WEBVTT - New CFTC Chairman Michael Selig on How to Regulate Prediction Markets 0:00:02.720 --> 0:00:14.000 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.360 --> 0:00:21.440 Hello and welcome to another episode of the Odd Lots Podcast. 0:00:21.480 --> 0:00:23.720 I'm Joe Wisenthal, and I'm Tracy Alloway. 0:00:23.960 --> 0:00:25.319 Tracy, did you watch the Super Bowl? 0:00:26.200 --> 0:00:26.239 No? 0:00:26.320 --> 0:00:28.000 I was going to ask that, didn't I knew it. 0:00:28.080 --> 0:00:31.400 Actually, I was going to start exactly the same way. 0:00:31.680 --> 0:00:34.240 I did watch the Super Bowl, And so I feel 0:00:34.240 --> 0:00:38.040 empowered to ask you a very controversial question. Oh yeah, 0:00:38.120 --> 0:00:42.360 not which halftime show you watched, but did Cardi be 0:00:42.720 --> 0:00:44.720 perform at the Super Bowl? 0:00:45.200 --> 0:00:46.920 Oh? 0:00:47.040 --> 0:00:49.239 Right, because this was a big thing. I forgot that 0:00:49.240 --> 0:00:51.840 there was, you know what, I'm aware of various sort 0:00:51.880 --> 0:00:54.840 of questions about prediction markets and things that people place 0:00:54.960 --> 0:00:57.080 bets on. Well, how did that resolve? What was what 0:00:57.200 --> 0:00:58.160 was the basic issue here? 0:00:58.160 --> 0:01:02.040 Again? So I think it's still being resolved in various ways. 0:01:02.080 --> 0:01:05.120 But Cardi b she was on set during Bad Bunnies 0:01:06.240 --> 0:01:10.759 Extravaganza and she was kind of like dancing and singing along, 0:01:10.880 --> 0:01:13.600 like mouthing words at least along with other people like 0:01:13.640 --> 0:01:15.800 Pedro Pascal and Jessica Alba. 0:01:15.640 --> 0:01:20.120 Yea Lady Gaga, well like singing right. 0:01:20.240 --> 0:01:23.200 So the only reason this matters at all is because 0:01:23.240 --> 0:01:26.560 of prediction Markets. So there was a bet will Cardi 0:01:26.640 --> 0:01:29.960 be perform? And now the question is does standing on 0:01:30.080 --> 0:01:32.640 stage and kind of bobbing your head and mouthing words 0:01:32.760 --> 0:01:37.600 count as a performance? Polymarket says it does, cal She 0:01:38.160 --> 0:01:38.839 says it doesn't. 0:01:38.920 --> 0:01:41.039 Oh interesting, Yeah, there you go call She and poly 0:01:41.120 --> 0:01:44.440 Markets split over whether Cardi b performed. That's a great tension. 0:01:44.600 --> 0:01:45.080 I like that. 0:01:45.440 --> 0:01:47.520 It was striking to me, setting aside that I actually 0:01:47.520 --> 0:01:50.200 somehow seem to have missed the specific thing like how 0:01:50.280 --> 0:01:54.840 much prediction markets are now just part of the consumption experience, 0:01:54.960 --> 0:01:57.320 you know, even you look at all these different things 0:01:57.320 --> 0:02:01.040 that people are talking about eighty Gaga going to show 0:02:01.080 --> 0:02:03.160 up somehow, like someone made a bet on it before 0:02:03.360 --> 0:02:06.800 it went public. But also just like with each score, 0:02:07.400 --> 0:02:09.399 you know, you check the line, it's like how much 0:02:09.440 --> 0:02:13.200 did this move the expectations of whether the Seahawks are leading? 0:02:13.280 --> 0:02:17.040 Like prediction markets are truly becoming part of like pop 0:02:17.080 --> 0:02:18.960 culture and how we interact with pop culture. 0:02:19.040 --> 0:02:22.360 There were some weird bets around, like color of gatorade 0:02:22.360 --> 0:02:24.440 that was going to get dumped on the coach. Yeah, 0:02:25.000 --> 0:02:29.440 lengths of like the national anthem being sung? Yeah, did 0:02:29.440 --> 0:02:31.440 you see that? Like I was tempted by some of those, 0:02:31.480 --> 0:02:32.760 but I stayed away. 0:02:33.680 --> 0:02:37.800 I've still I haven't used poly market or Kelsey probably was. 0:02:38.120 --> 0:02:38.320 You know. 0:02:38.400 --> 0:02:40.840 The interesting thing too, is like how much the mood 0:02:40.880 --> 0:02:43.960 has swung, right cause a few years ago, like I 0:02:43.960 --> 0:02:46.280 don't know, twenty twenty two, twenty twenty three, I think 0:02:46.320 --> 0:02:49.640 we did an episode like at that time, like there 0:02:49.680 --> 0:02:52.560 was almost nothing and the sort of like regulatory one 0:02:52.600 --> 0:02:56.280 to eighty. The degree to the liberalization of these markets 0:02:56.480 --> 0:02:59.160 has been pretty remarkable, even you know, going back to 0:02:59.240 --> 0:03:01.600 a year and a half go, there was just a 0:03:01.600 --> 0:03:04.680 polymarket and it was just the offshore version that you 0:03:04.720 --> 0:03:08.160 had to fund with stable coins, and now it's like exploded. 