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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast.

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Speaker 3: I'm Joe Wisenthal, and I'm Tracy Alloway.

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Speaker 2: Tracy, did you watch the Super Bowl?

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Speaker 3: No?

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Speaker 2: I was going to ask that, didn't I knew it.

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Speaker 3: Actually, I was going to start exactly the same way.

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Speaker 3: I did watch the Super Bowl, And so I feel

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Speaker 3: empowered to ask you a very controversial question. Oh yeah,

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Speaker 3: not which halftime show you watched, but did Cardi be

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Speaker 3: perform at the Super Bowl?

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Speaker 1: Oh?

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Speaker 2: Right, because this was a big thing. I forgot that

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Speaker 2: there was, you know what, I'm aware of various sort

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Speaker 2: of questions about prediction markets and things that people place

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Speaker 2: bets on. Well, how did that resolve? What was what

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Speaker 2: was the basic issue here?

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Speaker 3: Again? So I think it's still being resolved in various ways.

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Speaker 3: But Cardi b she was on set during Bad Bunnies

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Speaker 3: Extravaganza and she was kind of like dancing and singing along,

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Speaker 3: like mouthing words at least along with other people like

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Speaker 3: Pedro Pascal and Jessica Alba.

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Speaker 2: Yea Lady Gaga, well like singing right.

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Speaker 3: So the only reason this matters at all is because

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Speaker 3: of prediction Markets. So there was a bet will Cardi

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Speaker 3: be perform? And now the question is does standing on

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Speaker 3: stage and kind of bobbing your head and mouthing words

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Speaker 3: count as a performance? Polymarket says it does, cal She

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Speaker 3: says it doesn't.

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Speaker 2: Oh interesting, Yeah, there you go call She and poly

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Speaker 2: Markets split over whether Cardi b performed. That's a great tension.

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Speaker 3: I like that.

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Speaker 2: It was striking to me, setting aside that I actually

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Speaker 2: somehow seem to have missed the specific thing like how

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Speaker 2: much prediction markets are now just part of the consumption experience,

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Speaker 2: you know, even you look at all these different things

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Speaker 2: that people are talking about eighty Gaga going to show

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Speaker 2: up somehow, like someone made a bet on it before

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Speaker 2: it went public. But also just like with each score,

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Speaker 2: you know, you check the line, it's like how much

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Speaker 2: did this move the expectations of whether the Seahawks are leading?

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Speaker 2: Like prediction markets are truly becoming part of like pop

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Speaker 2: culture and how we interact with pop culture.

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Speaker 3: There were some weird bets around, like color of gatorade

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Speaker 3: that was going to get dumped on the coach. Yeah,

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Speaker 3: lengths of like the national anthem being sung? Yeah, did

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Speaker 3: you see that? Like I was tempted by some of those,

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Speaker 3: but I stayed away.

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Speaker 2: I've still I haven't used poly market or Kelsey probably was.

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Speaker 1: You know.

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Speaker 2: The interesting thing too, is like how much the mood

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Speaker 2: has swung, right cause a few years ago, like I

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Speaker 2: don't know, twenty twenty two, twenty twenty three, I think

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Speaker 2: we did an episode like at that time, like there

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Speaker 2: was almost nothing and the sort of like regulatory one

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Speaker 2: to eighty. The degree to the liberalization of these markets

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Speaker 2: has been pretty remarkable, even you know, going back to

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Speaker 2: a year and a half go, there was just a

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Speaker 2: polymarket and it was just the offshore version that you

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Speaker 2: had to fund with stable coins, and now it's like exploded.

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Speaker 2: At the time, you know, Kelshi was very limited. They

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Speaker 2: didn't have US access, et cetera, or very curtailed US access. Anyway,

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Speaker 2: they're here and everyone's trying to wrap their heads on

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Speaker 2: where this is all going and stuff.

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Speaker 3: Yeah, it feels like they're much more sanctioned, I guess

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Speaker 3: than they used to.

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Speaker 4: Yeah.

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Speaker 3: Yeah, but that said, there are still some issues that

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Speaker 3: people are trying to work out. You have ambiguous outcomes

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Speaker 3: like did Cardi B actually perform? You have concerns around

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Speaker 3: insider trading, No, not insider trading per se, because we're

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Speaker 3: not talking about securities contracts, but maybe people with insider

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Speaker 3: info who inadvertently disclosed something material. I was thinking about

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Speaker 3: this actually, So you can also bet on which companies

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Speaker 3: are going to run Super Bowl ads. Oh yeah, and

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Speaker 3: a lot of people must know if a company is

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Speaker 3: going to run an ad like that, you have like

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Speaker 3: the agency and actors like everyone, And you could argue

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Speaker 3: maybe that that's material non public information. Right, you run

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Speaker 3: a Super Bowl ad, you get a bunch of attention.

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Speaker 3: Maybe your share price goes up if you're publicly listed. Yeah,

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Speaker 3: I don't know.

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Speaker 2: There are so many things anyway, rather than us just

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Speaker 2: keep talking about them because we can talk for an hour.

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Speaker 2: We really do have the perfect guest. We're going to

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Speaker 2: be speaking with Mike Selig. He is the new chairman

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Speaker 2: of the CFTC, the main regulator for prediction markets, who's

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Speaker 2: just sworn in in December. We're going to talk all

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Speaker 2: about this, maybe some crypto as well. So, Mike, thank

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Speaker 2: you so much for coming on out Locks, coming into

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Speaker 2: the studio.

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Speaker 4: Glad to be here.

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Speaker 2: Why do you tell us a little bit about just

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Speaker 2: broadly coming into this new role, like what are your

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Speaker 2: goals here with the CFTC.

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Speaker 5: Or really at a pivotal moment you mentioned prediction markets,

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Speaker 5: crypto AI, all manner of new technologies and products that

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Speaker 5: are impacting our markets. And the CFTC was really this

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Speaker 5: kind of little known regulator before the Financial crisis, regulating

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Speaker 5: the futures markets. It has expanded jurisdiction now or the

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Speaker 5: swaps markets, counter derivatives markets, and now we see so

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Speaker 5: much innovation in that space with things like prediction markets

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Speaker 5: and crypto, with legislation on the perverge of hopefully being

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Speaker 5: on the President's desk, and so the agency is really

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Speaker 5: at this unique moment where it has the opportunity to

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Speaker 5: shape the future of these new and emerging markets, and

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Speaker 5: it's really exciting time to be in the seat.

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Speaker 3: Do you have an opinion on whether Cardi B performed

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Speaker 3: at the Super Bowl? I mean, it's funny, but it's

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Speaker 3: also kind of irrelevant because I saw someone has actually

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Speaker 3: filed a complaint to the Commission about Calshi's decisions specifically.

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Speaker 5: Well, of course we're spending a lot of resources investigating

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Speaker 5: whether Cardi B performed advocating. Really our focus here is

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Speaker 5: on the market, so the unique thing that the great

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Speaker 5: thing about the way that we regulate the markets is

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Speaker 5: that the exchanges themselves, similar to on the security side,

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Speaker 5: are self regulatory organizations. So each exchange has its own

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Speaker 5: rule book that's been approved by the agency. It has

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Speaker 5: its own requirements for contracts that are certified on the exchange.

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Speaker 5: So of course the card contracts went through a self

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Speaker 5: certification process and then they're settled in accordance with exchange rules.

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Speaker 4: They go through a clearinghouse as well.

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Speaker 5: So the exchanges each have these rule books and certain

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Speaker 5: requirements around how the contracts are resolved and settled. And

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Speaker 5: of course now we're seeing some differences amongst call She's

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Speaker 5: rulebook and poly Market's rule book.

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Speaker 4: But that's the great thing about our markets.

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Speaker 5: And having the ability to build a business, to develop

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Speaker 5: an exchange with some flexible guardrails on top that the

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Speaker 5: agency oversees. But we don't prescribe exactly what has to

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Speaker 5: be in the rule book. We have a principles based

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Speaker 5: system of regulation.

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Speaker 2: What is the basis for something like is CARDI B

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Speaker 2: going to perform at the Super Bowl? Have time show?

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Speaker 2: What is the basis for this being categorized as a

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Speaker 2: true financial instrument regulated by the CFDC, because it certainly

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Speaker 2: just feels like prop betting.

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Speaker 3: Who has economic exposure they need to hedge to cardi

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Speaker 3: b performing.

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Speaker 5: There's a really interesting historical story around the definition of

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Speaker 5: commodity and the markets that we regulate today, starting back

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Speaker 5: in the thirties when the Commodity Exchange Act was first ratified.

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Speaker 5: It was originally focused on grain, and over time we've

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Speaker 5: had things.

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Speaker 4: Like work values exactly. It's come a very long way.

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Speaker 5: Of course, with the financial crisis, we got all manner

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Speaker 5: of new products within our authority. But the definition of

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Speaker 5: commodity is extraordinarily brought. It includes virtually everything except a

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Speaker 5: few things have been carved out onions and motion picture

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Speaker 5: box office receiscent, and that's a really important point to

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Speaker 5: note that they were expressly carved out. So most things

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Speaker 5: in our commerce today, even securities, are technically considered commodities

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Speaker 5: under our act, and we have authority to regulate them.

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Speaker 5: In the case of securities, we coordinate with the sec

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Speaker 5: and have some joint authority. But for all other types

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Speaker 5: of products services rights.

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Speaker 4: In disease, people are going to hedge that risk.

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Speaker 5: They're going to be in the market to speculate on

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Speaker 5: those products, and so we don't merit regulate. We don't

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Speaker 5: tell people what they should be entering into contracts on.

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Speaker 5: We create rules and regulations around those markets to make

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Speaker 5: sure that they have integ that they're resilient, that they're vibrant,

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Speaker 5: and they have guardrails and in vexter protections. And so

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Speaker 5: that's why going back to the exchange rule books and

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Speaker 5: other control self certification being an important process. We're making

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Speaker 5: sure that those markets are safe and secure. But we're

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Speaker 5: not telling people whether to trade pork bellies or cardib

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Speaker 5: contracts or anything else.

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Speaker 3: So let's go to the insider trading question, because this

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Speaker 3: is sort of top of mind for a lot of people.

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Speaker 3: Technically it's not insider trading, but you know, it does

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Speaker 3: look like some people have inside knowledge sometimes when they

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Speaker 3: put on big bets on something that just happens to

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Speaker 3: happen the next day. The CFTC hasn't, as far as

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Speaker 3: I know, given a lot of guidance on this issue.

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Speaker 3: How are you actually thinking about it?

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Speaker 5: Well, from a legal standpoint, I think there's a bit

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Speaker 5: of a misunderstanding about the insider trading doctrine at the CFTC.

