Latest news with #BrianQuintenz
Chicago Tribune
15 hours ago
- Business
- Chicago Tribune
Karl Lockhart: Instead of squabbling over a new chair, merge the CFTC with the SEC
Today, trading stocks and options, wagering on an MLB game and buying cryptocurrency are just a swipe away — sometimes in the same app. The merging of these markets makes a strong case to merge the two federal agencies charged with regulating them, the Securities and Exchange Commission and the Commodity Futures Trading Commission. And now is the time to do it. The Senate Agriculture Committee, which oversees the CFTC, has been squabbling over President Donald Trump's nominated chair, Brian Quintenz. The remaining CFTC commissioners have indicated they plan to leave by the end of the year. Meanwhile, the SEC will likely have a Republican vacancy in the near future when Commissioner Hester Peirce's term ends. This setup creates a perfect scenario for Congress to pass legislation to merge these two agencies, something that has been called for — on a bipartisan basis — and considered for over 30 years. Quintenz could become the SEC's third Republican commissioner when Peirce departs, applying his past experience as a CFTC commissioner to smooth the transition. Beyond the convenience of timing, why merge the SEC and the CFTC? First, the line between the two regulators' jurisdictions has always been blurry. An early debate centered on futures related to securities, and current confusion and jurisdictional squabbling have come up over the regulation of non-stablecoin crypto products. While the GENIUS Act's passage has brought clarity to stablecoins, a merged SEC-CFTC would immediately remove uncertainty over which agency should oversee other crypto innovations. More importantly, markets have changed. The CFTC began as an agency to regulate futures on agricultural products, but the vast majority of futures and derivatives today are linked to financial products and instruments. Agricultural futures make up only a small sliver of the market. What's more, the growth in event contracts — options that pay out based on whether a given event does or does not take place — and CFTC's approval of event contracts related to sports have effectively legalized sports gambling across the United States, folding that market into the CFTC's regulatory reach. In short, all markets for financial products — equities, debt, options, commodity and currency futures, crypto and, now, sports wagers — are merging. Furthermore, the same players are participating in and employing the same tactics across all markets. Institutional investors such as hedge funds are applying big data, algorithms and artificial intelligence not only to stocks and bonds, but also to event contracts and sports betting markets. And, as mentioned above, retail investors — nonprofessional market participants trading for their personal accounts — can open the same app on their phones to trade stocks, options, crypto and sports-related event contracts anytime, anywhere. A merged SEC-CFTC would cut down on compliance costs for firms that currently must abide by two sets of regulations. And it would allow for better-coordinated enforcement activities against bad actors who scam retail investors across multiple markets. Both agencies also have a similar structure — five commissioners, with at most a bare majority from the president's party to preserve independence — a crucial factor in our partisan era. To be sure, as with any merger, some operational difficulties would be present as cultures and practices become aligned. But the SEC and the CFTC have fundamentally similar missions and roles. They just regulated what were different markets. Now, to best protect investors, facilitate capital formation and maintain a fair, orderly and efficient (now-unified) market, the SEC and CFTC should join forces. Markets have merged. So should our regulators.
