    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                        CFTC REAUTHORIZATION: STAKEHOLDER
                                  PERSPECTIVES

    =======================================================================

                                    HEARING

                                   BEFORE THE

                            COMMITTEE ON AGRICULTURE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               DECEMBER 11, 2025

                                   __________

                               Serial No. 119-18

                     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

              Printed for the use of the Committee on Agriculture
                             agriculture.house.gov

                                   ______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    63-346 PDF                WASHINGTON : 2026

                            COMMITTEE ON AGRICULTURE

                     GLENN THOMPSON, Pennsylvania, Chairman

    FRANK D. LUCAS, Oklahoma             ANGIE CRAIG, Minnesota, Ranking
    AUSTIN SCOTT, Georgia, Vice          Minority Member
    Chairman                             DAVID SCOTT, Georgia
    ERIC A. ``RICK'' CRAWFORD, Arkansas  JIM COSTA, California
    SCOTT DesJARLAIS, Tennessee          JAMES P. McGOVERN, Massachusetts
    DOUG LaMALFA, California             ALMA S. ADAMS, North Carolina
    DAVID ROUZER, North Carolina         JAHANA HAYES, Connecticut
    TRENT KELLY, Mississippi             SHONTEL M. BROWN, Ohio, Vice
    DON BACON, Nebraska                  Ranking Minority Member
    MIKE BOST, Illinois                  SHARICE DAVIDS, Kansas
    DUSTY JOHNSON, South Dakota          ANDREA SALINAS, Oregon
    JAMES R. BAIRD, Indiana              DONALD G. DAVIS, North Carolina
    TRACEY MANN, Kansas                  JILL N. TOKUDA, Hawaii
    RANDY FEENSTRA, Iowa                 NIKKI BUDZINSKI, Illinois
    MARY E. MILLER, Illinois             ERIC SORENSEN, Illinois
    BARRY MOORE, Alabama                 GABE VASQUEZ, New Mexico
    KAT CAMMACK, Florida                 JONATHAN L. JACKSON, Illinois
    BRAD FINSTAD, Minnesota              SHRI THANEDAR, Michigan
    JOHN W. ROSE, Tennessee              ADAM GRAY, California
    RONNY JACKSON, Texas                 KRISTEN McDONALD RIVET, Michigan
    MONICA De La CRUZ, Texas             SHOMARI FIGURES, Alabama
    ZACHARY NUNN, Iowa                   EUGENE SIMON VINDMAN, Virginia
    DERRICK VAN ORDEN, Wisconsin         JOSH RILEY, New York
    DAN NEWHOUSE, Washington             JOHN W. MANNION, New York
    TONY WIED, Wisconsin                 APRIL McCLAIN DELANEY, Maryland
    ROBERT P. BRESNAHAN, Jr.,            CHELLIE PINGREE, Maine
    Pennsylvania                         SALUD O. CARBAJAL, California
    MARK B. MESSMER, Indiana
    MARK HARRIS, North Carolina
    DAVID J. TAYLOR, Ohio

                                     ______

                         Parish Braden, Staff Director
                     Brian Sowyrda, Minority Staff Director

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Craig, Hon. Angie, a Representative in Congress from Minnesota,
      opening statement..............................................     3
        Prepared statement...........................................     4
    Davids, Hon. Sharice, a Representative in Congress from Kansas:
        Submitted letter.............................................    92
        Submitted opinion............................................    94
    Hon. Donald G. Davis, a Representative in Congress from North
      Carolina:
        Submitted Indian Gaming Association briefs...................    96
        Submitted letter on behalf of Bill Miller, President and
          Chief Executive Officer, American Gaming Association.......   100
        Submitted statements on behalf of:
            Miller, Jeff, Executive Vice President, Communications,
              Public Affairs and Policy, Player Health and Safety,
              National Football League...............................   103
            Coalition for Prediction Markets.........................   103
    Jackson, Hon. Jonathan L., a Representative in Congress from
      Illinois; submitted letter on behalf of James B. ``JB''
      Mackenzie, President, Robinhood Derivatives, LLC; Vice
      President and General Manager, Futures and International,
      Robinhood Markets, Inc.........................................   120
    Johnson, Hon. Dusty, a Representative in Congress from South
      Dakota:
        Submitted letter.............................................    88
        Submitted statement on behalf of National Grain and Feed
          Association................................................    90
    LaMalfa, Hon. Doug, a Representative in Congress from California:
        Submitted letter on behalf of Hon. Kenneth Kahn, Chairman,
          Santa Ynez Band of Chumash Indians.........................    73
        Submitted statements on behalf of:
            Butler, Hon. Rodney A., Chairman, Mashantucket Pequot
              Tribal Nation..........................................    74
            Lowes, Hon. Austin, Chairman, Sault Ste. Marie Tribe of
              Chippewa Indians.......................................    76
            Macarro, Hon. Mark, Chairman, Pechanga Band of Indians...    76
            Martin, Hon. Charles, Tribal Chairman, Morongo Band of
              Mission Indians........................................    78
            Siva, James, Chairman, California Nations Indian Gaming
              Association............................................    79
            Sprague, Hon. Lucas, Chief, Saginaw Chippewa Indian Tribe    83
            Wesaw, Hon. Matthew J., Chairman, Pokagon Band of
              Potawatomi Indians.....................................    84
            Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians.....    86
            Mohegan Tribe of Indians of Connecticut..................    87
    Pingree, Hon. Chellie, a Representative in Congress from Maine:
        Submitted letter.............................................   123
        Submitted letters on behalf of:
            Francis, Sr., Hon. Kirk, Chief, Penobscot Nation.........   124
            George, Rebecca, Executive Director, Washington Indian
              Gaming Association.....................................   126
            Gobin, Hon. Teri, Chair, Tulalip Tribes..................   128
    Thompson, Hon. Glenn, a Representative in Congress from
      Pennsylvania, opening statement................................     1
        Prepared statement...........................................     2
    Vasquez, Hon. Gabe, a Representative in Congress from New Mexico:
        Submitted Indian Gaming Association brief....................   105
        Submitted letter on behalf of Hon. Leonard Forsman, Chairman,
          Suquamish Indian Tribe.....................................   107
        Submitted statements on behalf of:
            Bean, David, Chairman, Indian Gaming Association.........   108
            Choke, Hon. Kenneth, Chairman, Nisqually Indian Tribe....   115
            Nenema, Hon. Glen D., Chairman and Chief Executive
              Officer, Kalispel Tribe................................   116
            Padilla, Thora W., President, Mescalero Apache Tribe.....   118

                                   Witnesses

    Stump, Hon. Dawn D., Principal, Stump Strategic LLC; former
      Commissioner, Commodity Futures Trading Commission, Washington,
      D.C............................................................     5
        Prepared statement...........................................     6
        Submitted questions..........................................   129
    Prosser, Edward F., Senior Vice President, Special Projects,
      Scoular Company; Member, Board of Directors, Commodity Markets
      Council, Omaha, NE.............................................     8
        Prepared statement...........................................     9
        Submitted questions..........................................   131
    Crighton, Alicia, Global Co-Head of Futures, Head of OTC and
      Prime Clearing, Goldman Sachs & Co. LLC; Chair, Board of
      Directors, Futures Industry Association, New York, NY..........    12
        Prepared statement...........................................    14
        Submitted questions..........................................   133
    Schwartz, J.D., Robert A., Partner, Morgan, Lewis & Bockius;
      former General Counsel, Commodity Futures Trading Commission,
      Washington, D.C................................................    16
        Prepared statement...........................................    18
        Submitted questions..........................................   135
    Schiffrin, J.D., Benjamin L., Director of Securities Policy,
      Better Markets, Inc., Washington, D.C..........................    20
        Prepared statement...........................................    21
        Submitted questions..........................................   136

                 CFTC REAUTHORIZATION: STAKEHOLDER PERSPECTIVES

                                  ----------

                          THURSDAY, DECEMBER 11, 2025

                              House of Representatives,
                                      Committee on Agriculture,
                                                       Washington, D.C.
        The Committee met, pursuant to call, at 10:01 a.m., in Room
    1300, Longworth House Office Building, Hon. Glenn Thompson
    [Chairman of the Committee] presiding.
        Members present: Representatives Thompson, Lucas, Austin
    Scott of Georgia, LaMalfa, Johnson, Mann, Moore, Rose, Messmer,
    Harris, Taylor, Craig, Costa, Brown, Salinas, Davis of North
    Carolina, Budzinski, Vasquez, Jackson of Illinois, McDonald
    Rivet, Figures, Vindman, and Carbajal.
        Staff present: Paul Balzano, Josh Beale, Austin DeBerry,
    Wick Dudley, Sofia Jones, Kyle Upton, John Konya, Joshua
    Lobert, Clark Ogilvie, Olivia Olson, Emma Simon, and Jackson
    Blodgett.

     OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN
                       CONGRESS FROM PENNSYLVANIA

        The Chairman. The Committee will come to order.
        Welcome, and thank you for joining today's hearing
    entitled, CFTC Reauthorization: Stakeholder Perspectives. After
    brief opening remarks, Members will receive testimony from our
    witnesses today, and then the hearing will be open to
    questions.
        So, good morning again, everyone, and welcome to our full
    Committee hearing on reauthorizing the Commodity Futures
    Trading Commission. Thank you to our panel of witnesses for
    making time to be with us today. Before we start, I want to
    thank Acting Chairman Pham for serving as acting Chairman and
    congratulate Mike Selig on his nomination as Chairman of the
    Commission, and I am looking forward to the Senate's
    confirmation vote. He is taking over the reins of the agency at
    a transformative time for the Commission and for financial
    markets broadly. He and the Commission staff will have their
    work cut out for them, but I know that they are up to the
    challenge. I look forward to inviting him to the Committee
    early next year to talk about his agenda and goals.
        As many of you know, the Commission's authorization for
    appropriations lapsed a dozen years ago in 2013. Now, this is
    unacceptable, and it is long past time for Congress to fulfill
    its responsibility and reauthorize the Commission, especially
    as we consider providing new authorities to the agency. I want
    to thank Ranking Member Craig for being not only a strong
    leader, but also a partner on this Committee. The Committee's
    years-long process on digital assets culminated in the House
    passage of the CLARITY Act of 2025 (H.R. 3633, Digital Asset
    Market Clarity Act of 2025) due, in no small part, to the
    Ranking Member's strong support. The legislation received
    overwhelming bipartisan support, garnering 294 votes, and over
    80 percent of the Members of the Agriculture Committee voted
    for it.
        In March, our Committee held another bipartisan event: a
    hearing commemorating the 50th anniversary of the Commission.
    We looked back at the storied history of the CFTC and the
    markets that it oversees, learning about the important and
    unique role it holds as a regulator, and how important
    derivative markets are to everyday Americans. These markets
    allow American businesses, including farmers, ranchers, and
    producers, to manage the risks of modern business. It was clear
    in March that as markets have evolved, so has the Commission.
    From legacy financial futures to novel new perpetual
    derivatives, the CFTC has applied its principles-based mandate
    and subject matter expertise to regulating new products and the
    novel issues they present.
        Today, we build off of what we learned in March and examine
    the importance of the Commission and the derivatives market
    today. We will hear from a cross-section of stakeholders who
    know the Commission and its markets well. This is an important
    opportunity to consider their suggestions for improvement and
    refinement and set the CFTC on solid footing for the next 50
    years. Again, thank you to each of our witnesses for their
    willingness to participate in today's hearing, and I look
    forward to our conversation.
        [The prepared statement of Mr. Thompson follows:]

    Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
                               from Pennsylvania
        Good morning, and welcome to our full Committee hearing on
    reauthorizing the Commodity Futures Trading Commission (CFTC).
        Thank you to our panel of witnesses for making the time to be with
    us today.
        Before we start, I want to thank acting Chairman Pham for serving
    as acting Chairman and congratulate Mike Selig on his nomination as
    Chairman of the Commission. I am looking forward to the Senate's
    confirmation vote [, maybe as soon as this afternoon!]
        He is taking over the reins of the agency at a transformative time
    for the Commission and for financial markets broadly. He and the
    Commission staff have their work cut out for them, but I know that they
    are up to the challenge.
        I look forward to inviting him to the Committee early next year to
    talk about his agenda and goals.
        As many of you know, the Commission's authorization for
    appropriations lapsed a dozen years ago, in 2013.
        This is unacceptable, and it is long past time for Congress to
    fulfill its responsibility and reauthorize the Commission, especially
    as we consider providing new authorities to the agency.
        I want to thank Ranking Member Craig for being not only a strong
    leader but also a partner on this Committee.
        The Committee's years-long process on digital assets culminated in
    the House passage of the CLARITY Act, due in no small part to the
    Ranking Member's strong support.
        The legislation received overwhelming bipartisan support, garnering
    294 votes, and over 80% of the Members of the Agriculture Committee
    voted for it.
        In March, our Committee held another bipartisan event: a hearing
    commemorating the 50th anniversary of the Commission.
        We looked back at the storied history of the CFTC and the markets
    it oversees, learning about the important and unique role it holds as a
    regulator and how important derivatives markets are to everyday
    Americans.
        These markets allow American businesses--including farmers,
    ranchers, and producers--to manage the risks of modern business.
        It was clear in March that as markets have evolved, so has the
    Commission.
        From legacy financial futures to novel new perpetual derivatives,
    the CFTC has applied its principles-based mandate and subject-matter
    expertise to regulating new products and the novel issues they present.
        Today, we build off of what we learned in March and examine the
    importance of the Commission and derivatives markets, today.
        We will hear from a cross-section of stakeholders who know the
    Commission and its markets well.
        This is an important opportunity to consider their suggestions for
    improvement and refinement and set the CFTC on solid footing for the
    next 50 years.
        Again, thank you to each of our witnesses for their willingness to
    participate in today's hearing. I look forward to our conversation.

        The Chairman. And with that, I would like to welcome the
    distinguished Ranking Member, the gentlewoman from Minnesota,
    Ms. Craig, for any opening remarks she would like to make.

      OPENING STATEMENT OF HON. ANGIE CRAIG, A REPRESENTATIVE IN
                        CONGRESS FROM MINNESOTA

        Ms. Craig. Thank you, Mr. Chairman, and I would like to
    start simply by thanking our witnesses for being here today and
    for the opportunity to hold this very important hearing as we
    look to reauthorize the Commodity Futures Trading Commission.
        As we all know, for the past 12 years, the CFTC has been
    operating without formal Congressional authorization since it
    last lapsed in 2013. A lot has happened since that time. As the
    industry and markets change, we need to make sure the CFTC has
    the necessary tools to handle these changes while maintaining
    its core function of ensuring the integrity, resilience, and
    vibrancy of the markets it currently oversees. We all know that
    a well-regulated financial system keeps our country strong and
    prosperous while protecting Americans.
        For 50 years, the CFTC has been the cop on the beat for
    U.S. derivative markets and making sure these markets work, not
    just for Wall Street, not just for the exchanges and
    clearinghouses themselves, but for main street Americans and
    commercial businesses whose livelihoods are impacted by these
    markets every day. But it takes resources to have effective
    oversight over these markets and protect the consumers,
    customers who use them. At previous hearings on reauthorizing
    the CFTC, we heard from commercial end-users of these markets
    about the agency's stagnant funding and how the agency needs
    sufficient resources. Otherwise, its ability to ensure the
    integrity of the more traditional commodity markets for risk
    management purposes will be diminished. If the users of these
    markets get it, we should, too. The recent gutting of staff at
    the agency, the last-minute withdrawal of a CFTC chair nominee
    because a friend of the President didn't like him, and the lack
    of nominees for other Commissioner positions demonstrates the
    Trump Administration's lack of respect for the agency, its
    staff, and its mission. I don't envy the challenge that the new
    CFTC chair nominee, Mr. Selig, faces to turn around all of this
    once he gets confirmed.
        I want to thank our witnesses for coming in today, and for
    your testimony and for sharing your perspectives. It is
    certainly a critical time for the CFTC. We may not agree on
    everything, but we can all agree that a well-resourced and
    appropriately staffed CFTC is critical to a healthy financial
    system, and to accomplish these goals, it is critical we work
    together and across the aisle. Thank you, Mr. Chairman, for
    holding this hearing, and with that, I yield back.
        [The prepared statement of Ms. Craig follows:]