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Speaker 5: So the authority at the agency is very similar to

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Speaker 5: the authority at the SEC Under our Anti Fraudience Manipulation Rule,

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Speaker 5: we do have authority to police insider trading in the

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Speaker 5: commodities markets. Now, the way that insider trading is carried

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Speaker 5: out is oftentimes different from a situation where you have

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Speaker 5: informational asymmetries relevant to a company. But there are situations

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Speaker 5: where you have informational asymmetries related to the markets, placing

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Speaker 5: a trade ahead of a customer, for example, or even

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Speaker 5: in this situation now with prediction markets, and that's something

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Speaker 5: we are thinking about and certainly on the beat and exploring.

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Speaker 5: So we surveil the markets, we collect data, we have

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Speaker 5: information about. For example, you know, our players participating in

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Speaker 5: these markets are people associated with the sports leagues, etc.

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Speaker 5: And so we are a cop on the beat in

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Speaker 5: that regard. So the doctrine is not entirely different, but

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Speaker 5: there are some nuances that we're aware of and making

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Speaker 5: sure that we're policing.

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Speaker 2: For would poly Market or Kelsey in your view, be

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Speaker 2: allowed to live stream a video of a giant roulette

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Speaker 2: wheel and let people trade futures on when it lands

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Speaker 2: on red or black?

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Speaker 5: Some of these types of gaming where it's really a

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Speaker 5: game of chance and not a game of skill, there's

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Speaker 5: definitely a difference. And I think when we look at

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Speaker 5: what's a commodity, it's possible that you could construct some

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Speaker 5: sort of contract an esotera derivative, but really the underlying

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Speaker 5: and a game of skills very different. There's a clear

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Speaker 5: economic risk associated for example, at the super Bowl.

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Speaker 4: It's a good example.

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Speaker 5: There's a ton of economic activity associated with that. There's

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Speaker 5: hotel revenue that comes from it, there's vendors, there's activity

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Speaker 5: within the city, tourism, all of that, and so there's

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Speaker 5: a real reason to hedge that risk. With a game

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Speaker 5: of chance, it's harder to say it's possible you can

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Speaker 5: construct something, but it's less likely that that's a real underlying.

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Speaker 2: Well, like what is like the difference because you know,

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Speaker 2: let's say it's what is bad Bunny's first song going

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Speaker 2: to be at the super Bowl? Like, what is the

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Speaker 2: difference between that, which doesn't really seem any more economic

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Speaker 2: than reultwel and whatever it is?

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Speaker 5: Well, to be clear, there's no requirement in the act

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Speaker 5: that there has to necessarily be some merit based result

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Speaker 5: from a contract. I do think with a lot of

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Speaker 5: these information markets, these prediction markets, where they're forecasting a

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Speaker 5: potential outcome in the future, they produce a lot of

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Speaker 5: useful information. We are seeing newsrooms incorporate prediction markets, We're

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Speaker 5: seeing sports live broadcasts incorporate prediction markets. We're seeing the

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Speaker 5: information use in particular. A great example is the election

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Speaker 5: in twenty twenty four were the president had a very

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Speaker 5: large victory and that was not necessarily forecast in many

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Speaker 5: of the polls, but of course the prediction markets got

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Speaker 5: that right. So it's something that I think is valuable

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Speaker 5: to society. The question of having regulation around that's a

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Speaker 5: separate question.

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Speaker 4: I think that's an important one.

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Speaker 5: We are certainly taking on that task and making sure

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Speaker 5: that we don't let these markets languish or that we

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Speaker 5: don't push them offshore, but we develop the right rules

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Speaker 5: and regulations to develop investments and make sure that the

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Speaker 5: markets are flourishing here in the United States.

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Speaker 3: Since we're discussing prediction markets through the medium of the

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Speaker 3: Super Bowl, and you mentioned players as well, looking at

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Speaker 3: player behavior, if a player were to place a bet

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Speaker 3: on I don't know, a specific play during the game,

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Speaker 3: and then they did it themselves like something that they

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Speaker 3: actually have agency over. Would that be something that you

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Speaker 3: would investigate or look into.

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Speaker 5: You know, I think it's all facts and circumstances, So

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Speaker 5: we ne'd evaluate potentially to the extent that there's insiders

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Speaker 5: that are involved in the markets, we get that data.

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Speaker 5: We're actually talking to a lot of the sports leagues.

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Speaker 5: We're talking to participants in the markets to make sure

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Speaker 5: that we are on top of things, have information about

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Speaker 5: who is able to be participating in these markets who's not.

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Speaker 4: We do have at the exchange level.

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Speaker 5: The exchanges are really the first line of defense, and

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Speaker 5: they're surveilling the markets, they're doing KYC on their customers,

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Speaker 5: and so that's certainly something we're on top of and

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Speaker 5: we'd consider and evaluate on a case by case basis.

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Speaker 2: Why isn't a trading sports derivatives gambling or betting or

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Speaker 2: is it betting?

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Speaker 4: Well, there really is an interesting history here.

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Speaker 5: So if you go back to the thirties, national grain

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Speaker 5: betting was a thing, right, and that was considered a

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Speaker 5: national pastime. And so for as long as we've had

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Speaker 5: derivatives markets, we've had these so called bucket shops which

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Speaker 5: were you know, these these off exchange markets where people

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Speaker 5: were just placing bets against the house on the future

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Speaker 5: price of a commodity.

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Speaker 4: On the other hand, you had organized exchanges.

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Speaker 5: So the Chicago Board of Trade later CME and others

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Speaker 5: had organized markets with market integrity. They had derivative instruments

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Speaker 5: contracts where you actually were in a contract with another person.

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Speaker 5: And then now in our markets, we have a clearinghouse

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Speaker 5: novating and standing in the middle of those contracts. But

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Speaker 5: you have a buyer for every seller. With the kind

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Speaker 5: of booky model, that's not the case. You're betting against

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Speaker 5: the house, and there's a lot of different rules. When

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Speaker 5: you're betting against the house. You don't have the liquidity

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Speaker 5: of being able to offset your position or sell out

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Speaker 5: of your position. You're kind of stuck taking for the

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Speaker 5: bookie's giving you, and some of the odds are very different,

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Speaker 5: so you're actually facing the odds of the bookie as

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Speaker 5: opposed to hear where the contracts go up and down

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Speaker 5: a value based on actual market activity. And so over time,

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Speaker 5: the Supreme Court actually blocked some of this bucket shop

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Speaker 5: activity by saying you can't take the price quotations from

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Speaker 5: the organized exchanges and use them in a bucket shop,

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Speaker 5: but a lot of these bucket shops over the years

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Speaker 5: have now moved into gaming and other things. We're seeing

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Speaker 5: really the same phenomenon where we have casinos and other

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Speaker 5: operations that are operating lawfully under state requirements and regulations,

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Speaker 5: but they don't have the same sorts of controls. You know,

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Speaker 5: we regulate a nearly five hundred trillion notional market with

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Speaker 5: the swaps market. We have very stringent requirements and controls

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Speaker 5: around our exchanges, and these contracts reflect that. They go

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Speaker 5: through a very stringent process of self certification. They can't

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Speaker 5: be readily susceptible to manipulation. We survey those markets, we've

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Speaker 5: policed things like insider trading, and so it's a much

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Speaker 5: more robust scheme on top of these markets, much higher

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Speaker 5: stringent requirements, and so I I do think we're seeing

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Speaker 5: a lot of parallels between the thirties and forties and today.

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Speaker 5: But rest assure that we're on top of these markets

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Speaker 5: and these have the same sorts of investor protections that

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Speaker 5: you would expect in the securities markets and in our

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Speaker 5: futures markets.

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Speaker 3: Out of curiosity, how much of your time is split

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Speaker 3: now between the new stuff, prediction markets crypto versus the

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Speaker 3: I guess, the old boring futures exchanges.

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Speaker 5: Yeah, oh five, Well, our day to day is really

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Speaker 5: the traditional markets. So and when we talk about these

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Speaker 5: new markets, many of the incumbents are getting into this

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Speaker 5: space as well. We're seeing more and more of these

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Speaker 5: products offered on our traditional dcms, But all of these

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Speaker 5: are the same registration category, right. There are some nuances

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Speaker 5: and how they're set up. There's some new action relief

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Speaker 5: that's been given to some of these platforms historically, but

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Speaker 5: this is not it's not, you know, our day to

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Speaker 5: day bulk of work. That said, given that it's new,

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Speaker 5: and given that there's so much that is changing, we

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Speaker 5: have a lot more rulemaking and policy work to do

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Speaker 5: in this space. So I do think it's a big

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Speaker 5: piece because of that. But in terms of the actual

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Speaker 5: size of these markets compared to our as I said,

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Speaker 5: about five hundred trillion dollar notional swaps market forty trillion

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Speaker 5: dollar notional futures markets, it's a smaller piece, but it's growing,

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Speaker 5: and I think blockchain is going to really change, in

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Speaker 5: particular how some of these existing exchanges operate, how they

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Speaker 5: settle transactions and so forth, and so it's a really

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Speaker 5: exciting time to be in the seat.

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Speaker 2: So I get that there are some market structure differences

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Speaker 2: between a futures exchange on sports versus the traditional house

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Speaker 2: sets the odds and so forth, But from the perspective

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Speaker 2: of the user or the person who's putting money on

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Speaker 2: the line, like I think most people would say, like economically,

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Speaker 2: they're very similar, and they're getting more similar because we

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Speaker 2: know that to say, like the Kelshie and poly market

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Speaker 2: they're trying to get into to do parlays and stuff,

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Speaker 2: so like it's getting closer and closer. And you know,

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Speaker 2: people have a lot of concerns about sports gambling, the

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Speaker 2: effect that that has on young people and so forth.

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Speaker 2: National legalization of these it defecta lowers the age in

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Speaker 2: a lot of states because in a lot of states

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Speaker 2: the legal age to gamble is twenty one and the

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Speaker 2: legal age to trade a future is like eighteen. I

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Speaker 2: believe do you think that's good that we've defacto lowered

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Speaker 2: the age to bet on sports.

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Speaker 4: Well, again, we're not merit regulators.

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Speaker 5: We don't pass judgment on kind of the age requirements

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Speaker 5: in our securities markets and our derivatives' markets. We have

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Speaker 5: certain standards that have been upheld these markets. People are

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Speaker 5: betting on any number of assets, right if.

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Speaker 2: You want to call it these overwhelmingly sports.