0:03:08.480 --> 0:03:12.079 At the time, you know, Kelshi was very limited. They 0:03:12.080 --> 0:03:16.120 didn't have US access, et cetera, or very curtailed US access. Anyway, 0:03:16.440 --> 0:03:18.639 they're here and everyone's trying to wrap their heads on 0:03:18.919 --> 0:03:20.200 where this is all going and stuff. 0:03:20.280 --> 0:03:22.880 Yeah, it feels like they're much more sanctioned, I guess 0:03:22.880 --> 0:03:23.520 than they used to. 0:03:23.600 --> 0:03:23.760 Yeah. 0:03:23.840 --> 0:03:26.760 Yeah, but that said, there are still some issues that 0:03:26.800 --> 0:03:30.119 people are trying to work out. You have ambiguous outcomes 0:03:30.280 --> 0:03:33.960 like did Cardi B actually perform? You have concerns around 0:03:33.960 --> 0:03:37.480 insider trading, No, not insider trading per se, because we're 0:03:37.520 --> 0:03:41.040 not talking about securities contracts, but maybe people with insider 0:03:41.240 --> 0:03:45.280 info who inadvertently disclosed something material. I was thinking about 0:03:45.320 --> 0:03:47.960 this actually, So you can also bet on which companies 0:03:48.000 --> 0:03:50.800 are going to run Super Bowl ads. Oh yeah, and 0:03:51.200 --> 0:03:54.480 a lot of people must know if a company is 0:03:54.520 --> 0:03:56.200 going to run an ad like that, you have like 0:03:56.240 --> 0:03:59.920 the agency and actors like everyone, And you could argue 0:04:00.080 --> 0:04:03.480 maybe that that's material non public information. Right, you run 0:04:03.480 --> 0:04:05.320 a Super Bowl ad, you get a bunch of attention. 0:04:05.720 --> 0:04:08.640 Maybe your share price goes up if you're publicly listed. Yeah, 0:04:08.680 --> 0:04:09.080 I don't know. 0:04:09.240 --> 0:04:11.640 There are so many things anyway, rather than us just 0:04:11.720 --> 0:04:13.640 keep talking about them because we can talk for an hour. 0:04:13.880 --> 0:04:16.800 We really do have the perfect guest. We're going to 0:04:16.839 --> 0:04:19.239 be speaking with Mike Selig. He is the new chairman 0:04:19.320 --> 0:04:23.000 of the CFTC, the main regulator for prediction markets, who's 0:04:23.040 --> 0:04:26.400 just sworn in in December. We're going to talk all 0:04:26.440 --> 0:04:29.120 about this, maybe some crypto as well. So, Mike, thank 0:04:29.120 --> 0:04:31.200 you so much for coming on out Locks, coming into 0:04:31.200 --> 0:04:32.000 the studio. 0:04:31.839 --> 0:04:32.600 Glad to be here. 0:04:33.000 --> 0:04:35.320 Why do you tell us a little bit about just 0:04:35.640 --> 0:04:38.680 broadly coming into this new role, like what are your 0:04:38.680 --> 0:04:40.760 goals here with the CFTC. 0:04:40.800 --> 0:04:43.640 Or really at a pivotal moment you mentioned prediction markets, 0:04:43.680 --> 0:04:48.039 crypto AI, all manner of new technologies and products that 0:04:48.080 --> 0:04:51.840 are impacting our markets. And the CFTC was really this 0:04:52.080 --> 0:04:55.160 kind of little known regulator before the Financial crisis, regulating 0:04:55.200 --> 0:04:58.880 the futures markets. It has expanded jurisdiction now or the 0:04:58.920 --> 0:05:02.599 swaps markets, counter derivatives markets, and now we see so 0:05:02.680 --> 0:05:05.320 much innovation in that space with things like prediction markets 0:05:05.360 --> 0:05:09.719 and crypto, with legislation on the perverge of hopefully being 0:05:09.720 --> 0:05:12.599 on the President's desk, and so the agency is really 0:05:12.640 --> 0:05:15.880 at this unique moment where it has the opportunity to 0:05:16.000 --> 0:05:18.400 shape the future of these new and emerging markets, and 0:05:18.600 --> 0:05:20.320 it's really exciting time to be in the seat. 0:05:20.800 --> 0:05:23.279 Do you have an opinion on whether Cardi B performed 0:05:23.320 --> 0:05:25.400 at the Super Bowl? I mean, it's funny, but it's 0:05:25.440 --> 0:05:28.360 also kind of irrelevant because I saw someone has actually 0:05:28.400 --> 0:05:32.840 filed a complaint to the Commission about Calshi's decisions specifically. 