Outgoing CFTC chair airs concerns over event contracts markets
With sports event trading and election betting becoming more commonplace, Rostin Behnam has called for his successor to set out “clear-cut lines” on the matter
Outgoing Commodity Futures Trading Commission (CFTC) chair, Rostin Behnam, has expressed concerns over political, event and sports contracts betting following a swell in sector activity in recent months.
Last month, Crypto.com launched its sports event trading product which allows users to trade their own prediction on the outcome of sporting events, including standout fixtures like the Super Bowl.
Users in all 50 US states will be able to participate, while wagers can be placed using cash or 350 different cryptocurrencies.
Though in this instance, Crypto.com’s derivatives product will be CFTC-regulated, as Benham has still stressed the need for wider regulation in the cryptocurrency sector.
Crypto.com’s launch of its product came following a surge in political contract betting around the presidential election in November, with Kalshi and Robinhood launching CFTC-regulated markets.
French company Polymarket, which is not regulated by the CFTC, also had live markets on who would win the election, with bettors majorly backing incoming President Donald Trump.
The polls had been unable to separate Trump and Democrat candidate Kamala Harris.
In 2023, the CFTC was successful in its efforts to thwart Kalshi’s election betting ambitions, voting 3-1 to ban such markets, determining they would involve unlawful gaming and would thus compel the agency to take on the role of “an election cop,” according to Benham.
A year on, Kalshi’s dispute with the CFTC went to the US Court of Appeals for the District of Colombia, which sided in favor of Kalshi despite the CFTC’s argument that election markets could “incentivize the spread of misinformation by individuals or groups seeking to influence perceptions of a political party or a party candidate’s success.”
Robinhood traded more than 10 million election event contracts on the first day of trading and went on to double that figure once the product was fully rolled out.
“I have strong concerns around contracts related to elections, assassination, terrorism, and gaming,” Behnam noted will speaking to the FT.
The outgoing chair said the growth in these contract markets would mean the “line is going to be very blurred about what is legal, what’s illegal” as he implored his successor to bring a “renewed focus” and to have “more clear-cut lines of what we view as permissible and impermissible.”
Robinhood is also thought to be on the cusp of expanding into the sports event prediction market, with CEO Vladimir Tenev revealing that the firm is “keenly looking into it” following the success of its presidential election contracts product.
Behnam also expressed concerns over crypto, adding: “You still have a large swath of the digital asset space unregulated in the US regulatory system and it’s important – given the adoption we’ve seen by some traditional financial institutions, the huge demand for these products by both the retail and institutional investors – that we fill this gap.”
Behnam is stepping down from his role on January 20, the same date that president-elect Trump will be inaugurated.