By Pratik Chougule, Mick Bransfield, and Solomon Sia
Although we would favor a more laissez-faire approach to event contracts than what the CFTC has pursued, we believe that a lack of regulatory certainty and clarity is perhaps as great an obstacle to the development of the event contract space as are regulations themselves.
The absence of clear rules has harmed the event contract space in three main ways.
First, it has deterred market entrants from participating in the space on the assumption that this decision would entail cost-prohibitive compliance measures, exposure to future enforcement actions, and poor returns on investment.
Second, regulatory ambiguity has encouraged market participants to offer and wager on betting lines with dubious public interest benefits, thereby inviting not only regulatory scrutiny but also negative public attention.
Third, attempts by both Commission staff and market operators in the space to interpret ambiguous rules and test their limits have escalated into policy reviews, notice and comment periods, lawsuits, and public discussions that have, in the aggregate, generated a backlash against event contracts.
Pratik Chougule (@pjchougule) is the executive director of the Coalition for Political Forecasting. Mick Bransfield (@mickbransfield) is the research director of the Coalition for Political Forecasting. Solomon Sia (@sia_solomon) is a board member of the Coalition for Political Forecasting.
This blog post is an excerpt of the authors’ August 2024 comment letter to the CFTC.