0:05:33.040 --> 0:05:35.520 Well, of course we're spending a lot of resources investigating 0:05:35.560 --> 0:05:40.000 whether Cardi B performed advocating. Really our focus here is 0:05:40.320 --> 0:05:43.240 on the market, so the unique thing that the great 0:05:43.279 --> 0:05:45.599 thing about the way that we regulate the markets is 0:05:45.600 --> 0:05:49.000 that the exchanges themselves, similar to on the security side, 0:05:49.160 --> 0:05:52.760 are self regulatory organizations. So each exchange has its own 0:05:52.800 --> 0:05:55.560 rule book that's been approved by the agency. It has 0:05:55.600 --> 0:05:59.039 its own requirements for contracts that are certified on the exchange. 0:05:59.240 --> 0:06:01.760 So of course the card contracts went through a self 0:06:01.760 --> 0:06:05.839 certification process and then they're settled in accordance with exchange rules. 0:06:05.839 --> 0:06:07.280 They go through a clearinghouse as well. 0:06:07.680 --> 0:06:10.760 So the exchanges each have these rule books and certain 0:06:10.800 --> 0:06:13.920 requirements around how the contracts are resolved and settled. And 0:06:13.960 --> 0:06:17.080 of course now we're seeing some differences amongst call She's 0:06:17.160 --> 0:06:19.120 rulebook and poly Market's rule book. 0:06:19.160 --> 0:06:20.920 But that's the great thing about our markets. 0:06:20.720 --> 0:06:22.960 And having the ability to build a business, to develop 0:06:23.000 --> 0:06:26.440 an exchange with some flexible guardrails on top that the 0:06:26.440 --> 0:06:29.680 agency oversees. But we don't prescribe exactly what has to 0:06:29.760 --> 0:06:31.440 be in the rule book. We have a principles based 0:06:31.480 --> 0:06:32.440 system of regulation. 0:06:32.960 --> 0:06:36.440 What is the basis for something like is CARDI B 0:06:36.680 --> 0:06:39.719 going to perform at the Super Bowl? Have time show? 0:06:40.040 --> 0:06:44.120 What is the basis for this being categorized as a 0:06:44.160 --> 0:06:48.160 true financial instrument regulated by the CFDC, because it certainly 0:06:48.240 --> 0:06:49.279 just feels like prop betting. 0:06:49.560 --> 0:06:52.719 Who has economic exposure they need to hedge to cardi 0:06:52.760 --> 0:06:53.599 b performing. 0:06:53.880 --> 0:06:58.160 There's a really interesting historical story around the definition of 0:06:58.200 --> 0:07:02.200 commodity and the markets that we regulate today, starting back 0:07:02.400 --> 0:07:06.480 in the thirties when the Commodity Exchange Act was first ratified. 0:07:06.640 --> 0:07:09.720 It was originally focused on grain, and over time we've 0:07:09.760 --> 0:07:10.320 had things. 0:07:10.160 --> 0:07:13.040 Like work values exactly. It's come a very long way. 0:07:13.040 --> 0:07:16.280 Of course, with the financial crisis, we got all manner 0:07:16.440 --> 0:07:18.960 of new products within our authority. But the definition of 0:07:18.960 --> 0:07:22.080 commodity is extraordinarily brought. It includes virtually everything except a 0:07:22.080 --> 0:07:24.840 few things have been carved out onions and motion picture 0:07:24.880 --> 0:07:27.800 box office receiscent, and that's a really important point to 0:07:27.840 --> 0:07:31.080 note that they were expressly carved out. So most things 0:07:31.200 --> 0:07:35.760 in our commerce today, even securities, are technically considered commodities 0:07:35.800 --> 0:07:38.080 under our act, and we have authority to regulate them. 0:07:38.240 --> 0:07:40.480 In the case of securities, we coordinate with the sec 0:07:40.560 --> 0:07:43.080 and have some joint authority. But for all other types 0:07:43.120 --> 0:07:45.480 of products services rights. 