back time, he would not have signed the law that legalized sports betting in his state. With two Cleveland Guardians pitchers and an Ohio-born guard for the Miami Heat snared in separate betting-related criminal probes, the second-term Republican says he now “absolutely” regrets unleashing this unbridled new industry on Ohioans with his 2021 signature.
“Look, we’ve always had gambling, we’re always going to have gambling,” DeWine told The Associated Press last week. “But just the power of these companies and the deep, deep, deep pockets they have to advertise and do everything they can to get someone to place that bet is really different once you have legalization of them.”
📚 Reading the line: Look, not that long ago, DeWine was again trying to raise taxes on sports betting. None of what’s happened in recent weeks should be a giant surprise to anyone who played a role in legalizing sports betting.
If DeWine is so concerned about sports betting, he should probably understand that prediction markets are also offering sports betting in his state (and the other 49). And that they are paying no taxes and without the same regulation that Ohio sportsbooks face. Maybe he should ask some questions about that!
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Gambling news roundup
Chauncey Billups Pleads Not Guilty For Alleged Role in Rigged Poker Games (Sports Betting Dime): “Former NBA coach and Hall of Famer Chauncey Billups pled not guilty this morning in a federal Brooklyn courthouse for his alleged role in rigged poker games. Billups has been charged with counts of wire fraud conspiracy and money laundering conspiracy for his alleged role in rigged poker games. The games involved several New York Italian mafia families using various technological means to rig games and scam millions of dollars from players.”
Maryland lawmaker wants state to consider banning micro bets (SBC Americas): “A lawmaker in Maryland wants the state to consider prohibiting micro betting as professional sports leagues deal with allegations of game manipulation by athletes. House of Delegates minority leader Jason Buckel told The Baltimore Sun that he would like to see the state tackle the issue of micro bets as MLB deals with a gambling scandal tied to the alleged manipulation of pitch-level markets.”
“We definitely should take a strong look at [micro betting],” Buckel said. “I believe the best course of action would be to either outright ban those types of individual-play prop bets or to very significantly limit the amount that could be wagered on those types of sporting activities.”
Legal sports betting didn’t create corruption. It exposed it. (Reason): “However, these types of gambling-related scandals have taken on greater significance in the wake of the Supreme Court’s 2018 decision in Murphy v. National Collegiate Athletic Association, which struck down as unconstitutional the Professional and Amateur Sports Protection Act, thereby allowing states to legalize sports betting. Can fans still have faith in the integrity of the games they love in a world where sports betting is legal and widely available? The answer is that they should arguably have more faith in game integrity now than they did when such betting took place underground and without the oversight of gambling companies, leagues, and sports integrity monitoring organizations.”
Davante Adams wants to make sure you know Sean McVay isn’t betting on football (Rams Wire): “So when Los Angeles Rams head coach Sean McVay said he was ‘betting on the people in that locker room’ after the team’s 34-7 win over the Tampa Bay Buccaneers, Davante Adams wanted to make sure everyone knew he wasn’t actually sports betting.
“He’s not actually betting. That’s dangerous waters these days,” Adams told the media Sunday night.” Figuratively speaking, yeah. I love that he would figuratively bet on us all day.”
Ifrah Law has been at the center of advancing iGaming in the U.S., shaping groundbreaking legislation, leading precedent-setting cases, and guiding clients that span the iGaming ecosystem through every phase of their business journey. Learn more at IfrahLaw.com.
DraftKings Set to Launch Mobile Sports Wagering in Missouri on December 1, and Taps Three Sports Legends (press release): DraftKings Inc. today announced plans to launch its top-rated mobile sportsbook in Missouri on December 1, 2025. Earlier this year, the Missouri Gaming Commission granted DraftKings a temporary direct mobile sports wagering license, allowing DraftKings to operate independently across the state without the need for affiliation with a land-based casino or professional sports team.
Missouri will become the 29th U.S. state where DraftKings offers sports wagering, in addition to Washington, D.C., Puerto Rico and Ontario, Canada. DraftKings has been an Official Sports Betting Operator of the Chiefs since 2022 and recently became an Official Sports Betting and Daily Fantasy Sports Operator of the St. Louis Blues.
Eligible customers in Missouri will gain access to DraftKings’ wide range of betting options — including same-game parlays, in-game wagering, and special odds boosts — and a comprehensive suite of responsible gaming tools and resources on December 1.
“DraftKings is built for passionate sports fans, making Missouri an exciting jurisdiction for us to enter with its rich sports culture, and several professional teams across the state,” said DraftKings’ Chief Revenue Officer Greg Karamitis. “This is an incredible time of year for sports fans with NFL, NBA, NHL, college football, and college basketball all in-season, and we look forward to elevating the experience for Missouri sports fans, responsibly, with our top-rated online sportsbook.” …
To celebrate the launch of legal online sports wagering in Missouri, DraftKings will host a ceremonial first bet event on December 1 at The Palladium in St. Louis, featuring Missouri sports legends Tony Gonzalez, Isaac Bruce and Brett Hull. The event will include ceremonial first bets from the icons, along with remarks from Missouri House Speaker Jonathan Patterson.
FanDuel Introduces “Pass The Leg,” the First In-App Collaborative Parlay Experience (press release): FanDuel, the premier online gaming company in North America, today announced the launch of Pass The Leg, a first-of-its-kind in-app feature that transforms traditional parlay betting into a shared, social experience just in time for holiday gatherings. Pass The Leg allows customers to build a single group parlay collaboratively, with each participant adding their own leg before placing individual bets using their own funds.
Designed to bring friends and family together around one of the biggest football days of the year whether near or far, the feature allows users to start or join a Group Build, invite others to contribute picks, and then add the completed parlay to their personal betslip. Each contributor can also take advantage of a dedicated Pass The Leg Profit Boost, amplifying the excitement and potential payout of the shared pick.
Available exclusively for the three NFL games taking place on Thanksgiving Day, Pass The Leg marks the first true multi-user parlay-building experience offered by a major U.S. sportsbook operator. FanDuel developed this feature to meet growing demand for more interactive and communal betting experiences, giving fans an easy, intuitive way to bring the group-chat banter directly into the app.
“Pass The Leg is all about how our customers actually experience sports - together, sharing excitement, and creating memories around the games they love,” said Karol Corcoran, Managing Director, Sportsbook at FanDuel. “We listened to how fans were already collaborating in group chats and family gatherings, and built a feature that brings that natural social energy directly into their betting experience.”
Circa Isn’t Your Average Sportsbook, And Owner Stevens Isn’t Your Average Guy (InGame): “Standing before the Missouri Gaming Commission (MGC) Aug. 13, Derek Stevens looked and sounded like an aw-shucks, regular guy.
He talked about how ‘businesses, farmers, attorneys’ would bet on his platform and that he wouldn’t limit how much they could bet. Then he told the commission that his company’s average hold of 3.5% is well below the industry norm and that Circa ‘can’t compete with the kind of tax revenue that major, national sportsbooks generate.”
There’s ‘No Limit’ To The Drama In The Poker World (Casino Reports): “Two stories from the past week or so related to the WSOP remind us of this quality poker possesses, and both involve the two most enduring stars some two decades later left over from the poker boom era: Phil Hellmuth and Daniel Negreanu.”
The fact the CFTC said basically we require no information for KYC/BSA/AML purposes is absolutely insane.