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Speaker 5: I mean I think that said you have the ability

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Speaker 5: to make investments and trade options all manner of securities,

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Speaker 5: all manner of commodities, and so the rules are not

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Speaker 5: different based on being sports or this or that. I

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Speaker 5: think this term betting has been used and thrown about

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Speaker 5: in our securities markets and our derivatives markets as well,

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Speaker 5: and I don't think it necessarily means anything in particular,

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Speaker 5: but the notion is that you're able to make decisions

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Speaker 5: at eighteen in our markets, and we uphold that. State

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Speaker 5: by state, some of the standards have set even higher,

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Speaker 5: and that is not something that you know, I have

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Speaker 5: a particular opinion on.

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Speaker 4: I think that's just the way.

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Speaker 2: When you say, sure, what do you mean in state

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Speaker 2: by say some of the standards.

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Speaker 5: So some of the states have flexibility and what they

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Speaker 5: set up for drinking or for you know, gambling, and

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Speaker 5: then like this is financial market activity.

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Speaker 4: These are not wagers. You're not betting against the house.

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Speaker 5: We have significant overlay from a regulatory standpoint over these markets,

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Speaker 5: and so we're not gatekeeping particular categories of markets, elections

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Speaker 5: or sports and having different standards. That's not how we've

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Speaker 5: typically done things, and so we don't intend to do

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Speaker 5: that in this particular market.

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Speaker 3: So you're not a merit based regulator, but you are

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Speaker 3: a technical regulator. And as we've been discussing, there's a

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Speaker 3: lot going on, lots of rulemaking to do, lots of

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Speaker 3: potential enforcement actions. There's a barren story out today talking

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Speaker 3: about how the CFTC apparently has no enforcement officers left

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Speaker 3: in its Chicago office, and you used to have twenty,

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Speaker 3: but everyone resigned. It seems. How are you balancing all

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Speaker 3: these new markets which are growing really really fast and

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Speaker 3: pose some very thorny questions that we've been discussing with

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Speaker 3: more limited resources.

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Speaker 5: Well, look, a lot of the folks that left that

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Speaker 5: was before my tenure, and certainly you know it's not

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Speaker 5: you know, they didn't leave it right after I joined, right,

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Speaker 5: But no, I think that it's a serious question. Right,

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Speaker 5: We've got to make sure that we have adequate staff

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Speaker 5: to police the markets, and we do have a ton

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Speaker 5: of staff throughout the country, and you know, to the

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Speaker 5: point of our Chicago office, of course, it's important that

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Speaker 5: we have folks within that office, but we don't have

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Speaker 5: a Texas office, we don't have a Florida office, we

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Speaker 5: don't have offices in every state.

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Speaker 4: We have a handful of offices.

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Speaker 5: We've got a critical mass in DC and a number

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Speaker 5: of folks in New York as well, and those are

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Speaker 5: two largest offices. We continue to fill those out, and

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Speaker 5: we would love to have more people in Chicago, and

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Speaker 5: you know, the door is always open for folks that

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Speaker 5: want to come in and work for us, and we

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Speaker 5: continue to build out the ranks there.

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Speaker 4: But we have adequate resources.

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Speaker 5: We have a ton of folks within each of our offices,

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Speaker 5: and we're actually leveraging a lot of the new technologies

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Speaker 5: like AI to make sure that we're surveilling the markets

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Speaker 5: and that we're reviewing things like can started trading and

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Speaker 5: bringing cases where it makes sense. We're also processing applications

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Speaker 5: very quickly. We just processed, I think in a record

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Speaker 5: time of two hundred days one of the more recent

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Speaker 5: exchange applications.

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Speaker 4: So we're really well staffed.

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Speaker 5: But we're continuing to build that out and make sure

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Speaker 5: that we have good people in the building who are

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Speaker 5: competent and.

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Speaker 4: Able to make sure that we protect our markets.

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Speaker 2: So you have the funding to add headcount, and are

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Speaker 2: you pursuing like building out the headcount. Do you need

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Speaker 2: more funding?

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Speaker 5: Absolutely, so we are actually staffing up, so one hundred

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Speaker 5: percent we're building that out. We have adequate resources to

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Speaker 5: do so. But I want to be clear that we

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Speaker 5: have a very well staffed building and we're very much

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Speaker 5: on top of things with and you know, these questions

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Speaker 5: are out not enforcing and surveilling. You know, I think

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Speaker 5: there's a little bit of face news there. We probably

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Speaker 5: should put it up to a prediction market. But I

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Speaker 5: do think that we're on top of things.

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Speaker 3: So one thing I know about the Trump administration, they

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Speaker 3: are big fans, seemingly of cutting costs, cutting spending, streamlining

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Speaker 3: the federal government in some ways, and you know, sometimes

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Speaker 3: cutting agencies altogether. This has been a really long running

435
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Speaker 3: question in market structure world. But why don't we just

436
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Speaker 3: combine the CFTC SEC.

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Speaker 4: It's everybody's favorite question. Yeah.

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Speaker 5: Look, the CFTC and SEC are very different regulators. So

439
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Speaker 5: the SEC is a capital markets regulator. They're focused on

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Speaker 5: somebody wants to go race capital for a great idea.

441
00:21:39,240 --> 00:21:41,680
Speaker 5: Other people want to place that capital somewhere there needs

442
00:21:41,720 --> 00:21:44,280
Speaker 5: to be some regulation over that. After the Great Depression,

443
00:21:44,320 --> 00:21:46,520
Speaker 5: there was a lot of chaos in the markets, and

444
00:21:46,720 --> 00:21:50,639
Speaker 5: the agency really was a great answer to that issue

445
00:21:50,800 --> 00:21:53,640
Speaker 5: and has put a great regime in place to regulate

446
00:21:53,680 --> 00:21:56,480
Speaker 5: all of that. The CFTC grew up actually at a

447
00:21:56,560 --> 00:21:59,280
Speaker 5: different time. The original act was in the thirties, but

448
00:21:59,400 --> 00:22:01,880
Speaker 5: later on and the safetc Was established in the seventies.

449
00:22:02,040 --> 00:22:06,000
Speaker 5: But the purpose of the CFDC is to regulate risk mitigation,

450
00:22:06,200 --> 00:22:09,720
Speaker 5: risk management very different areas. So there are firms that

451
00:22:10,040 --> 00:22:14,000
Speaker 5: whether farmers, ranchers, energy producers. Now we have data centers

452
00:22:14,440 --> 00:22:17,320
Speaker 5: in the AI space, but all manner of businesses have

453
00:22:17,400 --> 00:22:19,439
Speaker 5: a bunch of risk related to the inputs for their

454
00:22:19,480 --> 00:22:23,359
Speaker 5: business and ongoing operations and they need to hedge that risk.

455
00:22:23,440 --> 00:22:26,320
Speaker 5: And there are other praditions that want to supply liquidity

456
00:22:26,359 --> 00:22:30,160
Speaker 5: into those markets, make markets, or speculate, and the CFTC

457
00:22:30,440 --> 00:22:33,400
Speaker 5: regulates that. So very different purpose for the regulator. There's

458
00:22:33,400 --> 00:22:35,720
Speaker 5: not the same sort of disclosure regime that we have

459
00:22:35,800 --> 00:22:37,879
Speaker 5: with the SEC, and so it makes sense to have

460
00:22:37,960 --> 00:22:40,840
Speaker 5: two separate regulators. But what doesn't make sense and what

461
00:22:40,920 --> 00:22:43,320
Speaker 5: Chairman Akins and I have been very clear on is

462
00:22:43,359 --> 00:22:46,520
Speaker 5: the lack of coordination between the agency. So it's coordination,

463
00:22:46,920 --> 00:22:51,560
Speaker 5: not consolidation. We need to harmonize the two regimes to

464
00:22:51,680 --> 00:22:55,800
Speaker 5: make sure that there's not inconsistent and incompatible rules and

465
00:22:55,840 --> 00:22:58,520
Speaker 5: that there's not gaps. So Chairman Akins is referred to

466
00:22:58,560 --> 00:23:02,120
Speaker 5: this no man's land between the two agencies where you've

467
00:23:02,119 --> 00:23:05,280
Speaker 5: got the bodies of all these dead products and services

468
00:23:05,320 --> 00:23:07,720
Speaker 5: that otherwise could have been if the agencies could just

469
00:23:07,720 --> 00:23:11,000
Speaker 5: figure out how to coordinate. Security futures is a great example.

470
00:23:11,280 --> 00:23:14,280
Speaker 5: We have shared jurisdiction there, but we've really failed to

471
00:23:14,359 --> 00:23:15,120
Speaker 5: work well.

472
00:23:14,920 --> 00:23:16,480
Speaker 4: Together to get that off the ground.

473
00:23:16,880 --> 00:23:18,439
Speaker 5: And so I think it's really a new day at

474
00:23:18,480 --> 00:23:21,479
Speaker 5: both agencies where we're intending to work closely together on that.

475
00:23:21,880 --> 00:23:23,959
Speaker 3: Yeah, this is exactly what I wanted to ask. So

476
00:23:24,560 --> 00:23:28,280
Speaker 3: I've heard people talk about increased cooperation and coordination between

477
00:23:28,280 --> 00:23:32,600
Speaker 3: the SEC and the CFTC basically ever since the financial crisis,

478
00:23:33,040 --> 00:23:36,359
Speaker 3: and it hasn't really happened, or it hasn't happened to

479
00:23:36,400 --> 00:23:39,399
Speaker 3: the degree that some people would like to see, what's

480
00:23:39,440 --> 00:23:43,560
Speaker 3: your diagnosis of the actual problem there? And I would

481
00:23:43,600 --> 00:23:46,239
Speaker 3: love to get into the weeds here, and you know, like,

482
00:23:46,400 --> 00:23:49,600
Speaker 3: what does coordination look like between the two agencies.

483
00:23:50,200 --> 00:23:52,240
Speaker 5: Yeah, I mean, I'm in a good position that I

484
00:23:52,320 --> 00:23:55,000
Speaker 5: used to work for Tairman Akins, But you know, so

485
00:23:55,040 --> 00:23:56,840
Speaker 5: I think we have a great relationship just getting off

486
00:23:56,840 --> 00:24:00,359
Speaker 5: for the start. But a memorandum of understanding is something

487
00:24:00,400 --> 00:24:03,160
Speaker 5: that we've committed to execute and we're looking to ext

488
00:24:03,240 --> 00:24:05,520
Speaker 5: you very soon, and that really set all the ground

489
00:24:05,640 --> 00:24:08,800
Speaker 5: rules for coordination between the staffs, and so not having

490
00:24:08,840 --> 00:24:12,000
Speaker 5: that in place, I think is really hampered the two agencies.