0:07:45.600 --> 0:07:48.280 In disease, people are going to hedge that risk. 0:07:48.320 --> 0:07:50.000 They're going to be in the market to speculate on 0:07:50.040 --> 0:07:53.320 those products, and so we don't merit regulate. We don't 0:07:53.360 --> 0:07:56.120 tell people what they should be entering into contracts on. 0:07:56.480 --> 0:07:59.200 We create rules and regulations around those markets to make 0:07:59.200 --> 0:08:02.200 sure that they have integ that they're resilient, that they're vibrant, 0:08:02.280 --> 0:08:04.760 and they have guardrails and in vexter protections. And so 0:08:04.800 --> 0:08:06.920 that's why going back to the exchange rule books and 0:08:06.960 --> 0:08:10.920 other control self certification being an important process. We're making 0:08:10.920 --> 0:08:13.160 sure that those markets are safe and secure. But we're 0:08:13.160 --> 0:08:16.840 not telling people whether to trade pork bellies or cardib 0:08:17.000 --> 0:08:18.360 contracts or anything else. 0:08:19.360 --> 0:08:22.240 So let's go to the insider trading question, because this 0:08:22.320 --> 0:08:24.280 is sort of top of mind for a lot of people. 0:08:24.440 --> 0:08:27.840 Technically it's not insider trading, but you know, it does 0:08:27.920 --> 0:08:30.600 look like some people have inside knowledge sometimes when they 0:08:30.600 --> 0:08:34.040 put on big bets on something that just happens to 0:08:34.160 --> 0:08:38.480 happen the next day. The CFTC hasn't, as far as 0:08:38.520 --> 0:08:41.760 I know, given a lot of guidance on this issue. 0:08:41.840 --> 0:08:43.360 How are you actually thinking about it? 0:08:43.640 --> 0:08:46.319 Well, from a legal standpoint, I think there's a bit 0:08:46.360 --> 0:08:49.760 of a misunderstanding about the insider trading doctrine at the CFTC. 0:08:50.040 --> 0:08:52.480 So the authority at the agency is very similar to 0:08:52.520 --> 0:08:56.360 the authority at the SEC Under our Anti Fraudience Manipulation Rule, 0:08:56.600 --> 0:08:59.080 we do have authority to police insider trading in the 0:08:59.080 --> 0:09:02.439 commodities markets. Now, the way that insider trading is carried 0:09:02.520 --> 0:09:05.600 out is oftentimes different from a situation where you have 0:09:05.640 --> 0:09:09.280 informational asymmetries relevant to a company. But there are situations 0:09:09.280 --> 0:09:12.560 where you have informational asymmetries related to the markets, placing 0:09:12.559 --> 0:09:15.480 a trade ahead of a customer, for example, or even 0:09:15.520 --> 0:09:18.320 in this situation now with prediction markets, and that's something 0:09:18.360 --> 0:09:22.160 we are thinking about and certainly on the beat and exploring. 0:09:22.440 --> 0:09:25.440 So we surveil the markets, we collect data, we have 0:09:25.480 --> 0:09:29.080 information about. For example, you know, our players participating in 0:09:29.120 --> 0:09:32.800 these markets are people associated with the sports leagues, etc. 0:09:33.360 --> 0:09:34.840 And so we are a cop on the beat in 0:09:34.840 --> 0:09:38.000 that regard. So the doctrine is not entirely different, but 0:09:38.000 --> 0:09:40.440 there are some nuances that we're aware of and making 0:09:40.440 --> 0:09:41.280 sure that we're policing. 0:09:41.280 --> 0:10:00.280 For would poly Market or Kelsey in your view, be 0:10:00.400 --> 0:10:04.200 allowed to live stream a video of a giant roulette 0:10:04.200 --> 0:10:07.680 wheel and let people trade futures on when it lands 0:10:07.679 --> 0:10:08.360 on red or black? 