Trump's CFTC Pick Troubles Tribes With Prediction Market Plans
Tribal groups are concerned Kalshi, Robinhood and Crypto.com 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.
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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.
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