Yahoo
03-08-2025
- Business
- Yahoo
Kalshi Loss in Maryland Could Pave the Way for Supreme Court Review
A federal judge in Maryland on Friday ruled against the prediction market operator Kalshi on whether states can use sports betting laws to regulate the company's sports-based event contracts. The decision conflicts with interpretations by federal judges in Nevada and New Jersey. Kalshi immediately appealed U.S. District Judge Adam B. Abelson's denial of the company's motion for a preliminary injunction against Maryland's lottery and gaming control agency and commission to the U.S. Court of Appeals for the Fourth Circuit. The move sets in motion the possibility of an eventual review by the U.S. Supreme Court. The Court would decide which federal court has correctly interpreted the disputed interplay between federal and state laws in the context of sports wagering and sports-event contracts. More from Ex-Stanford Coach Taylor Sues ESPN for Defamation After Firing Deflated Balls Artist Sues Pelicans Over Instagram Posts Quintenz's CFTC Nomination Paused by White House Intervention As Sportico detailed in April, Kalshi scored victories before federal judges in Nevada and New Jersey that prevented those states gaming' commissions from requiring Kalshi to obtain licenses. The Maryland decision capped a challenging week for Kalshi, which also saw board member Brian Quintenz's bid to lead the Commodity Futures Trading Commission (CFTC) paused by the White House. Meanwhile, chief rival Polymarket recently signaled its intent to return to the U.S. with the pricey acquisition of a CFTC-registered exchange, a development that could limit Kalshi's growth ceiling regardless of outcomes in the courtroom. Before Abelson rejected Kalshi's arguments, U.S. District Judge Andrew P. Gordon and U.S. District Judge Edward S. Kiel, respectively, had agreed with the company that federal law appears to preempt states from regulating sports-event contracts. That is true even if sports-event contracts bear similarity to sports bets. Prediction markets such as Kalshi, which have gone live in all 50 states this year, enable users to place 'yes' or 'no' trades on subjects such as whether an MLB team will become the 'Pro Baseball Champion.' Prices for those contracts vary by team and are set by the market in a way that many states and tribal groups contend resembles odds-making. Kalshi insists that it is a distinct product from gambling because odds aren't being set in the same fashion as sportsbooks, though it has at times appeared to undermine its argument here through its marketing materials. At preliminary stages in the litigations, Gordon and Kiel agreed with Kalshi that its legal arguments are enhanced by the CFTC. The CFTC is an independent federal agency created by the Commodity Exchange Act of 1936 (CEA), a statute that has been amended several times. The CFTC enjoys exclusive jurisdiction to regulate commodities and futures on designated exchanges, is intended to craft uniform and national set of regulations for futures markets and has cleared Kalshi to offer prediction contracts under new leadership this year. While Nevada and New Jersey insisted that CEA's exclusive jurisdiction doesn't extend to sports-event contracts, the judges concluded that CEA doesn't explicitly say that, and that CFTC has implicitly allowed Kalshi to offer sports-event contracts. But Abelson, the Maryland judge, offered a contrasting viewpoint of Kalshi's activities. He highlighted that while Congress envisioned a substantial role for the CFTC, it also 'expressed a concern that some event contracts' would be 'contrary to the public interest.' Abelson further noted that while Kalshi self-certified (which the CEA authorizes) its sports-event contracts earlier this year, it could have instead 'requested pre-approval from the Commission regarding whether Kalshi could lawfully conduct sports betting on its platform.' During President Joe Biden's term, the CFTC contested Kalshi over its range of event contracts, which also include the ability for users to put money on elections. The agency's outlook on Kalshi changed with President Donald Trump taking office and Caroline Pham, a Republican, becoming the agency's interim chair. In May, the CFTC voluntarily dismissed an appeal of a 2024 court decision that allowed Kalshi to offer contracts on the 2024 election. As Maryland's gaming enforcers see it, 'event contracts based on the outcome of sporting events' are simply a form of sports wagering. In Maryland, sports wagering is a regulated activity that, under a state statute, is defined as 'the business of accepting wagers on any sporting event by any system or method of wagering, including single-game bets, teaser bets, parlays, over-under, moneyline, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, and straight bets.' Kalshi maintains Maryland law doesn't apply to sports-event contracts because state law is preempted by the CEA. Maryland disagrees, asserting that sports-event contracts don't fall within the meaning of the CEA, and that even if they do, the CEA doesn't preempt Maryland's sports betting laws. Central to the debate is the Supremacy Clause found in Article VI, Clause 2 of the U.S. Constitution. The Clause establishes that the Constitution and laws of the U.S. 