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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
Yahoo
02-06-2025
- Business
- Yahoo
Sports Stocks Rebound as Tariff Fears Recede, TACO Trade Dominates
Sports stocks posted their first positive month since January as fears eased about tariffs, which had dragged the Sportico Sports Stock Index 23% lower from its mid-February peak to its late April lows. The benchmark sports index posted a 7% gain in May to close the month at 1,380, pushing the index back into positive territory for 2025. The strength in sports reflected the wider rebound seen in the broader markets, which saw action in the month dominated by knee-jerk reactions to Trump tariff announcements followed by sharp rebound days due what investors began calling the TACO trade. More from ESPN Bet Faces Make-or-Break Year for $2 Billion Disney-Penn Deal Chip Wilson Makes $600M as Trump Tariffs Barely Dent Amer Sports DraftKings the Exception to Sports SPACs' Dire Track Record 'The recent rally has a lot to do with markets realizing that the U.S. administration does not have a very high tolerance for market and economic pressure, and will be quick to back off when tariffs cause pain. This is the Taco theory: Trump Always Chickens Out,' wrote Financial Times columnist Robert Armstrong in May, popularizing an acronym that began with Wall Street traders. The buying-on-weakness TACO trade resulted in three trading sessions in May when the Sportico Sports Stock Index jumped at least 2%. That's unusually volatile in the history of the index, but actually calmer than April, which had four such up days and five days of outsized losses. Given the tariff obsession of the markets, it's no surprise that one of the sports stocks most potentially impacted by the Trump tariffs was the lead gainer in May. Amer Sports (AS) leapt 50% in the month as management told investors the worst-case scenario of Trump's 145% import tax on Chinese made goods would clip five cents a share from earnings in 2025. Since at the time of Amer's earnings announcement last week Trump's had already backed off the 145% rate, shares rallied under the realization the profit hit would be far less for the year. Amer, which has 11 sporting goods brands including Arc'teryx, Salomon and Wilson, estimates perhaps 10% of its worldwide revenue would be subject to any U.S. taxes on Chinese goods, given its ability to source goods from other, less-taxed countries and the fact most of its sales come from Asia and Europe. Other tariff-exposed components of the Sportico index also rallied in the month. Sneaker maker On Holdings (ONON) gained 24%; concession firm Aramark (ARMK), which expected some hit on its concessions supplies like drinking cups, rallied 22%; while Asia-dependent gear markers Under Armour (UAA, up 17%) and Nike (NKE, up 7%) also rose. All told, 28 of the Sportico Sport Stock Index components rose in May, 13 of those more than 10%. Still, odds are tariff volatility will continue, despite a court ruling last week that Trump doesn't have the authority to impose blanket taxes on most imports, including from China, Canada and Mexico. 'We are going to end up with tariffs, one way or another—Trump has plenty of alternatives,' Aniket Shah, a Jefferies economist, said in a Thursday note on a U.S. Court of International Trade's decision invalidating the president's reasoning. The ruling, added Shah, 'is a body blow to President Trump's America First Trade Agenda, but not a fatal blow.' Though not directly affected by tariffs, ticket reseller Vivid Seats (SEAT) had a brutal May on fears of consumers pulling back spending. The stock surrendered 45% of its market capitalization to close the month at $1.56 a share, making for a company value of $338 million. Vivid is down 66% year-to-date. 'As we've all witnessed, economic and political volatility has impacted consumer sentiment, and this uncertainty can also impact how and when artists and rights holders go to market,' Vivid CEO Stanley Chia said on a May 6 earnings call. Due to the competitive landscape and consumer uncertainty, Vivid suspended its habit of providing forward earnings guidance to analysts with that call, adding to the bearish sentiment for Vivid that has yet to let up. By comparison, larger ticket seller Live Nation (LYV) hasn't been nearly as hard hit—its shares gained 4% in May. In a mid-May investor conference, the company emphasized that two-thirds of its growth comes from international markets, places where consumer spending power won't be hurt by Trump's tariffs. The Sportico Sports Stock Index is a basket of 40 stocks that rely on sports for a significant portion of future growth. The index includes sports teams and leagues such as Formula 1 (FWOBA, up 9%), regional sports network owners including Sphere Entertainment (SPHR, up 38%), recreation operators such as Vail Resorts (MTN, up 15%) and sports data and analytics providers like Genius Sports (GENI, down 11%). To be included in the index, stocks must be traded in the U.S. with sufficient daily volume and a market capitalization greater than $50 million. The index was launched in August 2020 at 1,000. It's up 38% since and 1% in 2025. 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 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
30-05-2025
- Business
- Yahoo
Robinhood's Sports Prediction Markets Are a Hook for Wider Play
