WASHINGTON, D.C.— Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement after the Commodity Futures Trading Commission (CFTC) directed prediction market platforms to defy court orders requiring geofencing:
“Yesterday, the CFTC took its lawlessness to a whole new level. By pretending that event contracts on sporting events are legitimate financial products, it has already demonstrated that it has no regard for state gambling laws that seek only to protect citizens from unregulated gambling. Now, it is directing prediction markets to defy lawful court orders and threatening them with potential enforcement actions if they follow the courts’ commands.
“Several courts have ordered prediction market platforms like Kalshi to maintain geofencing to block state residents from having access to these event contracts on sporting events, which those courts have ruled to be nothing more than gambling products. A few days ago, a federal appellate court in New York refused to prevent state gambling authorities from enforcing their laws against Kalshi and other prediction market platforms, which will likely lead to geofencing requirements in New York, Connecticut, and other states. The CFTC, which is prediction markets’ biggest cheerleader, has responded by directing prediction market platforms to defy court orders requiring geofencing and ensure access in all states.
“The CFTC’s directive gives prediction market platforms 30 days to explain why they would be unable to grant access to their platforms to residents of all 50 states. The reason is that courts have said they cannot. In this country, when courts issue orders, we follow them.
“Unfortunately, CFTC Chair Mike Selig thinks he is above the law. He doesn’t like that the CFTC and the prediction markets to which he has pledged fealty are losing in court. But that does not give the CFTC the right to tell prediction markets to ignore court orders. Yet this is not the first time he has directed prediction market platforms to do so. It won’t be the last.
“Under Chair Selig, the CFTC has demonstrated that its priority is giving crypto companies and prediction markets anything they want rather than doing its job of regulating the derivatives markets. It does not have a great track record of complying with the law as part of its boosterism. Ordering private financial firms to break the law is on a whole other level.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
