wagering other than the system known as the pari-mutuel method of wagering; provided, however, that such wagers shall be allowable under this Compact only if such wagers are allowed on non-Tribal lands under the laws of the State.”) (accessible here). 2 As for states, gaming regulation has been recognized at the heart of the police powers guaranteed by the Tenth Amendment of the United States Constitution. See, e.g., Ah Sin v. Wittman , 198 U.S. 500, 505–06 (1905) (“The suppression of gambling is concededly within the police powers of a state . . . .” (citing Booth v. Illinois , 184 U.S. 425, 429 (1902))); see also WV Ass’n of Club Owners & Fraternal Servs., Inc. v. Musgrave , 553 F.3d 292, 302 (4th Cir. 2009). An essential component of tribal and state sovereignty is the ability to enact laws for the benefit and protection of their citizens. This includes gaming laws. Congress has even affirmed tribal and state preemptive regulatory authority over sports betting; various federal statutes prohibit certain gaming activities and conduct when such is proscribed by tribal or state law, including the Wire Act, the Illegal Gambling Business Act, and the Unlawful Internet Gambling Enforcement Act. See 18 U.S.C. §§ 1084, 1955; 31 U.S.C. §§ 5362(10)(A), 5363. Thus, allowing the nationwide listing and trading of Sports Contracts would impermissibly infringe on tribal and state sovereignty, undermine current tribal and state regulatory schemes, and run afoul of federalism principles enshrined in the Constitution. C. Authorizing Sports Contracts Would Vitiate Regulations that Protect Consumers and Prevent Criminal Activity Lastly, despite sharing all the hallmarks of gaming, and indeed qualifying as “gaming” (as discussed more below), Sports Contracts do not provide the same public health and consumer safety measures as lawful, regulated gaming operations. As a result, companies and registered exchanges offering Sports Contracts do not offer the kind of regulatory safeguards that tribes and states currently do pursuant to their gaming regulations. In the jurisdictions that permit sports betting, there are stringent consumer protection regulations in place. For example, Know Your Customer (“KYC”) and anti-money laundering (“AML”) laws are commonplace, 3 as are protections and laws concerning age verification, access restrictions, identity theft, match-fixing, and problem gambling. 4 Thus, while potentially facilitating many of the negative externalities associated with sports betting, Sports Contracts require nothing in the way of protection or mitigation of such. This is clearly contrary to the public interest. Accordingly, allowing Sports Contracts to be traded on a national exchange would create a federal loophole to tribal and state sports betting regulations, effectively preempting a whole swath of laws enacted by sovereign governments seeking to protect the health, welfare, and safety of their citizens. This is clearly contrary to the public interest. II. The CFTC Should Prohibit the Listing and Trading of Nationwide Sports Contracts A. Sports Contracts Constitute “Class III Gaming” under IGRA and Otherwise Constitute Sports Betting Sports Contracts necessarily constitute “Class III gaming” under IGRA because they constitute “sports betting.” In 1988, Congress enacted IGRA “to provide a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments.” 25 U.S.C. § 2702(1). Under IGRA, Indian gaming is “not only ‘a source of substantial 2 See also 13 Miss. Admin. Code Pt. 9, R. 2.1(b) (permitting sports betting within the State of Mississippi (citing Miss. Code Ann. §§ 75-76-89 and 75-76-63)) (accessible here). 3 See Best Practices for Anti-Money Laundering Compliance , A MERICAN G AMING A SS ’ N (2022) (accessible here). 4 See e.g. , Mich. Admin. Code § 432.776; N.J. Admin. Code § 13:69O-1.2; Nev. Gam. Reg. § 5.170.
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