Former U.S. Senator Christopher J. Dodd has urged the Commodity Futures Trading Commission to abandon a proposed rule on prediction markets, arguing it would divert the agency from the original purpose of the Dodd‑Frank Act.
In a letter dated July 26, Dodd criticized the commission’s plan to expand derivatives trading to include event contracts that resemble gambling, asserting the move could encourage speculative betting rather than legitimate hedging.
He maintained that the Dodd‑Frank Act was crafted to support risk‑hedging while preventing derivatives markets from becoming gambling vehicles, and that Congress never intended to override state gaming laws or federal statutes such as the Indian Gaming Regulatory Act.
Dodd cited congressional discussions that highlighted the need to protect the public from gaming contracts, noting that the term “gaming” was used deliberately to regulate activities similar to sports betting.
The senator warned that the proposed rule could erode state and tribal sovereignty, expose consumers to significant risks, and undermine both the letter and spirit of the law.
He concluded by urging the commission to rescind the proposal and prevent companies from engaging in illegal gaming on regulated exchanges, labeling the recent rise in sports‑related event contracts as “rampant speculation” that the Dodd‑Frank bill sought to prohibit.