'shall be the supreme Law of the Land.' The Supremacy Clause allows the federal government to preempt states on certain types of legal questions. On the other hand, as Abelson detailed, Congress has also 'long recognized states' authority to regulate gambling conducted within their borders' because gambling can be 'vice activity' that imposes 'social costs' on states. This tension underscores much of the legal debate surrounding Kalshi's sports-event contracts. Abelson concluded that while CEA generally preempts state regulation of prediction markets, he wasn't persuaded that Congress 'clearly and manifestly intended to strip states' of the ability to regulate a company 'offering . . . wagering opportunities' and in turn require that company to gain state approval via a license. In that same vein, Abelson distinguished CEA having 'some' preemptive effect from a more expansive preemption of 'state gambling laws and specifically sports wagering laws.' He cited other cases for the precedent that courts must avoid 'interpreting the scope of the preempted field too broadly.' Abelson was also moved by the potential repercussions of siding with Kalshi on other industry actors. To that point, a group of tribes and gaming associations filed an amicus brief urging Abelson to side with Maryland. As the tribes see it, federal, state and tribal gaming laws apply to sports event contracts. Striking a supportive position of the tribes and gaming associations' concern, Abelson worried that an interpretation of the CEA as preempting state gambling laws for Kalshi contracts 'would necessarily mean that the CEA impliedly (albeit partially) overrides the Indian Gaming Regulatory Act.' This act, better known as IGRA, is central to a lawsuit brought last month by three tribal groups from California against Kalshi. IGRA established a system for reservations to launch, oversee and retain revenue from gaming—including sports betting—on their lands. Federal courts in different circuits reaching conflicting interpretations of law has problematic implications that sometimes attract the attention, and willingness, of the U.S. Supreme Court to intervene. The primary worry with circuit splits is that legal rights and obligations for people, businesses and government agencies vary based on which circuit they reside and where a legal dispute is litigated in the U.S. Here, the question of whether Kalshi's offerings ought to count as sports bets is the headline. However, the meat of the dispute is how a court should interpret a federal law that, through clearly contested language, preempts states from regulating an activity. Best of College Athletes as Employees: Answering 25 Key Questions
The Hill
01-08-2025
- Business
- The Hill
Contract gambling has become a runaway train
On July 21, the Senate Agriculture Committee's scheduled vote to confirm Brian Quintenz — a financial manager and former commissioner of the Commodity Futures Trading Commission — as the commission's new chair, was postponed. On Monday, another committee vote on Quintenz was postponed. Officially, the delays were due to lack of a quorum and White House concerns. But unofficially, insiders speculated that they were due to growing opposition to Quintenz, who is also a board member of Kalshi, a gambling company promoting future 24/7 games of chance on anything, anywhere. By the end of July, insiders noted that the opposition to Quintenz was still growing both within the Senate Agriculture Committee and throughout the U.S. Senate. Withdrawing the Quintenz nomination appeared to be an option gaining support. Since 2024, Kalshi has won several prime legal cases which arguably permit all types of 24/7 gambling everywhere on anything under the guise of legal events contracts. Kalshi-type gambling was sanctioned by the CFTC on May 5 when the commission unexpectedly dropped its case by filing a three-page surrender to Kalshi in the D.C. Circuit Court of Appeals. Accordingly, predictions markets can now gamble on elections, climate