Commodity Futures Trading Commission
CFTC considers Wall Street sports betting
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Everyone’s looking at Wall Street like it’s just another casino right now, but one man wants to use the market to help sports books. Thomas Chippas, CEO of ErisX, wants to list sports betting contract futures on the stock market, giving investors and book keepers a new way to hedge.The Washington lawyer emphasized that this isn’t a way to spread sports betting to investor markets, but specifically for sports books to hedge their risk. “This is not a substitute for gaming,” he noted to Bloomberg. “There is underlying economic risk that is being hedged.”ErisX has put in their formal request to the Commodity Futures Trading Commission (CFTC) in mid-November, and must wait a 90-day period for the public to provide comments. If the CFTC agrees to the plan, the exchange service, which also offers cryptocurrency, will offer futures for football, basketball and baseball.The CFTC isn’t taking the request lightly. They’ve asked for feedback on if the offering would be “contrary to the public interest,” as well as input on if it would affect sporting event outcomes, and if it would fall under a ban on gaming contracts. Such a ban was put in by Congress in 2010, but ErisX argues that their contracts would have nothing to do with gambling, but rather offer risk management tools for legal sportsbooks.One fear, if the proposal is accepted, is that sports books may use the ability to hedge to offer riskier bets. “The only winner under this type of proposal are the casinos themselves,” said Les Bernal, national director of the Washington advocacy group Stop Predatory Gambling.That being said, other experts think nothing will come of the proposal. Besides the potential of running afoul of congress, the precedents such a move would make might be unpalatable. And sports leagues who fought sports betting for so long have nothing to gain from this move, and likely won’t support it.But ErisX is talking about the benefits. Games that go badly against the sportsbook, almost entirely due to heavy public or sharp betting, could be hedged against should their service be allowed. That could reduce the risk to sportsbooks, allowing them to profit mostly off of handle rather than huge swings in a game.Of course, there’s always the traditional way of managing that risk: adjusting your lines. If ErisX’s dream doesn’t come to be, sportsbooks could simply invest more money in training and hiring better bookmakers, and make their profits by not offering lines that could bankrupt them.
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