Former SEC, CFTC Chair Gary Gensler argues that prediction markets don't overrule state regulations

Gary Gensler, former Chair of the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), argued this week that prediction markets are not exempt from state regulations, particularly concerning sports-related contracts. Gensler joined a coalition of interest groups, including the National Association of State Lottery Directors and the North American Association of State and Provincial Lotteries, in a letter to the CFTC. The letter contends that prediction markets are offering contracts that function similarly to illegal gambling, thereby encroaching on state authority. Specifically, the group highlighted the offering of contracts based on the outcomes of sporting events, which they argue falls under the purview of state-level gambling laws. This stance challenges the notion that prediction markets operate in a regulatory vacuum, asserting that they must adhere to existing state frameworks designed to govern wagering and related activities. The argument centers on the nature of the contracts offered and their potential to circumvent established regulatory structures designed to protect consumers and maintain market integrity within states.