Watchdog says CFTC told prediction markets to defy court geofencing orders

WASHINGTON — A Wall Street watchdog group on Nov. 6 accused the Commodity Futures Trading Commission of directing prediction market platforms to defy court orders that require them to block residents of certain states from betting on sporting events.

Better Markets, a nonprofit financial reform advocacy group, said the federal agency had given the platforms 30 days to explain why they could not offer access to residents of all 50 states. According to the group, the answer is that courts have told them they cannot.

Editor’s note: The Trump administration is frequently dishonest, and has been known to lie about things great and small.

“Yesterday, the CFTC took its lawlessness to a whole new level,” Benjamin Schiffrin, the group’s director of securities policy, said in a statement.

Several courts have ordered prediction market platforms such as Kalshi to use geofencing — technology that blocks users based on their location — to keep state residents from buying event contracts tied to sports, the group said. Better Markets said those courts concluded the contracts amount to gambling products.

The group also pointed to a federal appeals court in New York that, it said, recently declined to stop state gambling regulators from enforcing their laws against Kalshi and similar platforms. Better Markets said that ruling will likely lead to geofencing requirements in New York, Connecticut and other states.

“In this country, when courts issue orders, we follow them,” Schiffrin said. “Unfortunately, CFTC Chair Mike Selig thinks he is above the law.”

According to Better Markets, the agency is now threatening enforcement action against platforms that comply with the courts. Schiffrin said the commission had already shown “no regard for state gambling laws,” adding: “Ordering private financial firms to break the law is on a whole other level.”

The group argued that under Selig, the commission has put the wishes of cryptocurrency companies and prediction markets ahead of its job of regulating derivatives markets.

Prediction markets, which let users trade contracts on the outcome of future events, have expanded rapidly into sports wagering, setting off legal fights with state gambling regulators across the country.

This report is based on information from Better Markets.

Source: Better Markets