By Laura Matthews
NEW YORK (Reuters) – The U.S. Commodity Futures Trading Commission (CFTC) on Friday was poised to propose a ban on listed derivatives used to bet on U.S. elections and other major real world events, its chair said.
The agency is scheduled to vote on Friday on the proposed regulations which would ban the listing and clearing of so-called “event contracts,” a type of futures contract which have proliferated in recent years. Critics have said the products could undermine the integrity of U.S. elections.
“Such contracts not only fail to serve the economic purpose of the futures markets — they are illegal in several states and could potentially and impermissibly preempt State responsibilities for overseeing federal elections,” CFTC chair Rostin Behnam said in a statement ahead of the vote.
The proposal, which comes in a major presidential election year, would ban “gaming” derivatives, which would also cover products that allow bets on sporting events, as well as calamities such as terrorism and assassination, the chair said.
The proposal comes after the CFTC was sued by online marketplaces, including PredictIt, which the CFTC tried to shut down, and New York-based exchange KalshiEx, whose application to list event contracts was rejected.
(Reporting by Laura Matthews, Editing by Nick Zieminski)
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