     Prepared Statement of Hon. Angie Craig, a Representative in Congress
                                 from Minnesota
        Thank you to our witnesses for being here today, and for the
    opportunity to hold this very important hearing as we look at
    reauthorizing the Commodity Futures Trading Commission.
        As we all know, for the past 12 years, the CFTC has been operating
    without formal Congressional authorization since it lapsed in 2013. A
    lot has happened since that time.
        As industry and markets change, we need to make sure the CFTC has
    the necessary tools to handle these changes while maintaining its core
    function of ensuring the integrity, resilience and vibrancy of the
    markets it currently oversees.
        We all know that a well-regulated financial system keeps our
    country strong and prosperous while protecting Americans. For 50 years,
    the CFTC has been the cop on the beat for U.S. derivative markets and
    making sure these markets work, not just for Wall Street, not just for
    the exchanges and clearinghouses themselves, but for main street
    Americans and commercial businesses whose livelihoods are impacted by
    these markets every day.
        But it takes resources to have effective oversight over these
    markets and protect the customers who use them. At previous hearings on
    reauthorizing the CFTC, we heard from commercial end-users of these
    markets about the agency's ``stagnant funding'' and how the agency
    needs sufficient resources; otherwise, its ability to ensure the
    integrity of the more traditional commodity markets for risk management
    purposes will be diminished. If the users of these markets get it, we
    should too.
        The recent gutting of staff at the agency, the last-minute
    withdrawal of a CFTC Chair nominee because a friend of the President
    didn't like him and the lack of nominees for other Commissioner
    positions demonstrate the Trump Administration's lack of respect for
    the agency, its staff and its mission. I don't envy the challenge that
    the new CFTC Chair nominee, Mr. Selig, faces to turn all this around
    once he gets confirmed.
        I want to thank our witnesses for coming in today and for your
    testimony and sharing your perspectives. We may not agree on
    everything, but we can all agree that a well-resourced and
    appropriately staffed CFTC is critical to a healthy financial system,
    and to accomplish these goals, it's critical that we work together and
    across the aisle.
        Thank you, Mr. Chairman, for holding this hearing, and with that, I
    yield back.

        The Chairman. I thank the gentlelady. The chair would
    request that other Members submit their opening statements for
    the record so the witnesses may begin their testimony and to
    ensure that there is ample time for questions.
        Our first witness today is the Honorable Dawn D. Stump, a
    former Commissioner at the CFTC. Our next witness is Mr. Edward
    Prosser, the Senior Vice President for Special Projects at the
    Scoular Company. He is also a Member of the Board of the
    Commodity Markets Council and is testifying on their behalf.
    Our third witness today is Ms. Alicia Crighton. Ms. Crighton is
    the Managing Director and Global Co-Head of Futures, and the
    Head of OTC and Prime Clearing at Goldman Sachs, as well as the
    Chair of the Futures Industry Association. She is testifying on
    behalf of the Futures Industry Association today. Our next
    witness today is Mr. Rob Schwartz, former General Counsel at
    CFTC. He is currently a partner at Morgan Lewis and Bockius,
    and our final witness today is Mr. Benjamin Schiffrin, the
    Director of Securities Policy at Better Markets.
        Thank you all for joining us today, and we will now proceed
    to your testimony. You will each have 5 minutes. The timer in
    front of you will count down to zero, at which time your time
    has expired. Commissioner Stump, please begin when you are
    ready.

      STATEMENT OF HON. DAWN D. STUMP, PRINCIPAL, STUMP STRATEGIC
                  LLC; FORMER COMMISSIONER, COMMODITY
              FUTURES TRADING COMMISSION, WASHINGTON, D.C.

        Ms. Stump. Thank you. I would like to begin by thanking
    Chairman Thompson and Ranking Member Craig for inviting me to
    be here today, and I would like to applaud all of the Members
    for your attention to reauthorizing the CFTC. As a former
    staffer, I would also be remiss if I didn't acknowledge the
    tremendous amount of work the staff has put in to making this
    hearing a possibility today.
        Since it began operating 50 years ago, the CFTC has
    fostered tremendous growth and integrity in the U.S.
    derivatives markets. While this success is driven by the market
    itself, it is sustained by the unique regulatory purpose
    Congress designed for the CFTC, a purpose that needs to be
    reaffirmed from time to time lest it be misunderstood or
    undervalued. While the CFTC's mission remains timeless,
    sweeping and substantial changes in the derivatives markets
    have taken the agency on quite a transformative journey.
        I am proud to have been part of this progression, first, as
    a legislative staffer at both the House and the Senate
    Agriculture Committee where I worked on the last CFTC
    reauthorization in 2008 and the Dodd-Frank Act (Pub. L. 111-
    203) during the financial crisis. I have also had the
    opportunity to work within the industry for a variety of CFTC-
    regulated entities, and I count among my greatest honors
    serving as a CFTC Commissioner. In each of these roles--
    advancing legislation, conducting oversight, implementing
    regulation, enforcing rules, and developing compliant business
    operations in the real world--I have confronted many complex
    questions, often stemming from the competing and sometimes very
    creative interpretations of the objectives Congress has
    outlined for the CFTC. Time and time again, I find that the
    best compass in navigating these difficult and subjective
    debates is simply rereading the actual words in the Commodity
    Exchange Act (Pub. L. 74-675).
        To be clear, there have been many times when I wish the
    words said something different, but the CEA, the Commodity
    Exchange Act, is the ultimate directive to which we all must
    subscribe. And the reauthorization process has traditionally
    served as a recurring opportunity for Congress to ensure that
    those all-important words in the Commodity Exchange Act remain
    absolutely fit for purpose, such that market developers,
    regulators, and, where necessary, the courts can apply the
    statute in a current context. While the sensible flexibility of
    the Commodity Exchange Act largely enables the CFTC to adapt as
    the markets develop new products and business practices,
    reauthorization provides an opportunity for this Committee to
    address ambiguities that inevitably arise with such changes.
    Beyond this periodic review of the Commodity Exchange Act and
    ensuring that it remains up to date, I would like to briefly
    discuss two additional reasons reauthorization is prudent. One
    is a technical budgetary matter and the other an important
    validation of the agency itself.
        Beginning with the technical issue, it is worth briefly
    clarifying what we are talking about when we use the phrase,
    CFTC reauthorization. Importantly, the duties and authorities
    assigned to the agency do not lapse at the end of an
    authorization period. Rather, the authorization for
    appropriations expires. This is not unique to the CFTC, and in
    a much broader debate, there is a great deal of scrutiny
    surrounding such unauthorized appropriations. In my opinion,
    the best course of action to avoid the CFTC being inadvertently
    caught up in this broader procedural debate is simply to
    authorize the appropriation. This is CFTC reauthorization in
    its simplest form: changing the end date to extend the time
    frame for which appropriations are authorized for the agency.
        In addition to updating the Commodity Exchange Act and
    addressing this technical budgetary matter, Congress has
    historically taken the opportunity to demonstrate and renew its
    support for the CFTC by way of reauthorization. This is not, as
    some have suggested, merely a symbolic gesture, but rather, an
    important affirmation of the agency's distinct relevance.
    Though small in size, the CFTC performs a critical regulatory
    function, overseeing markets with enormous range of underlying
    products: agricultural commodities, energy resources, interest
    rates, foreign currency, metals, credit tools, and equity
    indexes, just to name a few. Its remit impacts grain elevators,
    hedge funds, financial institutions, manufacturers, supply
    chains, and retail participants in both existing and newly
    developed derivatives markets. CFTC's regulated markets have an
    enormous impact on the U.S. economy, yet its identity is often
    misunderstood as ``the little sister to the Securities and
    Exchange Commission.'' It is important that Congress endorses
    the unique objectives it set out for the CFTC to avoid these
    sorts of misconceptions, especially now during the current
    period of transition.
        In closing, I would, again, just like to thank you all for
    your attention to reauthorizing the CFTC. I think it is an
    important endeavor, and I would be happy to answer any
    questions.
        [The prepared statement of Ms. Stump follows:]

