Caroline Pham, Acting Chairperson Commodity Futures Trading Commission Page 13 of 13 Sports Contracts involve gaming and activity that is unlawful under both Federal and State law. However, the CFTC may provide clarification to preclude future challenges by exercising its authority under the Special Rule to make the official determination that 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 and 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 contracts that involve one of the five enumerated categories or “other similar activity to be 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 For all of the reasons stated above, we respectfully urge the CFTC to enforce the CEA Special Rule and its regulations and prohibit Sports Contracts.
Respectfully submitted,
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