compact. 25 U.S.C. § 2710(d)(1). Because Sports Contracts are not geographically restricted so as to avoid Indian lands—and are therefore offered on Indian lands—all Sports Contracts must be conducted pursuant to an IGRA compact. See e.g. , Coeur d’Alene Tribe v. Idaho , 842 F. Supp. 1268, 1282 (D. Idaho 1994) (finding that state lottery conducted on Indian lands in the absence of a tribal gaming ordinance or compact violated IGRA). Across the board, Sports Contracts are neither authorized by a tribal ordinance or resolution nor conducted pursuant to Tribal-State gaming compacts, and directly contravene IGRA compacts. As such, Sports Contracts also violate federal law under IGRA. Lastly, companies or registered exchanges that offer Sports Contracts also likely violate the Illegal Gambling Business Act (“IGBA”). 18 U.S.C. § 1955 . As established above, Sports Contracts violate state prohibitions on sports betting. Under the IGBA, it is unlawful to operate an “illegal gambling business.” Id. § 1955(a). For purposes of that law, “illegal gambling business” means one that (i) is a violation of the law of a State or political subdivision in which it is conducted; (ii) involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and (iii) has been or remains in substantially continuous operation for a period in excess of thirty days or has a gross revenue of $2,000 in a single day. Id. § 1955(b). This provision is interpreted based on statutory text and state law definitions, not nuances such as skill v. chance analyses. See United States v. DiCristina , 726 F.3d 92, 99–100 (2d Cir. 2013) (“[T]he focus of the statute’s criminal proscription is not on what game is being played, but on the size of the business and the revenue derived by those who are running it. . . . Had Congress intended to limit the reach of the IGBA to businesses operating games of chance, it could have done so by inserting that language in subsection (b)(2).”). Thus, even if trading on a Sports Contract requires skill or some “non-chance” component, 13 it still meets the essential elements of sports betting (noted above). As such, the business of operating a company or registered exchange offering Sports Betting would likely violate IGBA. 3. The CFTC may prohibit sports betting that is contrary to state law under the “Special Rule” provision covering “other similar activity determined by the Commission, by rule or regulation, to be contrary to the public interest.” Lastly, even if the CFTC determines that Sports Contracts do not “involve . . . gaming” or violate state or federal laws, Sports Contracts involve activity similar to gaming and are thus prohibited as contrary to the public interest. This would allow the CFTC to close any perceived “loophole” to the “Special Rule” under the CEA and its implementing regulations. It would also allow the CFTC to tailor a rule to prohibit federal sports betting without disrupting state and tribal sports betting regulatory schemes. The “Special Rule” allows the CFTC to prohibit event contracts that involve one of the five enumerated categories or “other similar activity determined by the [CFTC], by rule or regulation, to be contrary to the public interest.” 7 U.S.C. § 7a-2(c)(5)(C)(i)(VI); 17 C.F.R. § 40.11(a)(2). If Sports Contracts are not covered by the text of the statute, they are at the very least a “similar activity” to gaming, and similarly contrary to the public interest. As discussed in detail above, there are ample reasons for the CFTC to use its broad discretion to determine that Sports Contracts violate public policy and are contrary to the public interest. Therefore, Sports Contracts, which effectively allow nationwide sports betting, may be determined by the CFTC to be similar to “gaming” and similarly contrary to the public interest CONCLUSION
13 See Statement of Commissioner Brian D. Quintenz (distinguishing between “betting” and “speculation,” the latter of which is involved in Sports Contracts and requires “participat[ion] in non-chance driven outcomes that have price forming impacts upon which legitimate businesses can hedge their activities and cash flows”) (accessible here).
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