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As the US presidential elections get near, the Commodities Futures Trading Commission (CFTC) is getting closer to outlawing derivatives associated with sporting events and political races. This move could possibly upset the betting environment for anyone looking to place bets on impending political events, even though its timing and implementation are questionable.
The CFTC, an independent US government agency tasked with investigating various financial crimes, including commodities fraud and energy manipulation, recently issued a Notice of Proposed Rulemaking. This notice aims to specify the events contracts falling under the purview of the Commodity Exchange Act (CEA). While the current regulations empower the CFTC to restrict betting derivatives on events related to war, terrorism, or assassination, it may now extend its jurisdiction to events deemed “contrary to the public interest.”
CFTC statement read, “The Commission has recently observed an increase in the number and variety of event contracts listed for trading by CFTC-registered exchanges. In addition, the Commission has recently received applications for exchange registration, and expressions of interest regarding registration, from entities indicating that they are interested in listing event contracts for trading,“
Moreover, the CFTC seeks to define the term “gaming” in more detail, outlining various scenarios that fall under this category. According to the agency’s statement, this includes activities where individuals stake or risk something valuable on the outcomes of political or awards contests, or sporting events involving athletes. The proposal suggests that such contracts are examples of gaming that cannot be traded or approved under the current regulatory framework.
In response to the proposal, the CFTC will be open for public comments for a period of 60 days, ending on July 9, 2024. Stakeholders and interested parties can submit their feedback during this timeframe. Following the conclusion of the comment period, the agency will evaluate the inputs received and potentially make amendments to its proposal before it undergoes voting for approval.