     Prepared Statement of Hon. Dawn D. Stump, Principal, Stump Strategic
        LLC; Former Commissioner, Commodity Futures Trading Commission,
                                Washington, D.C.
        I would like to begin by thanking Chairman Thompson and Ranking
    Member Craig for inviting me to be here today, and I applaud all
    Members of the Committee for your attention to the task of
    reauthorizing the Commodity Futures Trading Commission (CFTC). Since it
    began operating 50 years ago, the CFTC has fostered tremendous growth
    and integrity in the U.S. derivatives markets. While this success is
    driven by the markets themselves, it is sustained by the unique
    regulatory purpose Congress designed for the CFTC--a purpose that needs
    to be reaffirmed from time to time, lest it be misunderstood or
    undervalued.
        While the CFTC's mission remains timeless, sweeping and substantial
    changes in the derivatives markets have taken the CFTC on a
    transformative journey. I am proud to have been involved in this
    evolution, even as some progress came with tremendous growing pains.
    During my career I have had the privilege to serve as a legislative
    staffer at both the House and Senate Agriculture Committees where I
    worked on the last CFTC reauthorization in 2008 and the Dodd-Frank Act
    during the financial crisis. I have also had the opportunity to work
    within the industry for a CFTC-regulated exchange and clearinghouse, a
    foreign board of trade, and on behalf of customer-facing
    intermediaries. And finally, I count among my greatest honors serving
    as a CFTC Commissioner during President Trump's first term and the
    early years of President Biden's Administration.
        In each of these roles--advancing legislation, conducting
    oversight, implementing regulations, enforcing rules, and developing
    compliant business operations in the real world--I have confronted many
    complex questions, often stemming from competing, and sometimes
    creative, interpretations of the objectives Congress has outlined for
    the CFTC. Time and again I find the best compass in navigating these
    subjective debates is simply re-reading the actual words used in the
    Commodity Exchange Act (CEA). To be clear, there have been instances in
    which I would have personally preferred different words, but the CEA is
    the ultimate directive to which we all must subscribe.
        The reauthorization process has traditionally served as a recurring
    opportunity for Congress to ensure those all-important words in the CEA
    remain absolutely fit for purpose such that market developers,
    regulators, and, where necessary, the courts can apply the statute in a
    current context. While the sensible flexibility of the CEA largely
    enables the CFTC to adapt as the market develops new products and
    business practices, reauthorization provides an opportunity for the
    people's elected representatives to address ambiguities that inevitably
    arise with such changes.
        Beyond this periodic review to ensure the CEA remains up to date, I
    would like to briefly discuss two additional reasons reauthorization is
    prudent--one is a technical budgetary matter and the other an important
    validation of the agency itself.
        Beginning with the technical issue, it is worth briefly clarifying
    what we are talking about when we refer to ``CFTC reauthorization''.
    Importantly, the duties and authorities assigned to the agency do not
    lapse at the end of the authorization period. Rather, the authorization
    for appropriations expires. This is not unique to the CFTC, and in a
    much broader debate there is a great deal of scrutiny surrounding
    ``unauthorized appropriations''. Some believe the receipt of funds
    without an updated authorization has enabled agencies to operate beyond
    their usefulness, while others have suggested that neglecting these
    routine authorizations results in agencies not receiving proper
    oversight.
        I hope we would all agree that such concerns do not apply to the
    CFTC--it was never envisioned to sunset, and Congressional oversight is
    constantly occurring through an ongoing dialogue between this Committee
    and the agency. Nonetheless, we cannot ignore the possibility that
    these ongoing considerations potentially put a target on an agency that
    was last authorized for appropriations in fiscal year 2013 at the
    conclusion of a routine 5 year authorization approved in 2008. In my
    opinion, the best course of action to avoid the CFTC being
    inadvertently caught up in this broader procedural debate is to simply
    authorize the appropriations. This is ``CFTC reauthorization'' in its
    simplest form--changing the end date to extend the timeframe for which
    appropriations are authorized for the agency.
        In addition to updating the CEA and addressing this technical
    budgetary matter, Congress has historically taken the opportunity to
    demonstrate and renew its support for the CFTC by way of
    reauthorization. This is not, as some have suggested, merely a symbolic
    gesture but rather an important affirmation of the agency's relevance.
    Though small in size, the CFTC performs a critical regulatory function
    overseeing markets with an enormous range of underlying products--
    agricultural commodities, energy resources, interest rates, foreign
    currency, metals, credit tools, and equity indexes just to name a few.
    Its remit impacts grain elevators, hedge funds, financial institutions,
    manufacturer supply chains, and retail participants in both established
    and new derivatives markets. CFTC-regulated markets have an enormous
    impact on the U.S. economy. Yet, its identity is often misunderstood as
    ``the little sister to the Securities and Exchange Commission''. It is
    important that Congress endorses the unique objectives it set out for
    the CFTC to avoid these sorts of misconceptions, especially during this
    period of transition.
        In closing, I again want to thank the Committee Members for your
    attention to reauthorizing the CFTC. The importance of the agency's
    mission warrants validation by Congress. Reauthorization serves to
    provide that support while also addressing technical matters and
    prudent review of the authorities entrusted to the Commission.

        The Chairman. Commissioner Stump, thank you so much for
    your testimony and your service. Mr. Prosser, please begin when
    you are ready.

              STATEMENT OF EDWARD F. PROSSER, SENIOR VICE
             PRESIDENT, SPECIAL PROJECTS, SCOULAR COMPANY;
     MEMBER, BOARD OF DIRECTORS, COMMODITY MARKETS COUNCIL, OMAHA,
                                   NE

        Mr. Prosser. Chairman Thompson, Ranking Member Craig, and
    Members of the Committee, thank you for inviting me here today
    to testify about the importance of the CFTC and this
    Committee's oversight and reauthorization of the agency. I am
    Ed Prosser, Senior Vice President of Special Projects at
    Scoular. Scoular is an employee-owned, $7.3 billion
    agribusiness and supply chain company with headquarters in
    Omaha, Nebraska. Founded over 130 years ago, our company buys,
    sells, stores, handles, and processes grain and ingredients
    through our global networks and expertise in trade and
    transportation. Our U.S. grain facility networks include
    locations in Illinois, Iowa, Nebraska, Kansas, and Missouri. We
    employ over 1,200 people in more than 100 offices and
    facilities worldwide.
        I have been an active participant in physical and
    derivative markets and agriculture and energy for 40 years. I
    serve on the board of the Commodity Markets Council, the
    National Oil Seed Processors Association, and as a member of
    the CFTC's Agricultural Advisory Committee. I also formerly
    served on the Risk Management Committee of the National Grain
    and Feed Association and was a member of the Minneapolis,
    Chicago, and Kansas City Board of Trade. Today, I am testifying
    on behalf of the Commodity Markets Council founded over 90
    years ago and originally called the National Grain Trade
    Council.
        CMC is the leading Washington, D.C.-based trade association
    that brings agriculture and energy traders together with
    commodity exchanges. Its members include end-users that utilize
    futures and swap markets for agriculture, energy, metal, and
    soft commodities, as well as designated contract markets,
    futures commission merchants, and swap execution facilities.
    CMC advocates for open, transparent, and competitive markets.
    For decades, we have supported both the principled regulation
    of, and responsible innovation in, derivatives markets.
        I firmly believe my testimony today reflects the views of
    thousands of end-users--farmers, merchants, utilities, energy
    suppliers, biofuel producers, and manufacturers--who rely on
    U.S. derivatives markets as critical risk management tools, not
    for speculation, but as a central part of their everyday
    business operations. The derivatives markets are just that:
    derivatives of cash markets that trade every workday to provide
    the food, fiber, and energy we rely on. The derivatives markets
    provide liquidity to ensure efficient price discovery, which
    allows participants around the world to signal which
    commodities are scarce and which are oversupplied.
    Specifically, these markets enable commercial users to hedge
    exposures to volatile price movements driven by weather events,
    global economic shifts, supply chain disruptions, and
    geopolitical instability.
        U.S. agriculture futures contracts, corn, soybeans, wheat,
    livestock, cotton, and more serve as global price benchmarks
    used in risk management by businesses here and around the
    world. These functions are not just theoretical. They are vital
    to the real-world business of producing and transporting
    agricultural goods to the consumers that depend on them. From
    the price of milk and bread, to the cost of gasoline and
    electricity, derivative markets shape our economy, ensuring
    that commercial participants can manage risk, avoid
    catastrophic losses, and deliver reliable value to consumers.
    The role of price discovery, risk transfer, and market
    liquidity are the pillars of healthy, resilient markets.
        With this in mind, I would like to provide six
    recommendations for Congressional action and refer you to my
    written testimony which further explains each of these and why
    they are critical. One, support the appropriate funding and
    staffing for the CFTC, enabling the agency to keep pace with
    market growth, technological complexity, and global
    competitiveness. Two, ensure that regulatory standards
    prioritize the needs of commercial users, end-users, and
    consumers, not just financial intermediaries, new market
    entrants, or speculative interests. Three, safeguard the
    principle-based regulatory model that has enabled responsible
    innovation and reasonable flexibility in responding to new
    market challenges. Four, maintain bipartisan commitment to
    transparency, public participation, and open debate in
    regulatory decision-making. Five, encouraging ongoing review of
    market structure proposals, such as event contracts, clearing
    organization changes, and customer bankruptcy protections to
    ensure that any market structure changes do not undermine our
    agriculture and energy markets. And six, anchor global
    benchmarks in U.S. markets, subject to U.S. oversight and
    rules, strengthening America's competitive position for the
    benefit of American producers, consumers, and communities.
        Thank you again for the opportunity to represent and
    comment on behalf of the Commodity Markets Council and all
    commercial users of these agricultural and energy contracts. We
    hope you will submit a fully funded--excuse me--I hope you will
    support a fully funded and fully functional CFTC to ensure that
    our producers, merchants, and end-users can continue to fuel,
    feed, and clothe America in a growing market. Thank you.
        [The prepared statement of Mr. Prosser follows:]