491
00:24:12,080 --> 00:24:15,200
Speaker 5: Because sharing information is really important. You need a framework

492
00:24:15,200 --> 00:24:17,840
Speaker 5: for sharing that information. There's a lot of non public

493
00:24:18,200 --> 00:24:21,440
Speaker 5: material that has generated in each building and so having

494
00:24:21,520 --> 00:24:24,359
Speaker 5: rules for the sharing of that information is important. Having

495
00:24:24,400 --> 00:24:27,719
Speaker 5: regular meetings between the staffs and coordination and sharing of

496
00:24:28,080 --> 00:24:31,600
Speaker 5: market data related to registrants is really important. So if

497
00:24:31,600 --> 00:24:34,840
Speaker 5: we've got dual registrants and we're collecting our own sets

498
00:24:34,880 --> 00:24:37,879
Speaker 5: of information and we're ensuring that they're each complying with

499
00:24:38,160 --> 00:24:41,399
Speaker 5: these two kind of separate fortresses of rules and regulations,

500
00:24:41,920 --> 00:24:44,200
Speaker 5: how do we know who's doing what and what needs

501
00:24:44,200 --> 00:24:46,800
Speaker 5: to be changed, And so having the information is really important.

502
00:24:46,800 --> 00:24:49,040
Speaker 5: That's the first step, and then the staffs need to

503
00:24:49,080 --> 00:24:52,480
Speaker 5: come together and figure out how to create substitute compliance.

504
00:24:52,800 --> 00:24:56,239
Speaker 5: So certain rules are incompatible on both sides, we need

505
00:24:56,280 --> 00:24:58,200
Speaker 5: to knock those out, or at least have a kind

506
00:24:58,200 --> 00:25:01,640
Speaker 5: of default choice one agency versus the other. If you're

507
00:25:01,640 --> 00:25:04,600
Speaker 5: a broker dealer and you're doing a very minimal amount

508
00:25:04,680 --> 00:25:07,919
Speaker 5: of commodity derivatives activity, perhaps you should have a primary

509
00:25:07,960 --> 00:25:11,399
Speaker 5: regulator at the SEC with some CFTC overlay to make

510
00:25:11,440 --> 00:25:12,880
Speaker 5: sure that there's no gaps.

511
00:25:13,240 --> 00:25:14,520
Speaker 4: So that that's an important piece.

512
00:25:14,800 --> 00:25:19,680
Speaker 5: I think a lot of the general crypto related issues

513
00:25:20,040 --> 00:25:25,320
Speaker 5: are really calling for joint rulemaking, joint work between the agencies,

514
00:25:25,400 --> 00:25:29,800
Speaker 5: because we're seeing Nvidia tokens on chain and not necessarily

515
00:25:29,800 --> 00:25:31,720
Speaker 5: within the US, but I think now with the DTC,

516
00:25:31,840 --> 00:25:33,679
Speaker 5: we're going to start seeing a lot more of the

517
00:25:33,720 --> 00:25:38,119
Speaker 5: tokenization of public equities, and then we're also seeing pitcoin

518
00:25:38,320 --> 00:25:42,440
Speaker 5: ether things that are within our territory trading on chain,

519
00:25:42,760 --> 00:25:44,520
Speaker 5: and those worlds are going to collide, and then they

520
00:25:44,520 --> 00:25:48,000
Speaker 5: are in fact colliding today, and so having common ground

521
00:25:48,080 --> 00:25:50,840
Speaker 5: between the agencies, figuring out what the ground rules are

522
00:25:51,560 --> 00:25:54,399
Speaker 5: and making sure that we have similar standards for decentralized

523
00:25:54,440 --> 00:25:56,800
Speaker 5: finance and for digital wallets and all of that's really

524
00:25:56,800 --> 00:26:00,719
Speaker 5: important because if we set incompatible standards, then it's going

525
00:26:00,800 --> 00:26:02,840
Speaker 5: to be a real disservice to the market, and that's

526
00:26:02,840 --> 00:26:04,440
Speaker 5: going to harm all Americans.

527
00:26:05,240 --> 00:26:05,480
Speaker 4: Kels.

528
00:26:05,480 --> 00:26:08,679
Speaker 2: She had an ad recently. It said pov is a girl,

529
00:26:08,840 --> 00:26:10,879
Speaker 2: and it said Puovy. I was about to be unable

530
00:26:10,920 --> 00:26:12,960
Speaker 2: to pay my rent, but I got two years of

531
00:26:13,040 --> 00:26:17,879
Speaker 2: rent through Kelshie's predictions. It's amazing. This seems more aggressive

532
00:26:18,000 --> 00:26:21,480
Speaker 2: even than you know, the traditional sports betting and there's

533
00:26:21,520 --> 00:26:24,600
Speaker 2: all kinds of sports betting ads, and then they have

534
00:26:24,640 --> 00:26:27,480
Speaker 2: a thing where you're a problem gambler call this number.

535
00:26:27,720 --> 00:26:31,720
Speaker 2: Should there be any limiting factor on how aggressively sports

536
00:26:31,920 --> 00:26:33,840
Speaker 2: these prediction markets should be advertised.

537
00:26:34,320 --> 00:26:37,359
Speaker 5: Well, that's one point that I think is worth double

538
00:26:37,400 --> 00:26:40,199
Speaker 5: clicking on, in the sense that there are standards for

539
00:26:40,320 --> 00:26:44,040
Speaker 5: futures commission mersions for the brokers within our markets, and

540
00:26:44,119 --> 00:26:48,359
Speaker 5: some of those standards are like essentially the way that

541
00:26:48,400 --> 00:26:53,119
Speaker 5: the Act and the regulations developed, where you have intermediation

542
00:26:53,520 --> 00:26:57,840
Speaker 5: between the customer and the clearinghouse and the exchange typically

543
00:26:57,880 --> 00:26:58,560
Speaker 5: in our markets.

544
00:26:58,640 --> 00:27:00,160
Speaker 4: Now these no Act.

545
00:27:00,320 --> 00:27:03,919
Speaker 5: Letters that started around two thousand that were given to

546
00:27:04,040 --> 00:27:07,159
Speaker 5: some of the prediction markets back then. Yeah, as well

547
00:27:07,240 --> 00:27:10,440
Speaker 5: as now other markets cut out the FCM cut out

548
00:27:10,480 --> 00:27:13,240
Speaker 5: the broker, and so you had direct to the clearing house,

549
00:27:13,280 --> 00:27:16,520
Speaker 5: direct to the exchange. And that model doesn't have all

550
00:27:16,560 --> 00:27:19,400
Speaker 5: the same rules and regulations, and so something that we're

551
00:27:19,440 --> 00:27:21,960
Speaker 5: thinking about is how do we make sure that we

552
00:27:21,960 --> 00:27:25,280
Speaker 5: have consistent standards across both. Now I think this question

553
00:27:25,320 --> 00:27:28,240
Speaker 5: of what sort of marketing and advertising either should be

554
00:27:28,280 --> 00:27:30,760
Speaker 5: able to engage in as one that we're certainly geving

555
00:27:30,800 --> 00:27:31,480
Speaker 5: to think about.

556
00:27:31,640 --> 00:27:33,919
Speaker 2: Sorry, just to be clear, there are current rules on

557
00:27:34,160 --> 00:27:37,520
Speaker 2: say a futures broker and how they can market. But

558
00:27:37,640 --> 00:27:41,240
Speaker 2: when these no action letters were established that allowed the

559
00:27:41,280 --> 00:27:44,640
Speaker 2: sort of the Future's entity itself to offer directly, they

560
00:27:44,640 --> 00:27:47,200
Speaker 2: didn't have the rules. What are the rules and wouldn't

561
00:27:47,240 --> 00:27:50,280
Speaker 2: add like these, like if a future is broker, like

562
00:27:50,400 --> 00:27:52,840
Speaker 2: I don't know, I forget MF Global or something, They're like, oh,

563
00:27:52,840 --> 00:27:56,080
Speaker 2: I couldn't pay my rent. But then now I'm you know,

564
00:27:56,200 --> 00:27:58,240
Speaker 2: now might now I'll never have to work again because

565
00:27:58,240 --> 00:28:01,199
Speaker 2: I traded whet futures. That seems a little weird and

566
00:28:01,280 --> 00:28:02,640
Speaker 2: I've never seen an ad like that.

567
00:28:02,720 --> 00:28:04,560
Speaker 5: Right, I mean, it really is this result of the

568
00:28:04,560 --> 00:28:06,919
Speaker 5: way that these no action letters were handed down, as

569
00:28:06,960 --> 00:28:09,320
Speaker 5: I said many many years ago, and this kind of

570
00:28:09,320 --> 00:28:12,560
Speaker 5: regime that we have that really my view on a

571
00:28:12,560 --> 00:28:14,240
Speaker 5: lot of this stuff is that we need clear rules

572
00:28:14,280 --> 00:28:16,160
Speaker 5: of the road. We need to do things through notice

573
00:28:16,160 --> 00:28:19,840
Speaker 5: and comment rulemaking, and actually think holistically about our markets

574
00:28:20,119 --> 00:28:22,800
Speaker 5: and not focus on these little patchwork no action letters,

575
00:28:22,800 --> 00:28:26,560
Speaker 5: which unfortunately has been the rule over many years. And

576
00:28:26,600 --> 00:28:28,639
Speaker 5: so that's definitely something we're thinking about. We want to

577
00:28:28,640 --> 00:28:31,320
Speaker 5: set clear standards. We want stakeholders out the table to

578
00:28:31,320 --> 00:28:33,680
Speaker 5: figure out what these regimes should look like. And I'm

579
00:28:33,680 --> 00:28:36,560
Speaker 5: not one necessarily to say what the marketing should look like.

580
00:28:36,600 --> 00:28:39,360
Speaker 5: We want to hear from participants as to what sort

581
00:28:39,400 --> 00:28:42,760
Speaker 5: of marketing they think's appropriate for these markets. But we're

582
00:28:42,760 --> 00:28:45,000
Speaker 5: certainly thinking about that, and there are different standards. It

583
00:28:45,040 --> 00:28:47,320
Speaker 5: really is just a result of the kind of ad

584
00:28:47,360 --> 00:28:50,640
Speaker 5: hoc way that regulators in the past have gone about

585
00:28:50,760 --> 00:28:54,160
Speaker 5: establishing exceptions for certain things in the markets.

