CFTC Chair Nominee Gives Stance on Prediction Markets and Impact

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00:00This week, a very interesting event from the CFTC. One of their nominations, their nominee,

00:05Michael Selig, was finally put to the test. And with these prediction markets, no one seems to

00:10be answering questions as to what the future could potentially hold. Is prediction market

00:15sports betting? Is it not? And Selig, who of course is expecting a nice bump here in salary

00:21and pay and a new job, didn't really seem to be all that interested in challenging these

00:26prediction markets, saying that he is going to leave it up to the courts, saying several times

00:31he's going to leave this to the courts as it pertains to prediction markets. So it's been a

00:35while since we've talked. What do you make of this whole prediction market business? It seems like

00:40a lot of companies are jumping in, DraftKings, FanDuel even leaving the American Gaming Association.

00:47There's just no stopping this train, and it doesn't seem like anybody's willing to even

00:51challenge it at this point. Well, because it has the full-throated support of the Trump

00:55administration. Donald Trump Jr. is a strategic advisor to Polymarket, to Calci. Truth Social

01:03is now in a partnership with Crypto.com. Wall Street is behind this. The White House is behind

01:09this. Major financial institutions like Citadel, Susquehanna, Silicon Valley. If we're going to

01:16analogize to David versus Goliath, the Goliath are the prediction markets because they have the full

01:21support of the federal government now, as exemplified by nominee Selig's non-answer and dodging of an

01:29obvious question. If you place a bet on the outcome of an NFL game, is that gaming? He couldn't even

01:34concede that. And the reason he did not make that concession is that there is a regulation in the CFTC,

01:42your rulemaking, in which gambling contracts, gaming contracts, are per se prohibited as contrary to

01:49public interest. When Congress created this whole mess back in 2010, no one ever thought that sports

01:57betting was a vehicle which could be conducted on the derivatives markets. It stayed silent for 15 years

02:02and only through creative lawyering by Calci's legal counsel did the notion of swaps now encompassing

02:10outcomes of sporting events come into the public sphere. It is just this mysterious argument that has

02:18gained traction over the last couple of months, but the courts have increasingly rejected that premise.

02:23So the future of the prediction markets, I think, at least for now, may be in the hands of the federal

02:28courts. But the good news for those who support prediction markets is that these court battles may

02:33last for another two to three years before we get clarity around the law. And nominee Selig was

02:40handpicked by Donald Trump, not because he was neutral on prediction markets, but because he would do nothing to

02:47slow it down and to not even be able to define what gaming is. Every first year gaming attorney knows what gaming

02:55means. Sports betting, casino, that is quintessential gaming. And he wouldn't even give an inch on that because to do so

03:02would have compromised the legality of the prediction markets because CFTC is not pushing

03:08back, has not taken any action to limit or restrict the kinds of event contracts that these companies

03:15are now listing, all of which are tied to outcomes of sporting events, quintessential sports betting.