As Robinhood has expanded its sports prediction markets, adding Indy 500 and French Open event swaps to its arsenal this month, the U.S. gambling industry establishment has remained on alert. Robinhood has more than 20 million monthly active users across its full suite of financial products, and CEO Vlad Tenev has frequently talked up the new sports prediction market endeavor. Tenev told analysts on April 30 the company had facilitated about 500,000 sports-related transactions. More from ESPN Bet Faces Make-or-Break Year for $2 Billion Disney-Penn Deal Sports Prediction Market Regulator Exits With Agency in Flux DraftKings the Exception to Sports SPACs' Dire Track Record Chris Grove, partner emeritus at Eilers & Krejcik Gaming, called the company 'a credible threat to the sports betting status quo' in a recent email to Sportico, citing its size and technology chops. But the fine details of Robinhood's dealings, some of which have not been publicly reported, underline how a financial technology company better known for stock market trading sees sports as a gateway for users to adopt other products. 'It's not just about the trading of these events, it is about the engagement that it [generates],' JB Mackenzie, VP of Futures and International, said in a video interview. 'When you create a product that has intrigue, such as sports prediction markets, it allows users the opportunity to then look at other asset classes that they may be interested in. What we've seen is that is exactly what occurs … they'll look at a sports event contract, but then also they look at crypto, they'll also look at equities or options trading.' That is a different mission from sportsbook operators such as DraftKings and FanDuel, which are nonetheless closely monitoring the rise of sports event futures because of their growing popularity and resemblance to traditional betting. DraftKings and FanDuel have not expressed interest in user acquisition for the sake of providing people with other asset management services. To the extent they are using sports wagering to drive users to another product, the destination sportsbooks have in mind is the revenue bonanza of mobile casinos in states that have legalized iGaming. Robinhood's strategy also contrasts its partner Kalshi, which owns the exchange underpinning Robinhood's in-app event futures trading capabilities. Kalshi's entire business rides on the ability to scale prediction markets. Robinhood's does not. In fact, Robinhood is lowering its revenue ceiling for prediction markets, seeking instead to reduce risk by using a third-party exchange rather than buying or building its own. Robinhood does not directly pay Kalshi for the right to host its exchange, Mackenzie said, and it only earns revenue from sports markets by charging $0.01 per dollar traded. Kalshi tacks on additional user fees in a separate process. Mackenzie said Robinhood made a cost-focused choice not to create or acquire its own exchange. purchased North American Derivatives Exchange Inc. in 2022 and now offers sports event futures there. 'Acquiring an exchange is a very difficult process, to be perfectly blunt,' Mackenzie said. 'There's probably less than six that are out there. So, acquiring one is probably a much bigger decision, and it usually involves a lot of different products outside of just prediction markets.' Robinhood's tie-up with Kalshi is non-exclusive, meaning it does not provide an inherent competitive edge over other financial technology companies that offer investments in varied asset classes. As previously reported by Sportico, Robinhood also takes a slightly different approach toward regulators than Kalshi, albeit one that is still far more aggressive than DraftKings and FanDuel. Kalshi remains live in all 50 states despite fierce legal challenges, but Robinhood is not offering sports contracts in Maryland, Nevada or New Jersey, a company spokesperson said Tuesday. The three states have issued cease-and-desist orders asking unregistered sports prediction markets to shut down, alleging they are illegally offering a gambling service. Robinhood and Kalshi have denied wrongdoing, claiming in court that sports futures are distinct from gambling and that the federal Commodity Futures Trading Commission (CFTC) holds exclusive oversight authority. The issue could eventually make it to the Supreme Court due to the clash of state and federal power. Because it is a trading broker that does not own a prediction market exchange, Robinhood faces fewer potential regulatory actions from the CFTC. The sparsely staffed federal agency that oversees futures trading has recently embraced a hands-off approach to the entire sector, adding to a sense that Robinhood's prediction markets will not face a blanket ban anytime soon. Also, Robinhood was one of the biggest corporate donors to President Donald Trump's inauguration committee, giving $2 million. Kalshi is well-connected with the Trump administration, too, adding Trump's son Donald as an advisor and seeing board member Brian Quintenz nominated to lead the CFTC. Quintenz said this week in a letter to the CFTC that he will step down from Kalshi's board when approved as chairman. If Quintenz is confirmed, he will enter an agency with all four other agency spots unfilled because of recent resignations. This will kneecap the CFTC's regulatory capabilities to monitor companies like Robinhood, departing commissioner Christy Goldsmith Romero said at a Brookings Institution conference Tuesday. 'I think it's difficult if there's one person deciding on what the rules should be,' Romero said. 'It does a disservice to regulation.' Beyond regulatory concerns, whether Robinhood hurts the gambling industry's longstanding business forces remains to be seen. A couple of months ago, executives at several prominent sportsbook operators viewed prediction markets as a possible existential threat, and a spokesperson for the American Gaming Association said in an email Tuesday that the trade group remains concerned. Tribal groups in places such as California, where sports betting is banned or limited outside of Native American operations, remain staunchly against the rise of sports prediction markets. But corporate sports betting operators could have a change of heart. Sporttrade, for example, is requesting the CFTC agree not to take action against it if it lists nationwide futures contracts like Kalshi. Sporttrade is a hybrid case—a prediction market hub that has until now been exclusively overseen by state gaming regulators and officially licensed in Arizona, Colorado, Iowa, New Jersey and Virginia. Meanwhile, DraftKings CEO Jason Robins and Flutter CEO Peter Jackson have gone on record to suggest they could introduce their own futures trading platforms once regulatory questions are resolved. Until then, Robinhood and its fintech peers, which also offer political markets, can run up the score, each with ultimate objectives tailored to their broader businesses. 'We love what we're seeing,' Tenev said on Robinhood's most recent earnings call, 'and it's so early that the potential of this is vast.' 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
