The Tennessee gaming regulator is the latest body to write to the Commodity Futures Trading Commission (CFTC) about prediction market operators offering sports contracts, urging the CFTC to prohibit such products.
In an April 14 letter from Tennessee Sports Wagering Council (SWAC) Executive Director Mary Beth Thomas to CFTC Acting Chair Caroline Pham, the asked the U.S. derivatives market regulator to “respect the policy decisions made by the Tennessee Legislature and not permit the offering of sports events contracts.”
“In Tennessee, it is a taxable privilege to offer sports wagering pursuant to a licence issued in accordance with the Tennessee Sports Gaming Act,” added the letter.
The Council believes that the sports event contracts that allow consumers to purchase contracts corresponding to one of two outcomes of a sporting event fall under the act’s definition of wagers and, “are being offered in violation of Tennessee law and regulations.”
It also notes that the Tennessee Legislature has implemented some stringent requirements when it comes to licensed sports betting, such as banning the use of credit cards, not allowing individuals under the age of 21 to wager and not permitting betting on injuries, penalties, the actions of individual collegiate athletes or on in-game prop bets on collegiate teams. “The CFTC-regulated entities currently offering these sports events contracts are not compliant with these protections (or many others) mandated by the Tennessee Legislature,” added the SWAC.
The letter was sent ahead of the planned April 30 CFTC roundtable on prediction markets.
AGA, MLB and tribes also write to CFTC
The Tennessee Sports Wagering Council is one of more than two-dozen parties to have written to the CFTC about prediction markets in the last two months.
So far, a wide range of stakeholders and observers have written to the CFTC about the issue, including but not limited to the American Gaming Association (AGA), Major League Baseball (MLB), the Campaign for Fairer Gambling, GeoComply and the National Council on Problem Gambling (NCPG).
In a letter in late February, the AGA requested a seat at the roundtable and reiterated its view that sports futures contracts pose “an unfair economic threat” to sportsbook operators because they mimic gambling. The AGA also stressed that the offerings do not provide consumer protections and threaten to violate tribal gaming rights in some jurisdictions.
On that note, tribal organizations including the Indian Gaming Association, the California Nations Indian Gaming Association and the Tribal Alliance of Sovereign Indian Nations have also filed concerns in writing with the CFTC.
Just three days before the Tennessee SWAC’s letter, the National Tribal Gaming Commissioners & Regulators (NTGCR), a national nonprofit regulatory trade association, wrote to express “our most critical concerns regarding the clear circumvention of well-established gambling and online wagering laws by the recent emergence of CFTC-sanctioned future contract event wagering conducted by Kalshi on investment platforms such as Robinhood.”
MLB’s own letter did not ask the CFTC to ban sports contracts but did urge the federal regulator to create an integrity framework around them. That letter stressed that, “as the resemblance between sports event contracts and traditional sports betting markets continues to grow, so too does the need to replicate the integrity and consumer protections that exist at the state level.”