586
00:28:54,360 --> 00:28:57,440
Speaker 3: Well, on this note, do you maybe need new classifications

587
00:28:57,440 --> 00:28:59,800
Speaker 3: because it seems like all these different worlds are kind

588
00:28:59,800 --> 00:29:02,719
Speaker 3: of melding together, where you might have a crypto trading

589
00:29:02,760 --> 00:29:07,040
Speaker 3: platform that's now offering derivatives and other things, and then

590
00:29:07,080 --> 00:29:10,280
Speaker 3: you have like an old school exchange that is offering

591
00:29:10,600 --> 00:29:14,720
Speaker 3: essentially bets like number go up, number go down. At

592
00:29:14,760 --> 00:29:18,320
Speaker 3: the moment, I think your registration categories are pretty like

593
00:29:19,200 --> 00:29:22,240
Speaker 3: standardized and you have three of them, is that right?

594
00:29:22,280 --> 00:29:25,800
Speaker 3: Like futures, exchange, swap execution stuff like that.

595
00:29:26,080 --> 00:29:28,320
Speaker 4: Oh, we've got too many, We've got many? Okay, anymore?

596
00:29:28,560 --> 00:29:29,000
Speaker 1: All right?

597
00:29:29,040 --> 00:29:31,560
Speaker 3: More than that? So could you create even more to

598
00:29:31,640 --> 00:29:35,520
Speaker 3: sort of encompass the industry changes that we're seeing.

599
00:29:35,720 --> 00:29:38,560
Speaker 5: Well, we certainly need to think holistically about what requirements

600
00:29:38,600 --> 00:29:41,840
Speaker 5: we have on different participants. So these non intermediated exchanges,

601
00:29:41,880 --> 00:29:44,000
Speaker 5: and we're also seeing a lot of vertical integration with

602
00:29:44,440 --> 00:29:48,440
Speaker 5: a single business owning a clearinghouse, an FCM, the broker,

603
00:29:48,560 --> 00:29:51,840
Speaker 5: and the exchange. We're seeing different models where there's the

604
00:29:51,920 --> 00:29:54,400
Speaker 5: non intermediated As I said, we don't have an FCM

605
00:29:54,400 --> 00:29:56,800
Speaker 5: at all, and then you have everything in between, and

606
00:29:56,840 --> 00:29:58,400
Speaker 5: so we need to think about that. We need to

607
00:29:58,440 --> 00:30:01,239
Speaker 5: make sure there's consistent standard. So we don't want a

608
00:30:01,280 --> 00:30:05,160
Speaker 5: regulatory arbitrage where because you don't have the broker, you're

609
00:30:05,200 --> 00:30:08,040
Speaker 5: able to do more. Now, the way that these have

610
00:30:08,080 --> 00:30:10,720
Speaker 5: been set up under no action letters today, they do

611
00:30:10,840 --> 00:30:15,240
Speaker 5: not allow for any margin, so they're fully collateralized. And

612
00:30:15,320 --> 00:30:18,920
Speaker 5: so if you go directly to the clearinghouse as a customer,

613
00:30:19,200 --> 00:30:22,000
Speaker 5: you're putting up full collateral, and so that's something as

614
00:30:22,000 --> 00:30:25,280
Speaker 5: well where we're seeing more institutional interests in these markets.

615
00:30:25,440 --> 00:30:27,440
Speaker 5: They would prefer to be able to put up margin

616
00:30:27,480 --> 00:30:30,240
Speaker 5: and go through a broker, or have a model where

617
00:30:30,240 --> 00:30:31,920
Speaker 5: you don't have the broker at all, but you're able

618
00:30:31,960 --> 00:30:34,640
Speaker 5: to use margin. So we're thinking about all these things.

619
00:30:34,680 --> 00:30:36,600
Speaker 5: It's a really interesting time, as I said, to be

620
00:30:36,640 --> 00:30:41,040
Speaker 5: thinking about market structure for things that really just probably

621
00:30:41,080 --> 00:30:44,719
Speaker 5: should have been done many years ago, and for whatever reason,

622
00:30:45,000 --> 00:30:47,240
Speaker 5: people relied on these no action letters and really I

623
00:30:47,280 --> 00:30:49,240
Speaker 5: guess it was more of an ankle biter at the

624
00:30:49,280 --> 00:30:51,280
Speaker 5: time and didn't get a full regime.

625
00:30:51,360 --> 00:30:52,600
Speaker 4: But we're thinking about all of that.

626
00:31:08,520 --> 00:31:11,160
Speaker 2: Donald Trump Junior is an advisor to Kelsey. He's on

627
00:31:11,160 --> 00:31:14,120
Speaker 2: the board of poly Market, and it looks like truth Social,

628
00:31:14,200 --> 00:31:17,080
Speaker 2: which is largely owned by President Trump, is also going

629
00:31:17,160 --> 00:31:20,320
Speaker 2: to launch something called truth predict. How should the public

630
00:31:20,360 --> 00:31:25,120
Speaker 2: feel comfortable that these are well regulated markets given the

631
00:31:25,440 --> 00:31:28,240
Speaker 2: very obvious sort of like stake that the president and

632
00:31:28,320 --> 00:31:29,640
Speaker 2: his family has in this industry.

633
00:31:30,120 --> 00:31:35,160
Speaker 5: These are designated contract markets like any other. We've regulated

634
00:31:35,200 --> 00:31:39,040
Speaker 5: these markets for many, many years for decades, they have

635
00:31:39,120 --> 00:31:42,960
Speaker 5: some of the most stringent regulatory requirements. As I mentioned,

636
00:31:43,200 --> 00:31:46,480
Speaker 5: these are nearly five hundred trillion dollars notional markets that

637
00:31:46,520 --> 00:31:49,239
Speaker 5: we regulate. We take it very seriously. We put these

638
00:31:49,320 --> 00:31:53,560
Speaker 5: fraud and manipulation these markets. So I think everybody can

639
00:31:54,080 --> 00:31:57,000
Speaker 5: rest asshore that we are on top of protecting the markets.

640
00:31:57,240 --> 00:31:59,480
Speaker 5: And we think it's great that there's a broad swath

641
00:31:59,520 --> 00:32:00,960
Speaker 5: of in the markets.

642
00:32:01,200 --> 00:32:03,640
Speaker 2: But like so for example, when you're figuring out, like

643
00:32:03,680 --> 00:32:07,680
Speaker 2: what is the appropriate level of advertising, going back to

644
00:32:08,080 --> 00:32:12,080
Speaker 2: those kelshy ads, and you're thinking, like okay, like talking

645
00:32:12,120 --> 00:32:14,720
Speaker 2: to market participants, like who is that? And like how

646
00:32:14,760 --> 00:32:17,760
Speaker 2: should people feel comfortable that you're going to find that

647
00:32:17,880 --> 00:32:20,440
Speaker 2: right line. Again, when the administration has like a very

648
00:32:20,480 --> 00:32:25,120
Speaker 2: clear economic stake in this industry and having the industry.

649
00:32:24,680 --> 00:32:26,280
Speaker 4: Grow, so we adhere to the law.

650
00:32:26,320 --> 00:32:29,400
Speaker 5: I mean, the Commodity Exchange Act is our authorizing statute.

651
00:32:29,520 --> 00:32:31,600
Speaker 5: We act in accordance with the Commodity Exchange Act, and

652
00:32:31,600 --> 00:32:34,760
Speaker 5: we have very strict ethics and you know, government requirements,

653
00:32:34,800 --> 00:32:37,680
Speaker 5: and as does I think everyone in this administration.

654
00:32:37,880 --> 00:32:39,440
Speaker 4: So we take off that very seriously.

655
00:32:39,960 --> 00:32:42,080
Speaker 3: So speaking of Trump, we should talk a little bit

656
00:32:42,080 --> 00:32:45,920
Speaker 3: more about crypto because it's been having a pretty bad

657
00:32:46,000 --> 00:32:49,480
Speaker 3: month so far, and I think one of the big

658
00:32:49,520 --> 00:32:52,640
Speaker 3: hopes of the industry, the Clarity Act, seems to be

659
00:32:52,880 --> 00:32:57,560
Speaker 3: stalled in Congress. What happens if that doesn't go through

660
00:32:57,720 --> 00:33:00,080
Speaker 3: because you've sort of I feel like you've committed your

661
00:33:00,080 --> 00:33:05,959
Speaker 3: self to being a crypto digital asset friendly regulator in

662
00:33:06,000 --> 00:33:06,880
Speaker 3: many ways.

663
00:33:07,160 --> 00:33:08,600
Speaker 4: Well thanks to the President's leadership.

664
00:33:08,600 --> 00:33:11,640
Speaker 5: I really do think we're at a critical moment where

665
00:33:11,760 --> 00:33:15,880
Speaker 5: we've got genius now as law regulation by enforcements done.

666
00:33:16,080 --> 00:33:19,120
Speaker 5: We've got the Clarity Act that's really on the precipice.

667
00:33:19,480 --> 00:33:22,560
Speaker 5: I think there's a few issues that are being ironed out.

668
00:33:22,560 --> 00:33:24,760
Speaker 5: Actually as we speak, I know there's a meeting today.

669
00:33:25,480 --> 00:33:27,400
Speaker 5: I'm more hopeful that that's going to get done. I

670
00:33:27,480 --> 00:33:30,480
Speaker 5: think that's going to set a really future proof framework

671
00:33:30,560 --> 00:33:34,080
Speaker 5: for crypto here in the US. We can't allow European

672
00:33:34,160 --> 00:33:39,280
Speaker 5: countries and others to lead in this area without US involvement, leadership,

673
00:33:39,320 --> 00:33:41,760
Speaker 5: and so we're committed to getting that done. I think

674
00:33:41,840 --> 00:33:45,560
Speaker 5: we've got a really great bill that's that's almost at

675
00:33:45,560 --> 00:33:46,520
Speaker 5: the finish line.

676
00:33:46,840 --> 00:33:48,160
Speaker 4: If it doesn't get done.

677
00:33:47,880 --> 00:33:49,840
Speaker 5: Look, I think there's a lot of authority that the

678
00:33:49,880 --> 00:33:53,520
Speaker 5: agencies have, but it's important with low or Bright and

679
00:33:53,560 --> 00:33:56,040
Speaker 5: some of the case law that takes a little bit

680
00:33:56,040 --> 00:34:00,600
Speaker 5: of the agency's discretion over nuances in the statue and

681
00:34:00,640 --> 00:34:03,440
Speaker 5: puts that back to Congress and the courts. I think

682
00:34:03,480 --> 00:34:06,160
Speaker 5: it's really important to have more baked into the statute

683
00:34:06,160 --> 00:34:08,080
Speaker 5: than not, and so we're hopeful that we'll get a

684
00:34:08,080 --> 00:34:08,840
Speaker 5: statute in place.

685
00:34:09,160 --> 00:34:11,080
Speaker 2: You know, one of the areas that crypto seems to

686
00:34:11,160 --> 00:34:14,879
Speaker 2: have been at the forefront of is perpetual futures and

687
00:34:14,960 --> 00:34:17,640
Speaker 2: you know, very popular. You see like you can get

688
00:34:17,640 --> 00:34:21,640
Speaker 2: one hundred and one leverage trading the futures on some platforms.