    Prepared Statement of Edward F. Prosser, Senior Vice President, Special
       Projects, Scoular Company; Member, Board of Directors, Commodity
                           Markets Council, Omaha, NE
    Regarding the Reauthorization and Oversight of the Commodity Futures
            Trading Commission
    Introduction
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee, thank you for inviting me here today to testify about the
    importance of the Commodity Futures Trading Commission and this
    Committee's oversight and reauthorization of the agency.
        I am Ed Prosser, Senior Vice President of Special Projects at
    Scoular. Scoular is an employee-owned $7.3 billion agribusiness and
    supply chain company with headquarters in Omaha, Nebraska. Founded over
    130 years ago, our company buys, sells, stores, handles, and processes
    grain and ingredients through our global networks and expertise in
    trade and transportation. Our U.S. grain facility network includes
    locations in Illinois, Iowa, Nebraska, Kansas, and Missouri. We employ
    over 1,200 people in more than 100 offices and facilities worldwide,
    and provide safe and reliable solutions to farmers, grain processors,
    biofuel producers, and other customers. I have been an active
    participant in physical and derivative markets in agriculture and
    energy for 40 years. I serve on the board of the Commodity Markets
    Council, the National Oilseed Processors Association, and as a member
    of the CFTC's Agriculture Advisory Committee. I also formerly served on
    the Risk Management Committee of the National Grain and Feed
    Association, and was a member of the Minneapolis Grain Exchange,
    Chicago Mercantile Exchange, and the Kansas City Board of Trade
    exchanges.
        Today, I am testifying on behalf of the Commodity Markets Council,
    founded over 90 years ago and originally called the National Grain
    Trade Council. Today, CMC is the leading Washington D.C.-based trade
    association that brings agriculture and energy traders together with
    commodity exchanges, and its members include commercial end-users that
    utilize futures and swaps markets for agriculture, energy, metals, and
    soft commodities as well as designated contract markets (DCMs), futures
    commission merchants (FCMs), and swap execution facilities (SEFs).
    While its membership has expanded over the years, its mission has
    remained the same: advocating for an open, transparent, competitive
    marketplace by combining the expertise, knowledge, and resources of our
    members to develop and support market-based policy. For decades, we
    have supported both the principled regulation of and responsible
    innovation in derivatives markets, which ultimately serve as the most
    robust and resilient risk management markets in the world.
        I firmly believe my testimony today reflects the views of thousands
    of commercial end-users, farmers, merchants, utilities, energy
    suppliers, biofuels producers, and manufacturers who rely on U.S.
    derivatives markets as critical risk management tools, not for
    speculation, but a as central part of their everyday business
    operations.
    Purpose and Function of Derivatives Markets
        The derivatives markets are just that: derivatives of cash markets
    that trade every workday to provide the food, fiber, and energy we rely
    on. The derivatives markets provide liquidity to ensure efficient price
    discovery which allows participants around the world to signal which
    commodities are scarce and which are oversupplied. Specifically, these
    markets enable commercial end-users to hedge exposures to volatile
    price movements driven by weather events, global economic shifts,
    supply chain disruptions, and geopolitical instability. U.S.
    agricultural futures contracts--corn, soybeans, wheat, livestock,
    cotton, and more--serve as global price benchmarks used in risk
    management by businesses here and around the world.
        The fast, fair, and efficient price discovery enabled through
    derivatives trading sends vital economic signals, informing producers,
    processors, and end-users about market scarcity or surplus. When
    farmers lock in crop prices with grain merchandisers, or fuel suppliers
    hedge energy costs, it is derivatives markets that empower their
    decisions and stabilize supply chains from farm to table and field to
    fuel tank. Commercial end-users depend on these markets, not only to
    offset risk, but also to secure business financing, manage uncertainty,
    and fuel ongoing investment in American agriculture and energy.
        These functions are not just theoretical--they are vital to the
    real-world business of producing and transporting agricultural goods to
    the consumers that depend on them. From the price of milk and bread to
    the cost of gasoline and electricity, derivatives markets shape our
    economy, ensuring that commercial participants can manage risk, avoid
    catastrophic losses, and deliver reliable value to consumers. The roles
    of price discovery, risk transfer, and market liquidity are the pillars
    of healthy, resilient markets.
    The Importance of a Robust, Well-Resourced CFTC
        The Commodity Futures Trading Commission (CFTC or Commission) is
    the cornerstone and referee of fair, transparent, and resilient markets
    in the U.S. The Commission's mandate is not only to supervise
    exchanges, clearinghouses, and intermediaries, but also to ensure that
    regulatory processes remain responsive, transparent, and open to public
    debate.
        Since its inception fifty years ago, the CFTC has evolved alongside
    the markets it governs--expanding from agricultural contracts to
    oversight of financial, energy, metals, and now, digital assets. Its
    principles-based regulatory regime has become a global model, allowing
    flexibility for innovation while maintaining rigorous standards for
    customer protection, market integrity, and risk management. As I see
    new exchanges and instruments enter the trading space, there seems to
    be pressure to change how clearinghouses work, how FCMs interact with
    the exchanges, and even how many hours derivatives markets are open. I
    am not here to comment on the needs of market participants in digital
    assets, event contracts, or other relatively new asset classes.
    However, like many others, I am concerned with their potential
    influence on our traditional markets.
        The trading rules for agriculture and energy markets have evolved
    over decades of experience and are in place for good reasons. They have
    been tested by crisis, black swan market events, and periods of
    inactivity, and they have always continued to function. We do not
    oppose innovation in our markets--innovation has been the reason for
    the tremendous success of traditional markets in the U.S.--but if
    market rules need to adjust for new entrants, let's not lump everyone
    together. Certain market features like 24/7 trading and perpetual
    futures might make sense in the context of digital asset commodities or
    event contract markets, but they could be extremely problematic when
    applied to traditional futures markets.
        Having a Commission that is thoughtful and well-resourced, and that
    understands both the importance of innovation and the importance of
    maintaining our status as a global leader in risk management is
    imperative. Our agriculture and energy markets should not change just
    to accommodate potential innovations in other markets.
        CFTC oversight ensures trustworthy price discovery, effective risk
    transfer, and resilient liquidity, while safeguarding the interests of
    commercial end-users. Its role in facilitating the convergence between
    cash and derivatives markets, especially for physically delivered
    contracts, provides critical market data such as the ``Commitment of
    Traders'' report, and enables market participants to petition for rule
    changes, ensuring that all voices are heard. Ultimately, this is what
    ties the crops that are physically grown on a farm or raised on a ranch
    to the financial derivatives we depend on to manage our risk.
        During historic periods of stress, such as the financial crisis of
    2008 and the aftermath of 9/11, the CFTC played a vital leadership
    role, ensuring markets remained open and orderly, restoring confidence,
    and working in close partnership with industry and policymakers. While
    dramatic market events and the changes they bring to the markets might
    be the biggest news, the most impactful role of the CFTC might be in
    what many would consider the mundane. The reliable data it provides to
    participants helps regulate the market by providing insight to market
    participants. The Commission also plays an important role in monitoring
    the convergence of the derivatives and physical markets. This highly
    specialized process is particularly important to our traditional
    agricultural contracts. The agency's responsiveness, expertise, and
    judgment have kept the U.S. markets at the forefront of innovation and
    stability amidst global competition.
        There are often differences of opinion between different players in
    derivatives markets. When this happens, it is vital to have a strong
    CFTC that can hear both sides and find reasonable solutions. These
    qualities depend on continued Congressional support for a robust, fully
    staffed, fully funded, and well-resourced CFTC.
    The Case for CFTC Reauthorization
        Reauthorizing the CFTC is more than a procedural step; it is the
    foundation for American economic leadership in the global commodities
    markets. Periodic reauthorization ensures that the agency keeps pace
    with technological change, the rapid growth of novel products, and the
    ongoing globalization of commodity trading. The process offers Congress
    vital oversight, enabling lawmakers to demand accountability, review
    evolving risks, and assess the effectiveness of regulatory pathways.
        The Commodity Exchange Act's core mandate is to foster innovation,
    encourage public debate, and ensure regulation keeps pace with ever-
    changing market needs. Passage of reauthorization legislation
    demonstrates bipartisan determination to strengthen market safeguards
    and address emerging challenges including cybersecurity, customer
    property protection, and conflicts of interest.
        Reauthorization also enables the CFTC to confront challenges posed
    by financial market regulation, such as the Basel III Endgame and
    Global Systemically Important Bank (GSIB) rules, international
    competition, market structure reforms, and new asset classes. For
    commercial end-users, keeping global benchmarks anchored in U.S.
    markets is crucial for price stability and market access. For
    consumers, robust reauthorization helps ensure that markets continue to
    function as intended even in times of stress, volatility, or crisis.
        Markets and businesses crave certainty. When there is uncertainty
    in government policy, we see unnecessary and unproductive volatility in
    the markets as market participants react to every rumor and news
    article because they do not have solid guidance. We see this in the
    soybean oil market today where market participants, awaiting
    significant guidance from the Environmental Protection Agency (EPA) and
    the Treasury Department on biofuels policy, see rumors of various
    outcomes shooting prices up or down. While we recognize that Congress
    has continued to fund the agency on a yearly basis, the lack of
    reauthorization for the CFTC creates that same uncertainty when market
    participants do not know what to expect from the government on a number
    of key policies, such as how derivatives markets are or are not going
    to integrate things like 24/7 trading. In short, CFTC reauthorization
    upholds regulatory confidence, fosters forward-looking innovation, and
    ensures that American farmers, merchants, utilities, processors, and
    consumers are protected from market failures, systemic risks, and
    global competition. Congress should go through the reauthorization
    process to affirm its steadfast support for the vital work of the CFTC.
    Recommendations for Congressional Action
        As Congress considers its role in overseeing, supporting, and
    reauthorizing the CFTC, I urge the Committee to:

