Prediction markets are disrupting the gambling industry’s growing sports betting business, and gambling industry lobbyists are worried President Donald Trump’s pick to oversee the Commodities Future Trading Commission won’t do anything about it.
The Trump administration’s nominee to lead the CFTC, Brian Quintenz, is a board member of prediction market giant Kalshi. He’s promised to step down from his role should be confirmed, and is expected to sail through the nomination process, but the gambling industry is antsy over his lack of commitment to review so-called “sports events contracts” offered by prediction market platforms.
So much so that gambling industry groups and tribal organizations sent senators a letter this week asking them to not advance Quintenz’s nomination until he commits to reviewing those contracts.
“Numerous states, sovereign Indian tribes, sports leagues, responsible gaming advocates and gaming industry stakeholders have conveyed their strong concerns to the CFTC about these contracts. The vast majority believe sports event contracts are tantamount to sports wagering and, therefore, constitute gaming,” the groups, including the American Gaming Association and the Indian Gaming Association, wrote in the letter exclusively shared with NOTUS. The letter was sent to Sens. John Boozman and Amy Klobuchar, the chair and ranking member of the Senate Agriculture Committee, which oversees commodities.
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Sports betting is currently legal in 40 states and territories, according to the American Gaming Association’s website, and sports betting regulation is primarily handled by states. But Kalshi says it’s a federally regulated platform under the Commodity Exchange Act, and therefore not subject to state gaming regulations and restrictions.
Prediction markets, like Kalshi, say they are not betting platforms but a barometer by which to weigh big events in politics, economics, climate, sports and more. Kalshi insists it offers a financial exchange akin to a commodity, not sports betting.
A spokesperson for Kalshi told NOTUS in an email that “prediction markets on sporting events are fundamentally different from traditional sports betting due to the underlying market structure.”
“Rather than operating a one-sided marketplace with monopolistic pricing power, commonly known as a ‘house’, Kalshi operates a two-sided, peer-to-peer exchange, similar to how the stock market operates. This simple but fundamental change in market structure has drastic effects on the end product, as consumers get fair prices and institutions are able to use the accurate pricing information to both model and hedge risk, neither of which are possible with traditional sports betting,” the spokesperson wrote.
Kalshi has quickly made inroads with the Trump administration. In addition to Quintenz’s nomination to lead the agency overseeing commodities, Kalshi added Donald Trump Jr. as a strategic adviser ahead of his father’s inauguration in January.
The Kalshi spokesperson dodged NOTUS’ questions about the company’s influence with the Trump administration.
“Kalshi, like any registered futures exchange, has regular, productive interactions with our regulator, which are consistent across administrations. It would not be appropriate to comment on those publicly,” the spokesperson told NOTUS.
Boozman told NOTUS that he has “heard a lot about” the dispute, but added, “I don’t know that I’m prepared to say it ought to be this way or that way.”
“States feel very strongly about it. The tribes feel very strongly about it. The individuals that are making those bets feel strongly about it. So at some point, the regulators, they need to be talking to them,” he added.
Last month, 34 state attorneys general filed an amicus brief in a case Kalshi brought against the New Jersey Division of Gaming Enforcement, which had sent the company a cease-and-desist letter demanding it stop offering sports contracts. The attorneys general argued that “Kalshi’s position would wrongly upset our country’s traditional division of power” and “eliminating the States’ ability to regulate online sports betting would pose very serious risks to the States’
citizens.”
At least six states have sent cease-and-desist letters, but Kalshi has not backed down. The company has also challenged cease-and-desist letters in Maryland and Nevada and has won preliminary injunctions in New Jersey and Nevada.
Quintenz, who served as commissioner of the CFTC during the first Trump administration, also stepped away from his role as global head of policy for the venture capital firm a16z crypto, according to an automatic reply to an email from NOTUS.
Quintenz had his confirmation hearing last month, but it has yet to come to the Senate floor. Sen. Adam Schiff, a California Democrat, asked Quintenz during his confirmation hearing to commit to a review of sports events contracts, calling them “indistinguishable from gaming.”
“I believe that the law is very clear about events that have commercial or financial or economic consequence qualifying as commodities because the [Commodity Exchange Act] recognizes that therefore a viable and valuable futures market can be listed upon them and afford people the opportunity for risk management, price discovery and price dissemination,” Quintenz said during his confirmation hearing.
Quintenz also said he would commit to a “very robust all-stakeholder engagement process” on the issue. But Schiff was not satisfied.
“In my view, 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,” Schiff said.
Gambling industry groups agree.
“While prediction platforms have tried to characterize these contracts as financial investing, in practice, when it includes sports contests and outcomes, these markets are effectively gambling platforms with little oversight and regulation,” American Gaming Association CEO Bill Miller wrote in an op-ed for The Kansas City Star last week.
But Kalshi insists that “prediction markets, including those on sports, are commodities.”
“Any change to the CFTC’s authority would be a violation of federal preemption, one of the cornerstones of American democracy, and would threaten to undermine the entire multi-trillion dollar commodities market, causing severe economic uncertainty and eroding American soft power,” the Kalshi spokesperson told NOTUS.
Quintenz did not respond to requests for comment from NOTUS.
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