Brian Quintenz, President Donald Trump’s nominee to head the Commodity Futures Trading Commission (CFTC), faced some tough questions from senators on sports event contracts and his own ties with Kalshi on Tuesday.
Quintenz answered queries during a hearing in the U.S. Senate Committee on Agriculture, Nutrition, and Forestry on June 10.
Ultimately, he seemed to suggest that he would not look to take action as CFTC Chair to prevent prediction market operators from offering sports contracts.
“I believe the law is very clear about the purpose of derivative contracts and about events that have financial or economic consequences qualifying as commodities,” he said, pointing to the Commodity Exchange Act (CEA).
Amid ongoing court battles between Kalshi and other operators and state regulators, Quintenz was asked whether he would theoretically look to challenge any court that were to rule sports event contracts illegal.
“The agency would want to ensure that it is appropriately defending the Commodity Exchange Act and the remit that the agency has to regulate and preempt laws, state laws around futures and derivatives markets,” he remarked.
Nothing stopping tribes getting involved, says Quintenz
California Sen. Adam Schiff, who in his role represents that states’ tribes and some of the largest tribal casino operators in the U.S., noted the argument that prediction markets’ sports contracts effectively amount to sports wagering without state approval.
“If betting on the outcome of a sporting event looks like sports betting, looks like gaming, smells like gaming, sounds like gaming, there are winners and losers like gaming, it’s probably gaming,” said Schiff. New Jersey Sen. Cory Booker also noted during the hearing that Kalshi’s own advertising on Instagram marketed its sports contracts as “sports betting legal in all 50 states.”
Kalshi and other operators continue to argue in public comments and in court that the CFTC’s federal right to regulate derivatives markets supersedes state gaming regulations. But Schiff added that he is “very concerned” that sports contracts violate tribal sovereignty and undermine the Indian Gaming Regulatory Act (IGRA).
Quintenz vowed to have a “very robust all-stakeholder engagement process” and to listen to the concerns of the tribes. He also noted that tribal operators can seek CFTC approval to offer their own versions of these markets if they so wish.
“Nothing in the CEA that I’m aware of prohibits or affects the opportunity of tribes to offer those products and those markets and those services.”
Asked by Schiff directly whether he would shut down sports contracts if they were determined to violate the IGRA, Quintenz responded that he would need to abide by the CEA. “And if there is a conflict between the Commodity Exchange Act and the other act you mentioned, I believe that’s best resolved through Congress,” he added.
Booker flags Kalshi conflict of interest concern
Quintenz has been on the board of Kalshi since 2021 and was also an advisor to Crypto.com, another company which has started offering sports events trading, from 2021-22.
He wrote in a letter to the CFTC’s Office of the General Counsel late last month that he would step down from his Kalshi role upon taking up the CTFC leadership, divest or forfeit any stock options he holds and recuse himself from proceedings involving Kalshi to avoid a potential conflict of interest.
On Tuesday, Booker questioned Quintenz on potential conflicts of interest, also noting the fact that Donald Trump Jr. recently joined Kalshi as an advisor and wondering aloud whether Quintenz woudl be willing to make rulings not supported by the president’s family.
“I hope you can appreciate that there will be some real questions into your independence in that role, given the fact that you sat on the board of this,” Booker addressed Quintenz. “You can understand that there’d be concerns about that.
“If [you are] chairman, are you going to feel empowered to prosecute a company or push back on a company that’s being advised by the president’s son? This deserves some exploration.”
Quintenz open to roundtable actually happening
Meanwhile, after a planned roundtable discussion of sports and other event contracts was canceled without much notice or reasoning by the CFTC, Quintenz said he would be happy to hold one himself.
“I have no information as to why it was canceled, and I’d be happy to reschedule it. Since I don’t have any plans to issue any guidance in the near term, so I feel comfortable making that commitment.”
The committee did not vote on Quintenz’s confirmation on Tuesday but if they do approve it, the issue would go to the full Senate for a vote.
