House Committee on Agriculture opens review of prediction markets, weighing Commission authority and possible legislation

In opening remarks at a subcommittee hearing on customer protections and market integrity in sports event prediction markets, House Committee on Agriculture Chairman Glenn Thompson said the committee is beginning a broader review of prediction markets and will hold further hearings. He framed the immediate issue as how the Commission should oversee newer derivatives products, including event contracts, while preserving the federal framework Congress established for derivatives markets under the Commodity Exchange Act. Thompson argued that the Commodity Exchange Act gives the Commission broad and exclusive authority over transactions on registered exchanges, but said that does not resolve wider policy questions about the rules for event contracts or whether certain contracts, especially sports-related contracts, are appropriate for public trading. He pointed to the Commission's proposed rulemaking from last month on defining the public interest and applying the special rule for event contracts, including how contracts involving gaming may be assessed as contrary to the public interest. He said the committee will use the hearing record to determine whether gaps exist in the Commission's current authority. If the Commission's authority is found to be insufficient, the committee will consider legislation, while also examining federal pre-emption and the effect on the federal regulatory framework under the Commodity Exchange Act.