Better Markets, a nonprofit focused on financial market oversight, filed a comment letter with the Commodity Futures Trading Commission (CFTC) on Monday urging the agency to withdraw its proposed rule on prediction markets, arguing it would effectively authorize widespread gambling under the guise of financial event contracts and undermine congressional intent.
The letter, submitted by Benjamin L. Schiffrin, Director of Securities Policy at Better Markets, addresses the CFTC’s notice of proposed rulemaking on prediction markets, presented last month.
“Wagering money on whether a team is going to win a game or how many points a player will score is plainly gambling—and the American people know it. Survey, after survey, after survey confirms that. The only people who disagree appear to be the prediction market companies, who stand to profit, and the CFTC, which appears willing to do whatever these companies want,” said Schiffrin in a statement accompanying the filing.
He added that the agency’s “willingness to ignore congressional intent so that it can reach the result it wants—and its efforts to convince the American people that its actions are somehow consistent with the public interest—is disgraceful.”
Letter cites 2010 Senate exchange on the Special Rule
The comment letter centers its legal argument on the so-called Special Rule, a provision of the 2010 Dodd-Frank Act authorizing the CFTC to determine that event contracts involving gaming are contrary to the public interest.
Better Markets points to a colloquy between then-Sen. Lincoln and then-Sen. Feinstein during Senate floor debate, in which Lincoln stated that the commission “needs the power to, and should, prevent derivatives contracts that are contrary to the public interest because they exist predominantly to enable gambling through supposed ‘event contracts.'”
Lincoln cited the Super Bowl, the Kentucky Derby and the Masters as examples of events around which such contracts could easily be built, adding that they “would not serve any real commercial purpose” and “would be used solely for gambling.”
Better Markets argues the CFTC’s proposal reaches the opposite conclusion from this record by defining “gaming” using dictionary definitions of “game” rather than “gaming,” a term the letter says is more closely tied to betting and wagering.
Under the CFTC’s proposed definition, an activity qualifies as gaming only if it is undertaken for recreation, is governed by rules and depends on participants’ luck, skill or athletic ability. Better Markets contends a definition tied to wagering money on the outcome of a contest, or on a matter with only entertainment value, would more closely track the statute and prevent the surplusage the agency itself says it wants to avoid.
Sports, casino games and pop culture contracts named
Applying that alternative definition, the letter argues that event contracts on sporting outcomes, poker and chess tournaments, reality television results, and other pop-culture-linked wagers would all qualify as gaming and should be found contrary to the public interest.
The letter notes that Kalshi currently lists contracts on the winner of Big Brother season 28, the most-searched person on Google for the year, and statements YouTube creator MrBeast might make in an upcoming video.
The letter also disputes the CFTC’s price-discovery rationale for permitting sports-related contracts, under which the agency reasons that data drawn from many event contracts about a team could feed into decisions such as hotel pricing, restaurant staffing or municipal resource planning around games.
Better Markets says the CFTC provides no support connecting national betting odds to local attendance patterns, and separately, that the same argument would apply to bets placed through traditional sportsbooks, a result the letter says the agency does not intend.
On casino-style contracts, Better Markets notes that the proposal treats games of pure chance, such as roulette, as more likely to be against the public interest, while treating skill-influenced games such as poker and chess as less likely to be.
The letter says this reasoning could allow contracts on poker tournament outcomes to be sold nationally even in states where poker itself is prohibited.
Insider trading cases raised as evidence of manipulation risk
The letter and the accompanying statement both raise recent cases the organization says illustrate the manipulation risk tied to contracts based on non-financial outcomes.
These include a Justice Department case accusing a Google engineer of using nonpublic search data to place a $1.2 million bet on Polymarket that singer D4vd would be the year’s most-searched person, and a federal inquiry into whether a White House teleprompter operator used advance knowledge of presidential remarks to profit nearly $100,000 through Kalshi mention-market contracts.
The letter also cites betting activity around Survivor season 50, in which Kalshi listed contestant Aubry Bracco’s odds of winning at 70% before the season premiered; Bracco went on to win.
A separate case involved an editor for MrBeast who the letter says used Kalshi contracts to place bets with “near-perfect” accuracy on outcomes tied to the creator’s video content.
Better Markets also references public comments from National Football League executive vice president Jeff Miller, who told ESPN the league has raised concerns with prediction market operators about mention markets tied to broadcast commentary.
“Some people are going to have that information . . . that they can then share,” Miller said. “We’re trying to stay as far as we can from some of those sorts of inside information wagers that could exist in this space.”
Cboe executive’s remarks cited on scope of CFTC oversight
The letter cites public comments from Cboe Global Markets Chief Executive Craig Donohue, whose company has announced plans for a prediction market product tied to financial data, in support of its argument that sports and entertainment contracts fall outside the CFTC’s intended jurisdiction.
Donohue said Cboe is “in the business of risk management, investing and portfolio optimization—not whether the Chicago Cubs will beat the Tampa Bay Rays or who takes home Best Actor at the Oscars,” and said he has “a lot of heartburn around trying to regulate sports betting and pop culture events as something called a swap on a CFTC-designed contract market.”
Better Markets contrasts the current proposal with the CFTC’s own past positions, including Rule 40.11, adopted in 2011 to carry out “Congress’s intent to prevent gambling through the futures markets,” and a 2024 proposed rule, since rescinded, stating that wagers on contests are generally too unpredictable to serve a hedging or price-basing function.
Procedural and jurisdictional objections
Better Markets separately argues the proposal leaves a gap for contracts that fall outside any gaming definition but pose comparable risks. As an example, the letter points to Kalshi’s recently launched contracts tied to the outcome of drug trials, saying such contracts could create financial incentives to manipulate trial results even though they involve neither a game nor an issue of pure entertainment value.
The letter states that the CFTC has not addressed the volume of public comments submitted in response to the March 2026 advance notice of proposed rulemaking that preceded the current proposal, and argues this lack of engagement raises concerns under the Administrative Procedure Act.
Better Markets closes the letter by describing the CFTC’s core function as oversight of the commodities and derivatives markets, which the organization values at $500 trillion, and argues the agency should limit event contracts on its registered platforms to instruments with a hedging function rather than acting as what the letter terms a “Nationwide Betting Commission.”
Original article: https://www.yogonet.com/international/news/2026/07/30/125617-better-markets-urges-cftc-to-withdraw-prediction-market-proposal-over-gambling-concerns
