Dodd’s brief then took issue with the CFTC’s argument that it has “exclusive jurisdiction” over these products.
“Nor is the CEA’s grant of ‘exclusive jurisdiction’ to the CFTC an express preemption provision immunizing every contract listed on a DCM from otherwise applicable state and tribal law. Rather, it identifies the CFTC as the federal regulator of covered financial instruments,” his filing said.
Former CFTC Chair Gary Gensler, who also played a key role in drafting regulations implementing Dodd-Frank, similarly argued that the law did not grant the CFTC authority to preempt state gambling laws. He’s made a similar argument in an appellate case as well.
The NFL argued it has a vested interest in the outcome of this case, given the importance of sports betting in, well, sports. The league took aim at what it described as the CFTC’s “laissez-faire” approach to this issue, as well as the broader issue of there being a divergence in how states regulate gambling companies and how the CFTC regulates designated contract markets (the type of license prediction market providers have).
On Friday, the CFTC proposed an interim final rule and a separate proposal aiming to clarify its interpretation of how these products fall into the definition of a “swap.” The agency said casino-style gambling falls outside its definition of a swap, but event contracts remain within it. And the regulator wants to formally include sports, politics, cultural and weather-related events as being part of event contracts that are counted as swaps.