689
00:34:21,960 --> 00:34:25,920
Speaker 2: Do you see the more use of perpetual purpose in

690
00:34:25,960 --> 00:34:29,520
Speaker 2: a sort of traditional finance? Could we have perpetual oil

691
00:34:29,600 --> 00:34:32,200
Speaker 2: futures at some point? Like could you envision them?

692
00:34:32,480 --> 00:34:34,480
Speaker 5: Well, right now we're thinking about it in crypto. I

693
00:34:34,480 --> 00:34:35,799
Speaker 5: think they're real, Like, you.

694
00:34:35,760 --> 00:34:39,040
Speaker 2: Know, trade it on chain like all futures. Like again,

695
00:34:39,080 --> 00:34:42,520
Speaker 2: if we're like okay, crypto provides the infrastructure, but could

696
00:34:42,520 --> 00:34:45,719
Speaker 2: you like why not trade an oil purp on chain?

697
00:34:46,040 --> 00:34:48,840
Speaker 5: Look, if there's demand for these products, it's definitely something

698
00:34:48,840 --> 00:34:51,160
Speaker 5: that we're all consider and look at. Right now, the

699
00:34:51,200 --> 00:34:54,040
Speaker 5: overwhelming demand's been in the crypto space. We've seen some

700
00:34:54,160 --> 00:34:58,160
Speaker 5: demand in precious metals gold and silver. We have to

701
00:34:58,200 --> 00:35:02,520
Speaker 5: consider the susceptible of each contract to manipulation, So there

702
00:35:02,560 --> 00:35:05,920
Speaker 5: might be unique considerations around a contract that doesn't have

703
00:35:05,960 --> 00:35:11,120
Speaker 5: a physical delivery date for example pork bellies or other things,

704
00:35:11,320 --> 00:35:14,880
Speaker 5: and that can create issues within the supply and liquidity

705
00:35:14,880 --> 00:35:18,879
Speaker 5: for the futures contracts. So something we're thinking about. We're

706
00:35:18,920 --> 00:35:22,400
Speaker 5: definitely excited about all this innovation. It's been too long

707
00:35:22,480 --> 00:35:25,680
Speaker 5: that this stuff is only developed offshore, and we really

708
00:35:25,680 --> 00:35:28,120
Speaker 5: want to bring it back with clear rules of the road.

709
00:35:28,200 --> 00:35:30,840
Speaker 5: So it's really important that the US leads and that

710
00:35:30,880 --> 00:35:33,720
Speaker 5: we set the standard that other countries are going to follow,

711
00:35:33,840 --> 00:35:37,279
Speaker 5: rather than just allow this stuff to flourish offshore with

712
00:35:37,400 --> 00:35:40,680
Speaker 5: potentially less regulation. As you all know, when you offer

713
00:35:40,719 --> 00:35:44,399
Speaker 5: into various countries, there's different rules around offering directly in

714
00:35:44,520 --> 00:35:48,560
Speaker 5: or solicitation verse solicitation, all of that. So we're certainly

715
00:35:48,680 --> 00:35:50,640
Speaker 5: aware of that, we're thinking about it. We want to

716
00:35:50,680 --> 00:35:54,560
Speaker 5: set really clear and kind of best in class standards

717
00:35:54,600 --> 00:35:55,520
Speaker 5: for US markets.

718
00:35:56,160 --> 00:35:58,239
Speaker 3: Just going back to prediction markets, I know you keep

719
00:35:58,239 --> 00:36:03,120
Speaker 3: emphasizing that you're not a merit based regulator, right, so

720
00:36:03,160 --> 00:36:06,040
Speaker 3: you're not making decisions on what people should be betting

721
00:36:06,080 --> 00:36:08,359
Speaker 3: on or what they can bet on. But is there like,

722
00:36:09,000 --> 00:36:12,480
Speaker 3: is there a line at some point that you wouldn't

723
00:36:12,520 --> 00:36:16,319
Speaker 3: want to see private companies actually cross, Like if someone

724
00:36:16,320 --> 00:36:19,759
Speaker 3: creates a contract for like someone's going to die, right,

725
00:36:19,920 --> 00:36:23,520
Speaker 3: a violent death or something like that, that would seem problematic.

726
00:36:23,120 --> 00:36:25,400
Speaker 2: Or a contract that this came up when we talked

727
00:36:25,400 --> 00:36:29,480
Speaker 2: to Don Wilson in Chicago, the contract for whether people

728
00:36:29,480 --> 00:36:33,200
Speaker 2: would throw sex toys onto the court during a WNBA game, which,

729
00:36:33,239 --> 00:36:36,720
Speaker 2: of course the existence of the contract right illicit people

730
00:36:36,840 --> 00:36:40,120
Speaker 2: to do it change their behavior, also kind of dangerous,

731
00:36:40,280 --> 00:36:41,359
Speaker 2: Like where's the line?

732
00:36:41,440 --> 00:36:44,440
Speaker 5: The latter seems highly at risk of, you know, being

733
00:36:44,480 --> 00:36:47,600
Speaker 5: susceptible to pipulation, which we do have authority to reject.

734
00:36:48,120 --> 00:36:52,480
Speaker 5: I think with other categories assassination and the like, there

735
00:36:52,560 --> 00:36:55,480
Speaker 5: is authority within our statute to prohibit, so we would

736
00:36:55,560 --> 00:36:58,000
Speaker 5: exercise that authority. You know, there's certain areas where we

737
00:36:58,160 --> 00:37:02,480
Speaker 5: certainly would not want contracts being offered, but with others,

738
00:37:02,480 --> 00:37:04,799
Speaker 5: look where we're not, as I said, a merit regulator,

739
00:37:05,160 --> 00:37:06,880
Speaker 5: We're not going to go and say you can't have

740
00:37:06,960 --> 00:37:09,600
Speaker 5: a contract in sports you can't have a contract in politics,

741
00:37:09,640 --> 00:37:12,719
Speaker 5: but the details matter, and we are evaluating that.

742
00:37:13,480 --> 00:37:15,520
Speaker 2: Just going back to you know, the sort of basic question.

743
00:37:15,560 --> 00:37:19,080
Speaker 2: A lot of states attorneys generals are attorneys general? Did

744
00:37:19,080 --> 00:37:21,440
Speaker 2: I say that I pluralize the attorneys attorney? A lot

745
00:37:21,480 --> 00:37:24,279
Speaker 2: of states attorneys general. You know, there's a lot of

746
00:37:24,320 --> 00:37:27,080
Speaker 2: court fights about this. And they look at this and

747
00:37:27,160 --> 00:37:29,040
Speaker 2: like many people would, and they say, look, this is

748
00:37:29,280 --> 00:37:31,560
Speaker 2: this is betting, this is this is gambling. This certainly

749
00:37:31,560 --> 00:37:34,680
Speaker 2: looks like sports gambling. Kelsey himself ran ads that said

750
00:37:34,840 --> 00:37:37,120
Speaker 2: sports betting is now legal in your stay, and I

751
00:37:37,120 --> 00:37:41,200
Speaker 2: think they've pulled those back, et cetera. But from the

752
00:37:41,239 --> 00:37:44,680
Speaker 2: perspective of the public, it certainly looks like by putting

753
00:37:44,680 --> 00:37:48,880
Speaker 2: sports betting into this framework that it's undermined the ability

754
00:37:48,880 --> 00:37:51,000
Speaker 2: of states to like set the rules about who can

755
00:37:51,040 --> 00:37:51,560
Speaker 2: bet on one.

756
00:37:52,120 --> 00:37:55,680
Speaker 5: Well, there's a great law journal article by professor's and

757
00:37:55,880 --> 00:37:58,840
Speaker 5: he's a securities law professor. This must have been written

758
00:37:58,880 --> 00:38:01,160
Speaker 5: in the early two thousand, but it was before the

759
00:38:01,440 --> 00:38:09,160
Speaker 5: financial crisis. Comparing derivatives, futures, contracts, securities, insurance products, gambling.

760
00:38:09,640 --> 00:38:12,680
Speaker 5: These are all products that you can take similar economic

761
00:38:12,719 --> 00:38:16,000
Speaker 5: positions in, but they have different legal treatment, and it's

762
00:38:16,040 --> 00:38:18,600
Speaker 5: because the products are structured different ways. So an insurance

763
00:38:18,680 --> 00:38:22,040
Speaker 5: contract could be structured very similarly to a credit to

764
00:38:22,120 --> 00:38:24,680
Speaker 5: false swap, but you have an ensurable interest. So the

765
00:38:24,680 --> 00:38:26,839
Speaker 5: details do matter, and we are looking at that. So

766
00:38:26,880 --> 00:38:29,680
Speaker 5: it's not the case that we're going into the casinos

767
00:38:29,680 --> 00:38:33,520
Speaker 5: and saying you're offering legal off exchange swaps. But if

768
00:38:33,520 --> 00:38:36,680
Speaker 5: the products are structured as swaps, then we have authority there.

769
00:38:36,760 --> 00:38:40,640
Speaker 5: And so many of these platforms that are offering products

770
00:38:40,640 --> 00:38:42,920
Speaker 5: that may have some similar economic attributes.

771
00:38:43,200 --> 00:38:44,440
Speaker 4: But the details do matter.

772
00:38:44,520 --> 00:38:46,440
Speaker 5: Right, As I mentioned, you can you have to go

773
00:38:46,520 --> 00:38:49,960
Speaker 5: through a clearinghouse, the products can be offset, you can

774
00:38:49,960 --> 00:38:51,120
Speaker 5: get in and out of your position.

775
00:38:51,120 --> 00:38:52,320
Speaker 4: There are different they matter.

776
00:38:53,280 --> 00:38:55,600
Speaker 2: I totally get that. But do they matter from the

777
00:38:55,640 --> 00:38:58,960
Speaker 2: perspective of like a nineteen year old who's addicted to

778
00:38:59,000 --> 00:38:59,800
Speaker 2: betting on sports.

779
00:39:00,040 --> 00:39:03,200
Speaker 5: Well, I think that's a question for society as a whole,

780
00:39:03,640 --> 00:39:05,839
Speaker 5: for Congress, right, I mean, to the extent we don't

781
00:39:05,880 --> 00:39:08,680
Speaker 5: want a nineteen year old trading Nvidia stock options either.

782
00:39:09,080 --> 00:39:11,840
Speaker 4: That's something that you can talk to Congress about.