      1.  Support appropriate funding and staffing for the CFTC, enabling
                the agency to keep pace with market growth, technological
                complexity, and global competitiveness.

      2.  Ensure that regulatory standards prioritize the needs of
                commercial end-users and consumers--not just financial
                intermediaries, new market entrants, or speculative
                interests.

      3.  Safeguard the principles-based regulatory model that has enabled
                responsible innovation and reasonable flexibility in
                responding to new market challenges.

      4.  Maintain bipartisan commitment to transparency, public
                participation, and open debate in regulatory decision-
                making.

      5.  Encourage ongoing review of market structure proposals--such as
                event contracts, clearing organization changes, and
                customer bankruptcy protections--to ensure that any market
                structure changes do not undermine our agriculture and
                energy markets.

      6.  Anchor global price benchmarks in U.S. markets subject to U.S.
                oversight and rules, strengthening America's competitive
                position for the benefit of American producers, consumers,
                and communities.

        Thank you again for the opportunity to represent and comment on
    behalf of the Commodity Markets Council, and all commercial end-users
    of these agriculture and energy contracts. We hope you will support a
    fully funded, fully functional CFTC to ensure that our producers,
    merchants, and end-users can continue to fuel, feed, and clothe America
    and a growing market.

        The Chairman. Mr. Prosser, thank you so much for your
    testimony. Ms. Crighton, please begin when you are ready.

            STATEMENT OF ALICIA CRIGHTON, GLOBAL CO-HEAD OF
     FUTURES, HEAD OF OTC AND PRIME CLEARING, GOLDMAN SACHS & CO.
     LLC; CHAIR, BOARD OF DIRECTORS, FUTURES INDUSTRY ASSOCIATION,
                              NEW YORK, NY

        Ms. Crighton. Thank you. Good morning, Chairman Thompson,
    Ranking Member Craig, and Members of the Committee. Thank you
    for the opportunity to testify. I am the Head of the Global
    Clearing Businesses for Goldman Sachs and the Co-Head of its
    global futures business. I am testifying today as Chair of the
    Futures Industry Association, the leading global trade
    organization for the futures options and centrally cleared
    derivatives markets.
        There is tremendous change facing the cleared derivatives
    markets today, especially when compared to 2008 when the CFTC
    was last reauthorized. FIA strongly supports the
    reauthorization of the CFTC as it reinforces the agency's
    mission in safeguarding markets critical to the global economy.
    I have had the privilege of interacting extensively with the
    Commission over many years through FIA, on behalf of Goldman
    Sachs, and as the Chair of the CFTC's Market Risk Advisory
    Committee, and believe that with adequate resources, it is well
    suited for the challenges ahead.
        FIA supports innovation and believes there is tremendous
    potential for technology to benefit all market participants. We
    also believe there are valuable and time-tested risk management
    traits of our current market structure that can play an
    important role in the integration of traditional and novel
    products and platforms. When risk management goes hand in hand
    with innovation, it helps to ensure the broadest participation
    across both retail, end-users, and institutional investors. It
    is to this end that I would like to highlight important
    recommendations we hope the Committee and the Commission will
    consider.
        First, many of the safeguards that exist in the markets
    today are behind the scenes, but critical to customer
    protections and market stability. Futures commission merchants,
    or FCMs, are risk managers that act as the first and last line
    of defense in the clearing system and prevent losses from
    triggering a domino effect that can threaten the stability of
    markets. FCMs are CFTC-regulated intermediaries that stand
    between end-users and the clearinghouses, safeguarding customer
    assets, monitoring for money laundering, and providing
    substantially all of the financial resources in the default
    funds that backstop these clearinghouses. To the degree trading
    platforms offer direct access models, the CFTC should consider
    whether the regulatory environment may also need to evolve to
    safeguard markets and market participants, particularly as
    retail investors are provided direct clearing access on a
    leveraged basis.
        In 2023, I testified before this Committee regarding
    volatility in the commodity derivatives markets and how end-
    users can be better prepared to weather market turbulence. I
    also highlighted how they are finding it harder to secure and
    sustain capacity from their FCMs to clear. I suggested two
    solutions that remain necessary today: adequate clearinghouse
    margin levels and a well-calibrated bank capital regime. I
    elaborate on these points in my written testimony and would be
    happy to discuss them further today.
        Perhaps one of the most notable changes in the CFTC's
    mission over the last 20 years is that it may now oversee
    significantly more leveraged retail investor trading volumes
    than ever before. FIA supports efforts underway by Congress to
    clarify and strengthen the CFTC's authority over digital
    commodities to help ensure retail investors are protected, but
    FIA also recommends that Congress authorize the CFTC to issue
    rules or guidance to require that financial resources used to
    manage the default involving leveraged retail transactions be
    segregated from other default resources in the clearinghouse.
    Such separation could mitigate systemic risk concerns.
        Next, FIA supports provisions in the CLARITY Act intended
    to ensure risk offsets are recognized across both traditional
    and digital asset products that span CFTC and SEC jurisdiction.
    Recognizing such offsets will incentivize hedging activity
    while promoting harmonization between both agencies. Similarly,
    FIA supports provisions in the CLARITY Act to authorize the
    CFTC to carry out a rulemaking to mitigate potential conflicts
    of interest for vertically integrated market participants and
    ensure retail investors remain protected. Rulemaking should
    establish requirements for the identification, mitigation, and
    resolution of these conflicts as they may arise in the context
    of vertically integrated market structures. Finally, FIA
    supports inclusion of the Griffin fix (FR Doc. 2020-28300) as
    it is designed to strengthen customer protections in bankruptcy
    proceedings involving FCMs by ensuring customers have priority
    if there is a shortfall in segregated funds. FIA believes there
    is broad stakeholder support for this provision.
        FIA greatly appreciates the Committee's interest in these
    topics that affect global derivatives markets. It is an honor
    to be with you today, and I look forward to answering your
    questions. Thank you.
        [The prepared statement of Ms. Crighton follows:]

