WASHINGTON, D.C.— Benjamin Schiffrin, Director of Securities Policy at Better Markets, issued the following statement in connection with the filing of Better Markets’ comment letter to the Commodity Futures Trading Commission (CFTC) urging it to withdraw its Proposal allowing event contracts to be used to gamble on almost anything:
“Wagering money on whether a team is going to win a game or how many points a player will score is plainly gambling—and the American people know it. Survey, after survey, after survey confirms that. The only people who disagree appear to be the prediction market companies, who stand to profit, and the CFTC, which appears willing to do whatever these companies want. The CFTC’s willingness to ignore congressional intent so that it can reach the result it wants—and its efforts to convince the American people that its actions are somehow consistent with the public interest—is disgraceful.”
In 2010, Congress authorized the CFTC to determine that event contracts that involved gaming, among other things, were contrary to the public interest. Congress intended for the CFTC to prohibit event contracts on sporting events because such event contracts would not serve any real commercial purpose and would be used solely for gambling. The Proposal is in direct violation of that intent and allows gambling on almost anything.
The Proposal also furthers the risk of insider betting. This is evident in the recent alleged cases of a Google engineer using inside information to rig bets tied to Google search data and a White House teleprompter operator profiting off of his access to the President’s prepared remarks. The Proposal would exacerbate this problem by further legitimizing this unregulated, unpoliced gambling dressed up as ‘prediction markets.’
Event contracts on sporting events, who will be the most searched person on Google, and what word somebody is going to say at a public event have no commercial utility or hedging function. They are used solely for gambling. Better Markets urges the CFTC to withdraw the Proposal in the interest of the American people and to uphold its core mission to regulate financial instruments that can legitimately be used to hedge economic risk.
The full Comment Letter can be read here.
###
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.