783
00:39:12,080 --> 00:39:15,360
Speaker 5: But the reality is that today we allow eighteen plus

784
00:39:15,360 --> 00:39:18,799
Speaker 5: in our financial markets, and there's responsibility associated with that,

785
00:39:18,840 --> 00:39:20,880
Speaker 5: they have to go through a broker. In many cases

786
00:39:21,200 --> 00:39:24,360
Speaker 5: there is this nuance of the non intermediated model, but

787
00:39:24,440 --> 00:39:27,200
Speaker 5: there's screening as well to be able to access those markets.

788
00:39:27,239 --> 00:39:29,280
Speaker 4: And so we do have standards, we do have rules.

789
00:39:29,280 --> 00:39:32,040
Speaker 5: Everything's done in accordance with an exchange rule book and

790
00:39:32,080 --> 00:39:34,799
Speaker 5: we enforce that and we are policing those markets. But

791
00:39:34,840 --> 00:39:39,960
Speaker 5: I think this more eternalistic question of what age should

792
00:39:40,000 --> 00:39:41,160
Speaker 5: be the age to be able to.

793
00:39:41,120 --> 00:39:42,160
Speaker 4: Participate in the markets.

794
00:39:42,400 --> 00:39:45,000
Speaker 5: These people can be drafted, go off to war, and

795
00:39:45,080 --> 00:39:47,920
Speaker 5: so a question of whether they can trade options on

796
00:39:48,600 --> 00:39:51,080
Speaker 5: the outcome of the super Bowl, you know.

797
00:39:51,120 --> 00:39:54,200
Speaker 4: I think that's not really for the regulator to decide.

798
00:39:54,360 --> 00:39:57,440
Speaker 3: You know, you said you were ramping up staffing to

799
00:39:57,800 --> 00:40:00,640
Speaker 3: you know, help regulate all these new markets. It's new

800
00:40:00,680 --> 00:40:04,360
Speaker 3: and fast growing markets. What's the hiring process or the

801
00:40:04,440 --> 00:40:07,640
Speaker 3: hiring experience actually like at the moment, because you know,

802
00:40:07,760 --> 00:40:11,000
Speaker 3: thinking back to last year twenty twenty five, all the

803
00:40:11,040 --> 00:40:15,040
Speaker 3: headlines when it came to government employment were you know, layoffs,

804
00:40:15,440 --> 00:40:19,680
Speaker 3: mass firing, streamlining. What's what's that like for you now?

805
00:40:19,719 --> 00:40:21,160
Speaker 3: Is it easy to get people in the door?

806
00:40:21,600 --> 00:40:23,759
Speaker 5: Well, look, there are there to the extent there are

807
00:40:24,000 --> 00:40:28,160
Speaker 5: areas where we need additional staff. We are evaluating based

808
00:40:28,200 --> 00:40:31,800
Speaker 5: on competence and the highest quality. We do not want

809
00:40:32,160 --> 00:40:34,479
Speaker 5: to just bring on bodies to bring on bodies. We're

810
00:40:34,480 --> 00:40:36,520
Speaker 5: making sure that we're bringing on the right people for

811
00:40:36,560 --> 00:40:40,520
Speaker 5: the rules, and in many cases we are very well staffed.

812
00:40:40,600 --> 00:40:42,440
Speaker 5: I think there are some needs that we're looking to

813
00:40:42,480 --> 00:40:45,760
Speaker 5: fill out, but again it's very much akin to hiring

814
00:40:45,760 --> 00:40:47,719
Speaker 5: it a private company. We're looking to bring on the

815
00:40:47,719 --> 00:40:50,400
Speaker 5: best and the brightest who really want to help revitalize

816
00:40:50,440 --> 00:40:53,440
Speaker 5: the agency, fill out needs for the agency. And we are,

817
00:40:53,600 --> 00:40:56,399
Speaker 5: as I mentioned earlier, relying a lot on technology as well,

818
00:40:56,440 --> 00:40:59,719
Speaker 5: because there's just so much that many years ago really

819
00:40:59,719 --> 00:41:01,879
Speaker 5: had to be done manually that can be done very

820
00:41:01,960 --> 00:41:04,080
Speaker 5: quickly through new technologies.

821
00:41:04,400 --> 00:41:06,560
Speaker 3: Well, this has been a perennial question, which is how

822
00:41:06,600 --> 00:41:10,120
Speaker 3: government agencies actually compete with the private sector to get

823
00:41:10,280 --> 00:41:13,040
Speaker 3: good people. How are you doing that at the moment

824
00:41:13,160 --> 00:41:16,200
Speaker 3: given that, I mean, I imagine you have some form

825
00:41:16,440 --> 00:41:20,840
Speaker 3: of budget constraint, and I would imagine that it's probably

826
00:41:21,520 --> 00:41:24,040
Speaker 3: your budget is not as big as like, I don't know,

827
00:41:24,200 --> 00:41:27,560
Speaker 3: CMEs or something like that. How do you actually compete?

828
00:41:28,440 --> 00:41:30,719
Speaker 5: Well, look, I think part of that's the mission. We

829
00:41:31,200 --> 00:41:35,680
Speaker 5: are really interested in making sure that these markets flourish

830
00:41:35,719 --> 00:41:38,680
Speaker 5: here in the United States. It's an exciting time. Many

831
00:41:38,760 --> 00:41:41,440
Speaker 5: people are interested in being able to contribute to that effort.

832
00:41:41,440 --> 00:41:45,000
Speaker 5: We're really, as I said earlier, setting new market structure

833
00:41:45,239 --> 00:41:49,759
Speaker 5: for this asset class as well as for blockchain based markets,

834
00:41:50,040 --> 00:41:51,600
Speaker 5: and a lot of the things that needed to be

835
00:41:51,640 --> 00:41:53,839
Speaker 5: fixed in the wake of Dot frank that frankly were

836
00:41:53,880 --> 00:41:57,080
Speaker 5: never fixed. So I think it's in part mission impart

837
00:41:57,120 --> 00:41:59,480
Speaker 5: people that are willing to serve and come in and

838
00:41:59,520 --> 00:42:01,640
Speaker 5: maybe they don't don't get the salary that they get

839
00:42:01,680 --> 00:42:04,680
Speaker 5: in the private sector, but that's not necessarily a bad thing.

840
00:42:04,719 --> 00:42:07,200
Speaker 5: They get a lot of value out of being working

841
00:42:07,400 --> 00:42:08,040
Speaker 5: for the government.

842
00:42:08,320 --> 00:42:10,880
Speaker 2: Going back to the question of like marketing and again

843
00:42:11,239 --> 00:42:14,560
Speaker 2: gambling marketing, there's always like some line or whatever about

844
00:42:14,560 --> 00:42:17,799
Speaker 2: people who get addicted. Would you like Congress to come

845
00:42:17,840 --> 00:42:21,279
Speaker 2: in and create rules? Should Congress come up with the

846
00:42:21,360 --> 00:42:24,040
Speaker 2: rule about prediction market advertising.

847
00:42:25,400 --> 00:42:28,279
Speaker 5: We've got a lot of authority to regulate our participants.

848
00:42:28,520 --> 00:42:31,919
Speaker 5: I think there's sometimes a real need for Congress, maybe

849
00:42:31,920 --> 00:42:34,359
Speaker 5: to the extent as you all mentioned, if you really

850
00:42:34,360 --> 00:42:37,120
Speaker 5: want to set some sort of more paternalists stick rule

851
00:42:37,200 --> 00:42:39,400
Speaker 5: around you have to be eighteen era twenty one to

852
00:42:39,400 --> 00:42:40,520
Speaker 5: participate in the markets.

853
00:42:40,920 --> 00:42:41,799
Speaker 4: That sort of thing.

854
00:42:41,920 --> 00:42:45,000
Speaker 5: Sure, you can talk to Congress about with respect to

855
00:42:45,040 --> 00:42:48,520
Speaker 5: the more nuanced pieces of how we regulate the markets.

856
00:42:48,560 --> 00:42:52,960
Speaker 5: That's stuff that we handle. It's not typically baked into statute.

857
00:42:53,040 --> 00:42:55,279
Speaker 5: We go through our notice and comment process and get

858
00:42:55,400 --> 00:42:57,640
Speaker 5: input from the public on those sorts of things. So

859
00:42:57,640 --> 00:42:59,400
Speaker 5: I don't necessarily think you need to kick everything to

860
00:42:59,480 --> 00:43:02,799
Speaker 5: Congress within the details, but it certainly could be something

861
00:43:03,000 --> 00:43:03,600
Speaker 5: that people.

862
00:43:03,760 --> 00:43:05,919
Speaker 2: It's a lot of countries, you know, regard or sorry,

863
00:43:05,960 --> 00:43:08,440
Speaker 2: a lot of states regard like okay under twenty one,

864
00:43:08,520 --> 00:43:10,520
Speaker 2: like we don't want that right, And it sounds like

865
00:43:10,560 --> 00:43:14,239
Speaker 2: you regard that as paternalism in action, which you know,

866
00:43:14,400 --> 00:43:17,440
Speaker 2: I understand a lot of people share that view. But

867
00:43:18,080 --> 00:43:20,200
Speaker 2: you know, it also seems like the CFTC. You know,

868
00:43:20,760 --> 00:43:23,719
Speaker 2: people have different views, and it sounds like the CFTC

869
00:43:23,880 --> 00:43:26,799
Speaker 2: is sort of undermining of value that a state might

870
00:43:26,880 --> 00:43:27,760
Speaker 2: have about gambling.

871
00:43:28,440 --> 00:43:29,319
Speaker 4: I don't view it that way.

872
00:43:29,520 --> 00:43:33,680
Speaker 5: I do think our derivatives' markets are a separate area

873
00:43:33,920 --> 00:43:38,880
Speaker 5: within government and within the law, as opposed to the state.

874
00:43:38,680 --> 00:43:39,440
Speaker 4: Gambling and the.

875
00:43:41,200 --> 00:43:45,280
Speaker 5: Rules and requirements that govern a state casino are very different.

876
00:43:45,680 --> 00:43:48,440
Speaker 5: They can do a lot different things than what a

877
00:43:48,800 --> 00:43:51,719
Speaker 5: regulated futures exchange can do, and so I do think

878
00:43:51,760 --> 00:43:55,279
Speaker 5: there's some give and take, some for sure limitation on

879
00:43:55,440 --> 00:43:58,360
Speaker 5: the age piece. But look, you can serve alcohol and

880
00:43:58,360 --> 00:44:00,080
Speaker 5: a casino and allow people to bet on sport, or

881
00:44:00,200 --> 00:44:03,640
Speaker 5: you can't do that necessarily at a digital exchange.

882
00:44:03,680 --> 00:44:05,240
Speaker 4: Maybe somebody's got to beer on the side.

