House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development Chairman Dusty Johnson (SD-At Large) delivered the following opening statement at today’s hearing, “Examining Customer Protections and Market Integrity in Sports Event Prediction Markets.”
Remarks as prepared:
Good morning, everyone.
Today’s hearing, “Examining Customer Protections and Market Integrity in Sports Event Prediction Markets,” is an opportunity to examine the growing world of sports-related prediction markets.
Prediction markets are not new. The idea of using markets to capture the wisdom of the crowd dates back centuries.
At the CFTC, prediction markets have long been a part of the Commission’s work. In 1988, the agency first provided registration relief to Iowa Electronic Markets for their innovative political prediction market.
But, as with all derivatives products, the landscape has changed considerably over the past 40 years.
Technology has supercharged the growth of prediction markets.
Today, tens of billions of dollars in transactions occur each month across registered and offshore exchanges.
They have grown to a size and scope few could have imagined just two years ago. As with many emerging technologies, our laws are being asked to answer questions were unknown when they were written.
And yet, despite all of the attention, event contract markets represent a small fraction of the activity across markets regulated by the CFTC.
The growth of sports-related prediction markets has raised unique questions that we will discuss today.
To many Americans, these products look a lot like sports betting.
To others, they are innovative financial products that can help aggregate information and provide insight into future events.
Drawing that line and determining whether our laws and regulators are equipped to do so, is one reason why we are here today.
Derivatives are tools, a means to an end, not an end themselves.
While products are not regulated based on merit, they should serve a purpose, whether managing risk or surfacing useful information.
They are not wagers and the CFTC is not a gambling regulator.
Most important, we want customers protected and markets to be sound.
Today’s hearing is about the unique nature of protecting customers and building healthy markets in prediction markets – specifically sports-related prediction markets. It is also about whether the CFTC has the right tools to do the job.
How we address those risks is essential to building fair and safe markets.
Customer protection has been a cornerstone of the CFTC’s work for more than five decades.
Today’s discussion will help us better understand where the law is working, where it may be falling short, and whether Congress has more work to do.
We have a terrific panel of witnesses today, and I am certain we will have no shortage of thoughtful discussion and lively debate.
I want to thank them for their preparation and willingness to share their expertise with us today.
With that, Ranking Member Davis, I yield to you.