0:10:09.880 --> 0:10:12.640 Some of these types of gaming where it's really a 0:10:12.640 --> 0:10:15.800 game of chance and not a game of skill, there's 0:10:16.120 --> 0:10:18.560 definitely a difference. And I think when we look at 0:10:18.600 --> 0:10:21.800 what's a commodity, it's possible that you could construct some 0:10:21.840 --> 0:10:26.280 sort of contract an esotera derivative, but really the underlying 0:10:26.320 --> 0:10:28.439 and a game of skills very different. There's a clear 0:10:28.520 --> 0:10:31.760 economic risk associated for example, at the super Bowl. 0:10:31.920 --> 0:10:32.880 It's a good example. 0:10:33.240 --> 0:10:35.840 There's a ton of economic activity associated with that. There's 0:10:35.880 --> 0:10:39.800 hotel revenue that comes from it, there's vendors, there's activity 0:10:39.800 --> 0:10:42.800 within the city, tourism, all of that, and so there's 0:10:42.840 --> 0:10:45.160 a real reason to hedge that risk. With a game 0:10:45.200 --> 0:10:48.080 of chance, it's harder to say it's possible you can 0:10:48.160 --> 0:10:51.360 construct something, but it's less likely that that's a real underlying. 0:10:51.440 --> 0:10:53.600 Well, like what is like the difference because you know, 0:10:53.840 --> 0:10:56.760 let's say it's what is bad Bunny's first song going 0:10:56.800 --> 0:10:59.439 to be at the super Bowl? Like, what is the 0:10:59.480 --> 0:11:02.880 difference between that, which doesn't really seem any more economic 0:11:03.120 --> 0:11:05.640 than reultwel and whatever it is? 0:11:05.840 --> 0:11:08.800 Well, to be clear, there's no requirement in the act 0:11:08.840 --> 0:11:13.280 that there has to necessarily be some merit based result 0:11:13.600 --> 0:11:15.720 from a contract. I do think with a lot of 0:11:15.760 --> 0:11:19.520 these information markets, these prediction markets, where they're forecasting a 0:11:19.559 --> 0:11:22.640 potential outcome in the future, they produce a lot of 0:11:22.760 --> 0:11:26.560 useful information. We are seeing newsrooms incorporate prediction markets, We're 0:11:26.559 --> 0:11:30.480 seeing sports live broadcasts incorporate prediction markets. We're seeing the 0:11:30.520 --> 0:11:33.840 information use in particular. A great example is the election 0:11:33.920 --> 0:11:36.520 in twenty twenty four were the president had a very 0:11:36.600 --> 0:11:39.720 large victory and that was not necessarily forecast in many 0:11:39.720 --> 0:11:41.840 of the polls, but of course the prediction markets got 0:11:41.920 --> 0:11:44.360 that right. So it's something that I think is valuable 0:11:44.400 --> 0:11:47.960 to society. The question of having regulation around that's a 0:11:47.960 --> 0:11:48.600 separate question. 0:11:48.640 --> 0:11:49.760 I think that's an important one. 0:11:49.800 --> 0:11:52.319 We are certainly taking on that task and making sure 0:11:52.640 --> 0:11:54.920 that we don't let these markets languish or that we 0:11:54.960 --> 0:11:57.839 don't push them offshore, but we develop the right rules 0:11:57.840 --> 0:12:01.120 and regulations to develop investments and make sure that the 0:12:01.160 --> 0:12:03.440 markets are flourishing here in the United States. 0:12:04.000 --> 0:12:06.880 Since we're discussing prediction markets through the medium of the 0:12:06.920 --> 0:12:10.320 Super Bowl, and you mentioned players as well, looking at 0:12:10.480 --> 0:12:14.640 player behavior, if a player were to place a bet 0:12:14.960 --> 0:12:18.040 on I don't know, a specific play during the game, 0:12:18.200 --> 0:12:20.719 and then they did it themselves like something that they 0:12:20.760 --> 0:12:24.439 actually have agency over. Would that be something that you 0:12:24.520 --> 0:12:26.800 would investigate or look into. 0:12:26.679 --> 0:12:28.560 You know, I think it's all facts and circumstances, So 0:12:28.600 --> 0:12:32.559 we ne'd evaluate potentially to the extent that there's insiders 0:12:32.559 --> 0:12:35.160 that are involved in the markets, we get that data. 0:12:35.160 --> 0:12:37.280 We're actually talking to a lot of the sports leagues. 0:12:37.280 --> 0:12:39.640 We're talking to participants in the markets to make sure 0:12:39.679 --> 0:12:42.040 that we are on top of things, have information about 0:12:42.080 --> 0:12:44.480 who is able to be participating in these markets who's not. 0:12:45.040 --> 0:12:47.240 We do have at the exchange level. 