As horse racing joins other powerful gaming interests in raising legal concerns about prediction markets and sports event contracts, a federal regulator has voiced support for these pursuits.
Michael Selig, the newly appointed chairman of the Commodity Futures Trading Commission, expressed support for these pursuits during a Jan. 29 presentation.
"It's time for clear rules and clear understanding that the CFTC supports lawful innovation in these markets," Selig said, as reported by Igamingbusiness.com. "Consistent with my commitment to fostering responsible innovation in crypto asset markets, I will continue to support the responsible development of event contract markets and the important role they play in the broader financial system."
These wagers allow players to wager, or accept wagers, on various event outcomes—elections, news events, etc.—including sporting events. Selig's comments suggest he views their emergence as a form of commodity trading.
Horse racing is concerned that such prediction markets have cut into pari-mutuel wagering and if they continue to grow, that impact will become more significant. As previously noted in this column, International Federation of Horseracing Authorities Conference, Tom Chignell, consultant for the Hong Kong Jockey Club, said one prediction market site saw $1.2 million wagered on this year's Triple Crown races.
Racing has some powerful allies in this fight, including tribal casinos and sports gambling as well as state-regulated sports gambling.
The American Gaming Association opposes the prediction markets. It estimates that sports gambling sites regulated at the state level have lost more than $418 million in handle because of the emergence of sports event contracts.
BH legal expert Dick Downey reported Jan. 17 that there are 77 court cases on prediction markets in United States district courts. As he reported: "Courts across the country are being tasked with deciding exactly what those markets are, their legality, and if they're found to be legitimate—how they should be regulated."
As that litigation plays out, the CFTC regulator sees innovation and noted that the CFTC has the "expertise and and responsibility to defend its exclusive jurisdiction over commodity derivatives," as reported by Igamingbusiness.com. Selig's comments were welcomed by the Coalition for Prediction Markets, which includes major players such as Kalshi, Robinhood, and Underdog.
After Selig's presentation, the coalition released a statement: "We applaud Chairman Selig's statements that the CFTC has 'the expertise and responsibility to defend its exclusive jurisdiction' over event contracts, and we welcome the participation of the Commission in matters where that jurisdiction is under attack. By withdrawing uncertain guidance around sports-event contracts and committing to undertake comprehensive rulemaking, the Commission takes a key step to foster market clarity, responsible innovation, and trust in American markets. We look forward to working with the CFTC to continue that important mission."
Owner's High Stakes Nomination
While prediction markets continue to be a major concern for the industry, a different corner of Washington saw a prominent horse owner nominated for one of the top economic positions in the world.
U.S. President Donald Trump said Jan. 30 that he nominated Kevin Warsh to be the next chairman of the Federal Reserve Board. The New York Times reported that the 55-year-old Warsh is nominated to serve as the next chair when the term of current chair Jerome Powell ends in May. Warsh still needs to be confirmed by the Senate.
On the track Warsh races as Vicarage Stable. Last year, in partnership with St. Elias Stable, Ken Langone, and Steven Duncker, Warsh campaigned Deterministic to a pair of grade 1 wins at Saratoga Race Course as the son of Liam's Map won the Manhattan and Fourstardave Stakes. Deterministic is trained by Miguel Clement.
Last year, the same partnership also campaigned Heartened, a stakes-placed Street Boss gelding trained by Todd Pletcher.
Warsh served as a member of the board of governors of the Federal Reserve from 2006-11. The New York Times story notes that Warsh grew up in Loudonville, N.Y., near Albany (and Saratoga Springs).