change and any 'future event' such as sports events. Allegedly bypassing all state and federal gambling regulations throughout the 50 states, Kalshi and its events contracts are still opposed by 34 states. On June 17, those states filed an amicus brief on a New Jersey case against Kalshi before the Third U.S. Circuit Court of Appeals. However, Kalshi is still offering its gambling-type events contracts, including sports gambling, in anticipation of winning in the Third Circuit or on further appeal to the U.S. Supreme Court. The week before President Donald Trump's inauguration on Jan. 20, Donald Trump Jr. was hired by Kalshi as an adviser. At that time, Kalshi was attempting to force the CFTC to allow de facto gambling via the predictions markets through the courts. On Feb. 11, President Trump nominated Quintenz to chair the CFTC. On May 5, the CFTC dropped its case against Kalshi and on June 10, Quintenz's nomination hearing was held before the Senate Agriculture Committee. During his nomination hearing, Quintenz was pointedly questioned by Sen. Cory Booker (D-N.J.) regarding apparent conflicts of interest, particularly when Quintenz repeatedly stated that he supported Kalshi-type events contracts as legal. Sen. Adam Schiff (D-Calif.) also vigorously queried Quintenz on the conflict of sports gambling events contracts with the Indian Gaming Regulatory Act, but Quintenz still defended the legitimacy of the Kalshi-type events contracts. The CFTC's original 2021 position against Kalshi's proposals, which prevailed until it abandoned its position in May, was supported via letters from multiple members of Congress. However, in 2021 as CFTC commissioner, Quintenz supported Kalshi's proposals. On Nov. 16, 2021, Quintenz joined Kalshi's board of directors. Since January, Kalshi has been offering sports event contracts which, for March Madness, were ' expanded to single-game outcomes ' on basketball games, reportedly constituting 16 percent of all March Madness wagers. Kalshi's arguments have prevailed in every significant court case, thereby obviating state and federal prohibitions. Their victories have also enabled similar gambling companies such as DraftKings as well as trading platforms such as Robinhood. Strategically, the universal gambling enabled via events contracts destabilizes Wall Street norms and the predictions markets. This macroeconomic scenario emulates the regulatory debacle of the credit default swaps, including the 2000 Commodity Futures Modernization Act, which largely precipitated the 2008 Great Recession. These 2025 trends toward uncontrolled and irrational gambling were also exemplified as people legally bet on the wildfires in California and other news events. Such extensive gambling activities, which are now largely unregulated and being combined with artificial intelligence applications, need to be addressed as a strategic economic threat to U.S. national security and the international strategic economic base. For 30 years, congressional hearings have noted that as legalized gambling continues to grow it becomes a threat to U.S. economic national security. A 1995 hearing before the House Judiciary Committee which included testimony and input from economic national security interests, as well as organized crime, culminated in the enactment of the U.S. National Gambling Impact Study Commission. In 1999, the commission's final report called for a moratorium on the expansion of any type of gambling anywhere in the U.S. It included a four-year analysis by U.S. experts which concluded that the Kalshi-type of internet gambling could not be regulated and should remain forever banned. The Kalshi and CFTC situation proves the validity of the U.S. Gambling Commission's warnings, and demonstrates to Congress and the public that new congressional hearings are essential. John Kindt is a professor emeritus of law, business and economics at the University of Illinois Urbana-Champaign and has served as a senior editor, contributing author and intermittent co-author of the United States International Gambling Report and the United States International Gaming Report.
Bloomberg
30-07-2025
- Business
- Bloomberg
White House Seeks ‘Swift Confirmation' of Brian Quintenz for CFTC
The White House reiterated support for Brian Quintenz, President Donald Trump's pick to lead the Commodity Futures Trading Commission, after a Senate committee delayed a vote on his nomination earlier this week. 'He will help execute President Trump's mission of making America the crypto capital of the world and we look forward to his swift confirmation,' White House spokeswoman Liz Huston said in a statement.