0:12:47.400 --> 0:12:49.760 The exchanges are really the first line of defense, and 0:12:49.840 --> 0:12:53.640 they're surveilling the markets, they're doing KYC on their customers, 0:12:53.880 --> 0:12:55.800 and so that's certainly something we're on top of and 0:12:55.840 --> 0:12:58.559 we'd consider and evaluate on a case by case basis. 0:12:59.200 --> 0:13:03.320 Why isn't a trading sports derivatives gambling or betting or 0:13:03.400 --> 0:13:03.920 is it betting? 0:13:04.000 --> 0:13:06.520 Well, there really is an interesting history here. 0:13:06.520 --> 0:13:11.439 So if you go back to the thirties, national grain 0:13:11.520 --> 0:13:13.599 betting was a thing, right, and that was considered a 0:13:13.679 --> 0:13:17.160 national pastime. And so for as long as we've had 0:13:17.200 --> 0:13:19.880 derivatives markets, we've had these so called bucket shops which 0:13:19.880 --> 0:13:23.280 were you know, these these off exchange markets where people 0:13:23.320 --> 0:13:26.040 were just placing bets against the house on the future 0:13:26.120 --> 0:13:27.120 price of a commodity. 0:13:27.480 --> 0:13:29.679 On the other hand, you had organized exchanges. 0:13:29.679 --> 0:13:32.720 So the Chicago Board of Trade later CME and others 0:13:33.000 --> 0:13:36.360 had organized markets with market integrity. They had derivative instruments 0:13:36.440 --> 0:13:40.520 contracts where you actually were in a contract with another person. 0:13:40.640 --> 0:13:42.959 And then now in our markets, we have a clearinghouse 0:13:43.080 --> 0:13:45.560 novating and standing in the middle of those contracts. But 0:13:45.640 --> 0:13:47.719 you have a buyer for every seller. With the kind 0:13:47.720 --> 0:13:50.320 of booky model, that's not the case. You're betting against 0:13:50.320 --> 0:13:53.040 the house, and there's a lot of different rules. When 0:13:53.040 --> 0:13:54.880 you're betting against the house. You don't have the liquidity 0:13:54.920 --> 0:13:57.320 of being able to offset your position or sell out 0:13:57.360 --> 0:14:00.240 of your position. You're kind of stuck taking for the 0:14:00.280 --> 0:14:02.520 bookie's giving you, and some of the odds are very different, 0:14:02.559 --> 0:14:04.840 so you're actually facing the odds of the bookie as 0:14:04.880 --> 0:14:07.320 opposed to hear where the contracts go up and down 0:14:07.320 --> 0:14:11.240 a value based on actual market activity. And so over time, 0:14:11.440 --> 0:14:14.440 the Supreme Court actually blocked some of this bucket shop 0:14:14.480 --> 0:14:17.200 activity by saying you can't take the price quotations from 0:14:17.360 --> 0:14:19.600 the organized exchanges and use them in a bucket shop, 0:14:20.240 --> 0:14:21.880 but a lot of these bucket shops over the years 0:14:21.840 --> 0:14:24.640 have now moved into gaming and other things. We're seeing 0:14:24.680 --> 0:14:28.200 really the same phenomenon where we have casinos and other 0:14:28.240 --> 0:14:33.040 operations that are operating lawfully under state requirements and regulations, 0:14:33.200 --> 0:14:35.080 but they don't have the same sorts of controls. You know, 0:14:35.080 --> 0:14:38.720 we regulate a nearly five hundred trillion notional market with 0:14:38.760 --> 0:14:41.960 the swaps market. We have very stringent requirements and controls 0:14:42.000 --> 0:14:45.560 around our exchanges, and these contracts reflect that. They go 0:14:45.640 --> 0:14:49.360 through a very stringent process of self certification. They can't 0:14:49.360 --> 0:14:52.640 be readily susceptible to manipulation. We survey those markets, we've 0:14:52.640 --> 0:14:55.120 policed things like insider trading, and so it's a much 0:14:55.120 --> 0:14:57.880 more robust scheme on top of these markets, much higher 0:14:57.880 --> 0:15:00.720 stringent requirements, and so I I do think we're seeing 0:15:00.720 --> 0:15:04.040 a lot of parallels between the thirties and forties and today. 