Sports Event Contracts No-Show SEC and CFTC Roundtable

• Sports event contracts were not discussed during a recent SEC and CFTC harmonization roundtable
• Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan both spoke at the meeting
• Innovation tops key discussion points

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Most of us came for the sports event contracts, but we stayed for the topics of financial innovation.

The much anticipated roundtable between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) on Monday did not feature any discussion on sports event contracts, but instead focused on the issue of “innovation” and perhaps signaled an acceptance of prediction markets among the financial old guard.

Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan both participated in a panel on “How regulatory harmonization efforts could unlock economic value for platforms while continuing to protect investors,” and discussed the place of their companies and prediction markets in the U.S. financial landscape. .

Old Guard vs. New Guard

While sports event contracts were not directly discussed, the roundtable perhaps signaled a new acceptance of prediction markets from the more traditional financial giants.

Jeffrey Sprecher, chair and CEO of Intercontinental Exchange, a multinational financial services company, noted that both Mansour and Coplan went through “significant personal sacrifice to get where they are today.”

“Both gentlemen have gone through significant personal sacrifice to get to where they are today. We cannot tolerate Wells notices, we cannot tolerate the FBI showing up in senior executives’ homes because our shareholders will not allow that,” he said.

Mansour and Coplan both acknowledged the surprise of being on the panel, representing their companies and prediction markets as a whole. Coplan even joked at the start of the roundtable that he expected to be “whisked away” before he could participated, referencing his apartment being raided by the FBI in 2024 as part of an investigation into Polymarket’s prediction market election offerings.

The closest the panel came to discussing sports event contracts was a quick aside from Terrence Duffy, chairman and CEO of CME Group, a commodities giant, when he said he spent most of a weekend in Las Vegas out of the casinos but on Mansour’s Kalshi platform.

When asked by Mansour if he won any money, Duffy said he broke even but Mansour certainly made a profit.

“Lot of fees on that Kalshi thing,” he joked.

Innovation vs. Regulation

The largest topic of discussion during the roundtable seemed to be the matter of innovation vs. regulation. CFTC regulated companies such as Kalshi, Polymarket, and Kraken, whose co-CEO Arjun Sethi was also in attendance, can typically self-certify new markets to bring to customers, while SEC regulated companies have to go through a stricter set of regulations.

Mansour said Kalshi offered 687 markets to customers in 2024, but will offer more than 2,000 markets in 2024, which could even bump up to 3,000 before the end of the years. The markets are approved through a self-certification process with the CFTC,

Duffy, whose CME Group recently announced a partnership with FanDuel that would allow the sports betting company to offer prediction markets to its customers, said companies need a level playing field to be able to compete. He criticized the innovation exemptions

“I appreciate the innovation on this panel, and I think it’s critical to the future, but you cannot have a double standard, whether it’s in derivatives or securities,” he said.

Craig Donohue, CEO of Cboe Markets, a leading derivatives and securities exchange network, supported Duffy’s opinion. Noting that everyone on the panel can be great competitors, great innovators, but for some it “shouldn’t be that we’re trapped in the old paradigm.”

“If you’re going to do it, it has to be for everybody. It can’t just be for the new people doing new things. We’re all doing new things everyday, so we want to join you in that. If there’s an opportunity to be more successful, let’s all have at it. We’ll all be great competitors, we’ll all be great innovators, but it shouldnt be that we’re trapped in the old paradigm and there’s an exemption where everybody can do whatever they want,” he said.

It’s not just about the quality of innovation, he said, but about the quality of regulations.

“People trust our markets because they’re trustworthy. We have market quality. We have market integrity. We have platform resiliency, we have safety, investor protection. Let’s not lose sight of that,” Donohue said.

However, Sethi criticized the financial giants for their comments, saying the companies should have been “pushing in the same direction the same way we were four years ago, eight years ago, or ten years ago.”