Yahoo
11-06-2025
- Business
- Yahoo
Trump's CFTC Pick Troubles Tribes With Prediction Market Plans
Tribal groups are concerned Kalshi, Robinhood and pose an existential economic threat to them through sports prediction markets—and on Tuesday, it became even more clear the Commodity Futures Trading Commission (CFTC) isn't coming to their rescue. CFTC chairman nominee Brian Quintenz made his pro-market stance apparent while speaking in front of the U.S. Senate Committee on Agriculture, Nutrition and Forestry at a Tuesday confirmation hearing. Quintenz told senators the CFTC has a 'very clear' mandate to permit the sports event futures contracts that financial technology companies have offered nationwide since the start of the year, despite state and tribal objections. More from Yasiel Puig Sports Betting Guilty Plea Overturned by Federal Court Robinhood's Sports Prediction Markets Are a Hook for Wider Play ESPN Bet Faces Make-or-Break Year for $2 Billion Disney-Penn Deal Unless Congress steps in with a new law, Quintenz said, 'I need to abide by the Commodity Exchange Act.' The CFTC's exclusive regulatory authority for sports event contracts under the Commodity Exchange Act is being challenged in court by multiple states; those states, like many tribal groups, call the markets an illegal sports betting equivalent that circumvents state taxes and other regulations. While no tribal group has filed a related lawsuit to date, more than a dozen have petitioned the CFTC to shut down sports prediction markets in their regions. Quintenz, a Kalshi board member, suggested unhappy tribal groups could compete with the new sports prediction markets by launching their own. But gaming exclusivity is the very right tribes are desperate to preserve in states where sportsbook operators such as DraftKings and FanDuel are banned. 'Nothing in the CEA that I'm aware of prohibits or affects the opportunity of tribes to offer those [prediction market products],' Quintenz said in response to a question from Democrat Sen. Adam Schiff of California. President Donald Trump's agency pick said he would 'listen to the concerns of the tribes' raised by Schiff and reschedule a public roundtable discussion canceled without explanation in April by acting chair Caroline Pham. He said he did not have any information about why the original discussion was nixed. 'We respect Tribal Nations and their inherent sovereignty,' a Kalshi spokesperson wrote in an email after Quintenz's hearing. 'The Commodity Exchange Act does not restrict Tribes from engaging in gaming activities on their reservations or within the states where they operate, consistent with applicable laws. We have had productive conversations with several Tribes and are hopeful to build collaborative partnerships in the future.' Amid conflict-of-interest concerns given his Kalshi ties, Quintenz wrote in a pre-hearing letter to the CFTC that he would step down from the company's board and divest stock upon being confirmed to lead the federal agency. He said he would recuse himself from matters involving Kalshi. In Tuesday's hearing, Quintenz told U.S. Sen. Amy Klobuchar (D-Minn.) that the CFTC would appoint a 'screener' in his office 'to make sure no matter inappropriately comes before me.' The current makeup of the CFTC strains the logic of his proposed strategy. If confirmed by the Senate, Quintenz would be the only commissioner at the CFTC, with the four other slots unfilled after a spate of resignations and retirements. It is unclear, then, who else right now could regulate the rise of Kalshi and similar companies that offer sports event futures. Departing commissioner Christy Goldsmith Romero, a Democrat, last month called the pending one-person CFTC leadership structure 'a disservice to regulation.' But Quintenz said several times in his hearing that he would not explicitly urge the president to nominate candidates from both political parties to be CFTC commissioners in accordance with agency rules—or ask that empty agency spots be filled at all. 'I don't tell the president what to do,' Quintenz said to U.S. Sen. Raphael Warnock (D-Ga.). Interim CFTC chair Pham has not taken a vocal stance on sports prediction markets since being named to the post in January. The agency has been hands-off toward Kalshi and other exchanges—a full turn from how things went during Joe Biden's presidency when the agency fought Kalshi in court over its election contracts. It dropped an appeal in the Kalshi election contract case after Pham took over for Biden-era CFTC chair Rostin Behnam. Quintenz has long argued that sports event contracts are a legitimate financial hedging tool that provide an opportunity for 'risk management, price discovery and price dissemination.' His claims date back to his stint as a CFTC commissioner from 2017-2021. During Tuesday's hearing, Quintenz repeated many of his talking points from a 2021 speech to the Federalist Society in which he said the CFTC has no right to inhibit sports prediction markets under the Commodity Exchange Act. The U.S. Senate Committee on Agriculture, Nutrition and Forestry will vote on whether to recommend Quintenz for full Senate approval. Then, the Senate will hold a final vote on Quintenz's nomination. Best of Most Expensive Sports Memorabilia and Collectibles in History The 100 Most Valuable Sports Teams in the World NFL Private Equity Ownership Rules: PE Can Now Own Stakes in Teams