    Prepared Statement of Alicia Crighton, Global Co-Head of Futures, Head
      of OTC and Prime Clearing, Goldman Sachs & Co. LLC; Chair, Board of
             Directors, Futures Industry Association, New York, NY
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee, thank you for the opportunity to testify. I am the head of
    the global clearing business for Goldman Sachs and the co-head of its
    global futures business. I am testifying as Chair of the Futures
    Industry Association (FIA), the leading global trade organization for
    the futures, options and centrally cleared derivatives markets.
        There is tremendous change facing the cleared derivatives markets
    today, especially when compared to 2008 when the CFTC was last
    reauthorized. FIA strongly supports the reauthorization of the CFTC, as
    it reinforces the agency's mission and central role in safeguarding
    markets critical to the global economy. I've had the privilege of
    interacting extensively with the Commission over many years, through
    FIA, on behalf of Goldman Sachs and as Chair of the CFTC's Market Risk
    Advisory Committee and believe that with adequate resources it is well
    suited for the challenges ahead.
        As the Committee undertakes this process, I appreciate the
    opportunity to highlight important recommendations that we hope the
    Committee and the Commission will consider.
    The Role of Futures Commission Merchants (FCMs)
        First, I will provide the Committee with an overview of the
    important role clearing members, or Futures Commission Merchants
    (FCMs), play in global derivatives markets. Through their connectivity
    to exchanges and clearinghouses around the world, clearing members
    provide customers, including agricultural and energy end-users, with
    access to global markets to manage the risks of their operations. For
    example, many FIA members participate in clearinghouses across dozens
    of jurisdictions to ensure their clients can transact in any region in
    which they do business.
        Clearing members are intermediaries, which means they stand between
    an end-user and the clearinghouse, and act as the first and the last
    line of defense in fostering stability in cleared derivatives markets.
    These intermediaries act as a first line of defense by underwriting the
    risk of a client's portfolio before it ever reaches the clearinghouse
    and monitoring that risk on an ongoing basis. This includes determining
    the appropriateness and suitability of leveraged products, monitoring
    clients for money laundering and other risks to market integrity,
    collecting and safeguarding customer margin, and guaranteeing the
    performance of clients to the clearinghouse.
        Perhaps less known is that clearing members are also the last line
    of defense, in the sense that they contribute substantially all the
    financial resources in the default funds that backstop the
    clearinghouses. These default funds are rarely used, but they are
    essential for absorbing losses in the event of a major market
    disruption or a default by a market participant and preventing those
    losses from cascading into a financial crisis.
        Looking at just the five derivatives clearinghouses that operate in
    the U.S., we can see that clearing members contributed $35.7 billion to
    their default funds as of June 2025, the most recent data available.
    That was equivalent to 98.5% of all the money in those default funds.
    If we include three other major international clearinghouses that are
    highly important to end-users in the U.S., namely Eurex, ICE Clear
    Europe and LCH Ltd, we see the same picture. As of June 2025, clearing
    members contributed $61 billion in total to this group of eight
    clearinghouses, equivalent to 98.4% of the total amounts in those
    default funds.
        Clearing members also hold a significant amount of regulatory
    capital, which serves as an additional layer of protection to the
    system that helps ensure clearing members themselves can withstand a
    severe market disruption. The total amount of capital held by the
    clearing members regulated by the CFTC was $169 billion as of September
    2025.
        Together, these financial resources reduce the risk that a major
    market event or default creates wider market contagion, which can put
    financial markets and customer assets at risk.

              Source: FIA CCP Tracker. Data as of June 2025.