0:15:04.400 --> 0:15:06.400 But rest assure that we're on top of these markets 0:15:06.520 --> 0:15:09.120 and these have the same sorts of investor protections that 0:15:09.120 --> 0:15:11.680 you would expect in the securities markets and in our 0:15:11.680 --> 0:15:12.600 futures markets. 0:15:13.280 --> 0:15:16.280 Out of curiosity, how much of your time is split 0:15:16.400 --> 0:15:20.440 now between the new stuff, prediction markets crypto versus the 0:15:20.840 --> 0:15:23.160 I guess, the old boring futures exchanges. 0:15:23.360 --> 0:15:26.080 Yeah, oh five, Well, our day to day is really 0:15:26.120 --> 0:15:28.840 the traditional markets. So and when we talk about these 0:15:28.880 --> 0:15:31.560 new markets, many of the incumbents are getting into this 0:15:31.600 --> 0:15:33.760 space as well. We're seeing more and more of these 0:15:33.760 --> 0:15:37.080 products offered on our traditional dcms, But all of these 0:15:37.080 --> 0:15:40.440 are the same registration category, right. There are some nuances 0:15:40.440 --> 0:15:42.520 and how they're set up. There's some new action relief 0:15:42.560 --> 0:15:45.680 that's been given to some of these platforms historically, but 0:15:45.840 --> 0:15:48.240 this is not it's not, you know, our day to 0:15:48.320 --> 0:15:52.600 day bulk of work. That said, given that it's new, 0:15:52.640 --> 0:15:55.120 and given that there's so much that is changing, we 0:15:55.240 --> 0:15:58.240 have a lot more rulemaking and policy work to do 0:15:58.280 --> 0:16:00.680 in this space. So I do think it's a big 0:16:00.760 --> 0:16:03.920 piece because of that. But in terms of the actual 0:16:04.360 --> 0:16:07.080 size of these markets compared to our as I said, 0:16:07.160 --> 0:16:11.400 about five hundred trillion dollar notional swaps market forty trillion 0:16:11.480 --> 0:16:15.960 dollar notional futures markets, it's a smaller piece, but it's growing, 0:16:16.080 --> 0:16:18.280 and I think blockchain is going to really change, in 0:16:18.320 --> 0:16:22.400 particular how some of these existing exchanges operate, how they 0:16:22.440 --> 0:16:25.360 settle transactions and so forth, and so it's a really 0:16:25.360 --> 0:16:26.800 exciting time to be in the seat. 0:16:27.080 --> 0:16:30.400 So I get that there are some market structure differences 0:16:30.520 --> 0:16:35.320 between a futures exchange on sports versus the traditional house 0:16:35.360 --> 0:16:38.560 sets the odds and so forth, But from the perspective 0:16:38.840 --> 0:16:42.360 of the user or the person who's putting money on 0:16:42.400 --> 0:16:45.720 the line, like I think most people would say, like economically, 0:16:46.280 --> 0:16:48.560 they're very similar, and they're getting more similar because we 0:16:48.640 --> 0:16:50.880 know that to say, like the Kelshie and poly market 0:16:51.080 --> 0:16:53.800 they're trying to get into to do parlays and stuff, 0:16:53.840 --> 0:16:57.480 so like it's getting closer and closer. And you know, 0:16:57.520 --> 0:17:00.160 people have a lot of concerns about sports gambling, the 0:17:00.160 --> 0:17:03.000 effect that that has on young people and so forth. 0:17:03.280 --> 0:17:06.679 National legalization of these it defecta lowers the age in 0:17:06.720 --> 0:17:08.920 a lot of states because in a lot of states 0:17:08.960 --> 0:17:11.760 the legal age to gamble is twenty one and the 0:17:11.840 --> 0:17:14.040 legal age to trade a future is like eighteen. I 0:17:14.080 --> 0:17:17.399 believe do you think that's good that we've defacto lowered 0:17:17.400 --> 0:17:18.560 the age to bet on sports. 0:17:19.200 --> 0:17:21.240 Well, again, we're not merit regulators. 0:17:21.480 --> 0:17:23.440 We don't pass judgment on kind of the age requirements 0:17:23.440 --> 0:17:25.879 in our securities markets and our derivatives' markets. We have 0:17:25.920 --> 0:17:30.160 certain standards that have been upheld these markets. People are 0:17:30.200 --> 0:17:33.080 betting on any number of assets, right if. 0:17:33.040 --> 0:17:35.040 You want to call it these overwhelmingly sports. 