883
00:44:05,280 --> 00:44:07,799
Speaker 5: But I do think there's a lot of different restrictions

884
00:44:08,040 --> 00:44:10,160
Speaker 5: in a different environment in which people are trading, so

885
00:44:10,200 --> 00:44:11,680
Speaker 5: it's not quite apple stables.

886
00:44:11,920 --> 00:44:14,880
Speaker 2: Mike Seeling, thank you so much for coming on odd laws,

887
00:44:14,920 --> 00:44:16,640
Speaker 2: a perfect guess at the perfect time.

888
00:44:16,840 --> 00:44:17,719
Speaker 4: Thanks for having me.

889
00:44:30,000 --> 00:44:34,400
Speaker 3: I enjoyed that conversation me too. However, there are a

890
00:44:34,480 --> 00:44:39,439
Speaker 3: number of difficulties with regulating prediction markets, and I'm kind

891
00:44:39,440 --> 00:44:42,399
Speaker 3: of trying to like zoom in on what I think

892
00:44:42,480 --> 00:44:46,040
Speaker 3: might be the primary one. So Number one, the CFTC

893
00:44:46,120 --> 00:44:49,920
Speaker 3: exists to regulate risk management, right, which is what Mike said.

894
00:44:51,400 --> 00:44:55,040
Speaker 3: It is very doubtful to me that someone needs to

895
00:44:55,120 --> 00:44:59,799
Speaker 3: manage their exposure to Cardi B performing on stage at

896
00:44:59,800 --> 00:45:03,880
Speaker 3: the Super Bowl, So it's not even entirely clear to

897
00:45:04,000 --> 00:45:07,680
Speaker 3: me that this is an industry that the CFTC should

898
00:45:07,719 --> 00:45:12,040
Speaker 3: be regulating. Now that said, that's a big tension, yeah, right,

899
00:45:12,080 --> 00:45:16,239
Speaker 3: And then just beyond that, you could certainly argue that

900
00:45:16,400 --> 00:45:22,120
Speaker 3: by legitimizing prediction markets and helping them to grow, you

901
00:45:22,160 --> 00:45:26,360
Speaker 3: are in fact introducing a new risk into the system

902
00:45:26,480 --> 00:45:29,120
Speaker 3: because everyone's going to start gambling away I don't know,

903
00:45:29,160 --> 00:45:31,200
Speaker 3: their college funds or whatever, you know.

904
00:45:31,320 --> 00:45:34,799
Speaker 2: I think Mike made an interesting observation sort of near

905
00:45:34,840 --> 00:45:38,040
Speaker 2: the end of the conversation that like, and it's totally true,

906
00:45:38,080 --> 00:45:44,560
Speaker 2: like different market structures warrant different types of regulatory treatment, right, so,

907
00:45:44,680 --> 00:45:47,040
Speaker 2: and I think that makes sense. I think what's interesting

908
00:45:47,080 --> 00:45:50,240
Speaker 2: though about this conversation, particularly as it relates to sports betting,

909
00:45:50,440 --> 00:45:54,040
Speaker 2: is that part of the reason that states have sort

910
00:45:54,080 --> 00:45:57,359
Speaker 2: of in many cases either no sports betting or very

911
00:45:57,400 --> 00:46:00,440
Speaker 2: stringent rules about who can engage in sports betting has

912
00:46:00,480 --> 00:46:03,759
Speaker 2: nothing to do with financial risk and everything to do

913
00:46:03,800 --> 00:46:06,320
Speaker 2: with a sort of like moral choice about who gets

914
00:46:06,360 --> 00:46:09,040
Speaker 2: to sports bet And so, you know, on one head

915
00:46:09,120 --> 00:46:11,680
Speaker 2: is like, okay, there's like traditional sports books, they have

916
00:46:11,719 --> 00:46:14,239
Speaker 2: a house that sets the odds. It's definitely true that

917
00:46:14,280 --> 00:46:17,960
Speaker 2: prediction market companies have like a different market structure, but

918
00:46:18,080 --> 00:46:20,440
Speaker 2: from a sort of like why does society want to

919
00:46:20,480 --> 00:46:23,680
Speaker 2: constrain the role of sports betting. It's not because of

920
00:46:23,760 --> 00:46:26,719
Speaker 2: like any sort of like financial instability risk, because we

921
00:46:26,760 --> 00:46:29,400
Speaker 2: don't want certain people like eighteen year olds, people who

922
00:46:29,480 --> 00:46:32,400
Speaker 2: might still be in high school, having access to sports betting.

923
00:46:32,760 --> 00:46:35,440
Speaker 2: And when the c OFTC says, like, you know, this

924
00:46:35,520 --> 00:46:38,160
Speaker 2: is just this is a new type of financial instrument

925
00:46:38,160 --> 00:46:40,600
Speaker 2: that should be regulated like a financial instrument, it sort

926
00:46:40,600 --> 00:46:43,640
Speaker 2: of undercuts that sort of choice that the state has made.

927
00:46:43,800 --> 00:46:46,960
Speaker 3: Yeah, exactly do you think sports betting is like the

928
00:46:47,000 --> 00:46:47,960
Speaker 3: new monoculture?

929
00:46:48,280 --> 00:46:50,480
Speaker 2: It is really incredible how pervasive it is, and it's

930
00:46:50,520 --> 00:46:53,520
Speaker 2: really incredible. But also it's just incredible, you know, truly

931
00:46:53,560 --> 00:46:56,200
Speaker 2: how pervasive betting on everything is. And you know, I

932
00:46:56,200 --> 00:47:01,799
Speaker 2: should say like I am an enthusiastic consumer of the

933
00:47:01,840 --> 00:47:03,960
Speaker 2: prediction market's data, you know, like I said at the

934
00:47:04,040 --> 00:47:07,440
Speaker 2: very beginning, like I now on all kinds of things,

935
00:47:07,560 --> 00:47:09,879
Speaker 2: including FED decisions. You know, Like I think it's very

936
00:47:09,960 --> 00:47:13,040
Speaker 2: useful to say, like you look at like certain measures

937
00:47:13,040 --> 00:47:15,319
Speaker 2: of like I don't know, you know, the FED fund

938
00:47:15,360 --> 00:47:18,200
Speaker 2: swaps or whatever, like you just look at WORP. I

939
00:47:18,239 --> 00:47:20,200
Speaker 2: love WORP too, but like as simple we have it

940
00:47:20,239 --> 00:47:22,279
Speaker 2: on the Bloomberg now poly market. Will there be three

941
00:47:22,320 --> 00:47:25,759
Speaker 2: rate cuts this year? That is also a useful instrument

942
00:47:25,840 --> 00:47:28,799
Speaker 2: to have. But there are a lot of things that

943
00:47:28,880 --> 00:47:32,560
Speaker 2: prediction markets have and again that a aren't that but

944
00:47:32,680 --> 00:47:34,160
Speaker 2: I you know, I like a lot of them. I

945
00:47:34,239 --> 00:47:36,760
Speaker 2: like looking at election ods. I like looking at whether

946
00:47:37,120 --> 00:47:40,360
Speaker 2: the odds of like some company what they're going to say, Like,

947
00:47:40,360 --> 00:47:42,239
Speaker 2: I think there's a lot of useful signal from them.

948
00:47:42,520 --> 00:47:45,120
Speaker 2: It's also true that the platforms are largely sports betting

949
00:47:45,120 --> 00:47:45,399
Speaker 2: at this.

950
00:47:45,320 --> 00:47:48,200
Speaker 3: Point, right right, how much signal do you actually need

951
00:47:48,239 --> 00:47:51,920
Speaker 3: about I don't know, the Super Bowl. I'm sure some

952
00:47:51,960 --> 00:47:55,480
Speaker 3: people are really into it, but from a trading.

953
00:47:55,800 --> 00:47:59,560
Speaker 2: Sort of from a financial regulation standpoint, it's a different

954
00:47:59,600 --> 00:48:02,880
Speaker 2: question anyway. And it's also true, by the way, that

955
00:48:02,960 --> 00:48:06,960
Speaker 2: the Trump family is very invested, quite literally into this space,

956
00:48:07,000 --> 00:48:10,640
Speaker 2: and I think that quite reasonably. Should you know, raise

957
00:48:10,680 --> 00:48:15,080
Speaker 2: some questions about like how policy is being made about

958
00:48:15,160 --> 00:48:17,120
Speaker 2: the growth of this industry incentives?

959
00:48:17,239 --> 00:48:18,880
Speaker 3: Yeah, for sure? All right, shall we leave it there.

960
00:48:19,000 --> 00:48:19,759
Speaker 2: Let's leave it there.

961
00:48:20,000 --> 00:48:22,240
Speaker 3: This has been another episode of the oud Loots podcast.

962
00:48:22,320 --> 00:48:25,439
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway and.

963
00:48:25,360 --> 00:48:28,160
Speaker 2: I'm Jill Wisenthal. You can follow me at the Stalwart,

964
00:48:28,520 --> 00:48:31,720
Speaker 2: follow our guest Michael Selig He's at Michael Selig. Follow

965
00:48:31,719 --> 00:48:35,080
Speaker 2: our producers Carmen Rodriguez at Carmen Rmann, dash Ol Bennett

966
00:48:35,080 --> 00:48:38,840
Speaker 2: at Dashbot, and Kelbrooks at Kilbrooks. And for odd Laws content,

967
00:48:38,880 --> 00:48:41,040
Speaker 2: go to Bloomberg dot com slash odd Lots for a

968
00:48:41,040 --> 00:48:43,560
Speaker 2: the daily newsletter and all of our episodes, and you

969
00:48:43,600 --> 00:48:45,680
Speaker 2: can shat about all of these topics twenty four seven

970
00:48:45,800 --> 00:48:49,120
Speaker 2: in our discord discord dot gg slash outlines.

971
00:48:49,440 --> 00:48:51,640
Speaker 3: And if you enjoy odd Lots, if you like it

972
00:48:51,680 --> 00:48:54,520
Speaker 3: when we talk about regulating prediction markets, then please leave

973
00:48:54,560 --> 00:48:58,040
Speaker 3: us a positive review on your favorite podcast platform. And remember,

974
00:48:58,080 --> 00:49:00,160
Speaker 3: if you are a Bloomberg subscriber, you can listen listen

975
00:49:00,239 --> 00:49:03,120
Speaker 3: to all of our episodes absolutely add free. All you

976
00:49:03,160 --> 00:49:05,240
Speaker 3: need to do is find the Bloomberg channel on Apple

977
00:49:05,280 --> 00:49:08,480
Speaker 3: Podcasts and follow the instructions there. Thanks for listening