0:17:35.960 --> 0:17:38.359 I mean I think that said you have the ability 0:17:38.400 --> 0:17:41.640 to make investments and trade options all manner of securities, 0:17:41.680 --> 0:17:44.040 all manner of commodities, and so the rules are not 0:17:44.160 --> 0:17:47.440 different based on being sports or this or that. I 0:17:47.480 --> 0:17:49.879 think this term betting has been used and thrown about 0:17:50.200 --> 0:17:52.800 in our securities markets and our derivatives markets as well, 0:17:53.000 --> 0:17:56.040 and I don't think it necessarily means anything in particular, 0:17:56.160 --> 0:17:59.040 but the notion is that you're able to make decisions 0:17:59.080 --> 0:18:02.600 at eighteen in our markets, and we uphold that. State 0:18:02.600 --> 0:18:05.520 by state, some of the standards have set even higher, 0:18:05.640 --> 0:18:08.239 and that is not something that you know, I have 0:18:08.280 --> 0:18:09.359 a particular opinion on. 0:18:09.440 --> 0:18:10.600 I think that's just the way. 0:18:10.440 --> 0:18:12.040 When you say, sure, what do you mean in state 0:18:12.080 --> 0:18:13.560 by say some of the standards. 0:18:13.160 --> 0:18:15.440 So some of the states have flexibility and what they 0:18:15.520 --> 0:18:18.760 set up for drinking or for you know, gambling, and 0:18:18.800 --> 0:18:21.200 then like this is financial market activity. 0:18:21.240 --> 0:18:24.800 These are not wagers. You're not betting against the house. 0:18:24.840 --> 0:18:28.840 We have significant overlay from a regulatory standpoint over these markets, 0:18:28.840 --> 0:18:33.200 and so we're not gatekeeping particular categories of markets, elections 0:18:33.280 --> 0:18:35.840 or sports and having different standards. That's not how we've 0:18:35.840 --> 0:18:38.199 typically done things, and so we don't intend to do 0:18:38.240 --> 0:18:39.679 that in this particular market. 0:18:40.119 --> 0:18:43.080 So you're not a merit based regulator, but you are 0:18:43.119 --> 0:18:46.440 a technical regulator. And as we've been discussing, there's a 0:18:46.480 --> 0:18:49.280 lot going on, lots of rulemaking to do, lots of 0:18:49.280 --> 0:18:54.280 potential enforcement actions. There's a barren story out today talking 0:18:54.280 --> 0:18:59.080 about how the CFTC apparently has no enforcement officers left 0:18:59.119 --> 0:19:02.479 in its Chicago office, and you used to have twenty, 0:19:02.600 --> 0:19:07.640 but everyone resigned. It seems. How are you balancing all 0:19:07.760 --> 0:19:11.040 these new markets which are growing really really fast and 0:19:11.160 --> 0:19:15.359 pose some very thorny questions that we've been discussing with 0:19:15.840 --> 0:19:17.119 more limited resources. 0:19:17.480 --> 0:19:20.000 Well, look, a lot of the folks that left that 0:19:20.119 --> 0:19:23.720 was before my tenure, and certainly you know it's not 0:19:24.359 --> 0:19:26.160 you know, they didn't leave it right after I joined, right, 0:19:26.960 --> 0:19:29.000 But no, I think that it's a serious question. Right, 0:19:29.040 --> 0:19:30.880 We've got to make sure that we have adequate staff 0:19:31.000 --> 0:19:33.520 to police the markets, and we do have a ton 0:19:33.520 --> 0:19:36.280 of staff throughout the country, and you know, to the 0:19:36.280 --> 0:19:38.679 point of our Chicago office, of course, it's important that 0:19:38.720 --> 0:19:41.159 we have folks within that office, but we don't have 0:19:41.160 --> 0:19:43.359 a Texas office, we don't have a Florida office, we 0:19:43.359 --> 0:19:44.640 don't have offices in every state. 0:19:44.640 --> 0:19:46.040 We have a handful of offices. 0:19:46.160 --> 0:19:48.880 We've got a critical mass in DC and a number 0:19:48.880 --> 0:19:51.000 of folks in New York as well, and those are 0:19:51.160 --> 0:19:54.800 two largest offices. We continue to fill those out, and 0:19:55.280 --> 0:19:58.000