        We support innovation and believe there is tremendous potential in
    technology to benefit all market participants. We also believe there
    are valuable and time-tested risk management traits of our current
    market structure that can play an important role in the integration of
    traditional and novel products and platforms. Ensuring risk management
    goes hand in hand with innovation will ensure the broadest
    participation across both retail, end-users and institutional
    investors, and the issues I'd like to raise today are to that end.
    Regulated and Well Capitalized Intermediaries Play an Essential Role in
            Protecting Customers and the Stability of the Market Ecosystem
        First, many of the safeguards that exist in the markets today are
    ``behind the scenes'' but critical to customer protections and market
    stability. Futures Commission Merchants (FCMs) are risk managers that
    play a central role in ensuring the resiliency of the clearing system
    and preventing losses from triggering a domino effect that can threaten
    the stability of the markets. Like regulated exchanges and
    clearinghouses, well capitalized FCMs are a key component of the
    regulatory architecture that have served the derivatives markets well.
    FCMs are CFTC regulated intermediaries that stand between end-users and
    the clearinghouses by guaranteeing the performance of clients to the
    clearinghouse. In addition, FCMs safeguard customer assets, monitor for
    money laundering and other risks to market integrity and provide
    substantially all the financial resources in the default funds that
    backstop the clearinghouses.
        To the degree trading platforms offer direct access models where
    participants can access the exchange or clearinghouse directly, the
    CFTC should consider whether the regulatory environment may also need
    to evolve to sufficiently safeguard markets and market participants.
    This will be especially important as retail investors are provided
    direct clearing access on a leveraged basis.
    Stable, Robust Margin Levels and a Well-Calibrated Capital Regime Will
            Support Access to Global Markets for End-Users and Investors
        In 2023, following the Russian invasion of Ukraine, I testified
    before this Committee regarding volatility in the commodity derivative
    markets and how end-users can be better prepared to weather market
    turbulence. I also spoke to the fact that end-users are finding it
    harder to secure and sustain capacity from their FCMs to clear the full
    extent of their trading volume. I suggested two solutions at that time
    that remain necessary today: adequate clearinghouse margin levels and a
    well-calibrated bank capital regime.
        Clearinghouses collect ``margin'' for the futures contracts that
    energy and agricultural producers use to hedge against fluctuations in
    energy and food prices. Margin is the capital collected in conjunction
    with those contracts to protect against default. In 2023, I highlighted
    how important it is to ensure margin levels are robust and stable over
    time so that end-users, such as ranchers and farmers, are not exposed
    to dramatic spikes in their margin payments during market volatility,
    which in turn helps ensure consumer prices remain stable. Additionally,
    inadequate margin level requirements present risks that are absorbed by
    FCMs--both because of the immense financial resources that FCMs bring
    to bear in supporting the resilience of the clearing system and because
    FCMs often cover margin shortfalls through margin add-ons that
    clearinghouses call from them. Margin adequacy is therefore closely
    tied to the amount of clearing capacity that clearing members can make
    available for end-users. Despite the consensus that emerged in
    recommendations to address margin adequacy by the CFTC's Market Risk
    Advisory Committee in 2021, there has been little progress. We believe
    the CFTC can do more to ensure the adequacy of clearinghouse margin
    models to reduce the negative effects of market volatility on end-users
    and increase their access to clearing.
        Last, bank capital rules dictate the amount of capital clearing
    members must hold. Despite an intentional regulatory push towards
    clearing, the previously proposed Basel III Endgame capital rule took a
    punitive approach that would further limit clearing members' ability to
    provide capacity to the markets. The proposed approach was also
    punitive relative to the international standards, placing U.S. banks at
    a competitive disadvantage in providing clearing services. A re-
    proposal of Basel III Endgame is expected early next year and provides
    an opportunity to ensure that the bank capital regime is appropriately
    calibrated to help support the expansion of clearing, rather than to
    constrain capacity as we see today.
    As More Retail Leveraged Transactions Enter CFTC Markets, Congress
            Should Consider Safeguards for Institutional Investors and
            Hedgers
        Perhaps one of the most notable changes in the CFTC's mission over
    the last 20 years is that it may now oversee significantly more
    leveraged retail investor trading volumes than ever before. FIA
    supports efforts underway by Congress to clarify and strengthen the
    CFTC's authority over digital commodities to help ensure retail
    investors are protected.
        A unique aspect of the derivatives ecosystem is that in the event a
    clearing member defaults, losses are mutually shared by the remaining
    clearing members in what is known as default fund loss mutualization.
    With the increase in leveraged retail transactions, clearing members
    representing institutional end-users will now participate in the same
    default fund as retail investors. FIA recommends that Congress consider
    authorizing the CFTC to issue rules or guidance to require that
    financial resources that would be used to manage the default involving
    leveraged retail transactions be segregated from other default
    resources in the clearinghouse. Such separation could mitigate systemic
    risk concerns and prevent contagion from spreading between retail
    investors trading novel products and end-users and other traditional
    market participants accessing the markets for hedging purposes.
    Portfolio Margining Incentivizes Hedging, Promotes Market Liquidity and
            Fosters Greater Coordination Between CFTC and SEC
        Next, FIA supports provisions in the CLARITY Act intended to ensure
    risk offsets are recognized across both traditional and digital asset
    products that span CFTC and SEC jurisdiction in both the margin and
    bank capital framework. Recognizing such offsets will incentivize
    hedging activity while promoting harmonization between the CFTC and
    SEC.
    Addressing Conflicts of Interest in Vertically Integrated Models Is
            Important To Uphold Market Integrity, Protect Market Stability
            and Instill Confidence in U.S. Markets
        Similarly, FIA supports provisions in the CLARITY Act to authorize
    the CFTC to carry out a rulemaking to mitigate potential conflicts of
    interest for vertically integrated market participants and ensure
    retail investors remain protected. In recent years, there has been a
    distinct trend in derivatives and spot digital asset markets toward
    vertically integrated business models. For example, while the futures
    markets are accustomed to exchanges and clearinghouses under common
    ownership, many new models are structured to extend the ``vertical'' to
    include FCMs and other intermediaries. Further, as envisioned by the
    CLARITY Act, these verticals may grow with the addition of ``digital
    commodity'' exchanges and intermediaries that will be registered with
    the CFTC to provide services in spot cryptocurrency markets.
        These new models may increase the potential--both in practice and
    perception--of substantial conflicts of interest across the mix of
    commercial objectives, regulatory responsibilities and risk management
    processes under one roof. Rulemaking should establish requirements for
    the identification, mitigation, and resolution of conflicts of interest
    as they may arise in the context of vertically integrated market
    structures.
    The ``Griffin Fix'' Will Strengthen Customer Protections in Bankruptcy
        A key measure that has been consistently considered in previous
    reauthorization bills and passed out of both the House and Senate
    Agriculture Committees with bipartisan support is the ``Griffin fix.''
    FIA supports inclusion of the Griffin fix as it is designed to
    strengthen customer protections in bankruptcy proceedings involving
    FCMs by providing legislative certainty for the CFTC's rulemaking
    authority to ensure customers have priority if there is a shortfall in
    segregated funds. FIA believes there is broad stakeholder support for
    this provision, which benefits FCM customers including farmers,
    ranchers, energy producers, and other end-users.
    Conclusion
        FIA greatly appreciates the Committee's interest in these topics
    that affect global derivatives markets. It is an honor to be with you
    today and I look forward to answering your questions.

        The Chairman. Ms. Crighton, thank you so much for your
    testimony. Mr. Schwartz, please begin when you are ready.

            STATEMENT OF ROBERT A. SCHWARTZ, J.D., PARTNER,
      MORGAN, LEWIS & BOCKIUS; FORMER GENERAL COUNSEL, COMMODITY
                      FUTURES TRADING COMMISSION,
                            WASHINGTON, D.C.

        Mr. Schwartz. Thank you. Excuse me. Good morning, Chairman
    Thompson, Ranking Member Craig, Members of the Committee. I am
    Rob Schwartz, a partner in the Futures and Derivatives Practice
    at Morgan, Lewis & Bockius, but more importantly for today's
    purposes, I spent 13 years at the CFTC, including most recently
    as its General Counsel. I had the privilege of being involved
    in some capacity on most major issues before the Commission for
    over a decade.
        I am also the grandson of a farm girl. Years ago, my family
    owned a dairy farm with about five cows in southeast Brooklyn,
    if you can believe it, just a few minutes from what is now
    Kennedy Airport. I looked this up with the state's Department
    of Agriculture and Markets, and there is now just one farm in
    all of New York City, and it grows salad greens and wheatgrass
    in shipping containers, my point being that things change, and
    things are changing for the CFTC, too: new products, new
    technologies, new market participants, and soon, new
    leadership. It is the right time to take a fresh look at the
    statute, the Commodity Exchange Act, and so I thank you for
    your work and the opportunity to appear before you.
        Okay. Now the disclaimer: the views I share are my own and
    do not represent those of Morgan Lewis, my colleagues or
    clients, or any other person or organization. Okay, onward.
        The CFTC is a special agency, and I want to highlight three
    aspects of that. First, the CFTC is a deliberative, bipartisan
    body in the truest sense. Of all the experiences I had during
    my service at the agency, some of the most interesting were the
    times I got to sit behind closed doors with generations of
    Commissioners while they deliberated on critical issues.
    Democrats and Republicans of good faith would debate, sharpen
    their thinking, compromise, and sometimes even change their
    minds. I think if the American people had visibility into that
    like I did, they would be pleased with what Washington is
    capable of. This is a technical field, and partisanship should
    not and typically does not dictate how the CFTC executes its
    mission, and I can tell you that most people who work at the
    CFTC do not care if it is led by Democrats or Republicans. They
    look for leadership, expertise, and problem solving, and they
    do their work with the same dedication no matter what.
        Second, the Commission, when it is at full strength,
    possesses a wealth of knowledge. Congress designed it that way.
    The CEA directs the President to nominate individuals with
    ``demonstrated knowledge in futures trading or regulation of
    one or more of the commodities covered by the statute, and seek
    to ensure balance in those areas.'' It is tall order. The CEA
    definition of commodity, as you probably know, covers anything
    that underlies a futures contract, which means it covers assets
    from cotton and grain to oil and gas, raw materials, precious
    metals, interest rates, credit indices, exchange rates, and now
    cryptocurrency.
        But while achieving that balance is hard, Presidents of
    both parties have succeeded. Commissions I served under
    included experts on agriculture, energy, financial products,
    international business, digital assets, and on and on. The same
    is true of the agency staff. CFTC economists, technical
    experts, lawyers, and others have degrees in everything from
    law and government, to math and hard sciences. They include
    experts in fintech. They come from rural and urban backgrounds.
    Many have served in the military. Together, they have a level
    of skill, knowledge, and discipline worthy of the agency's
    mandate. That matters because there may be no other agency that
    touches so many areas of the economy. As former Chairman
    Tarbert put it, the CFTC is the most important regulator most
    Americans have never heard of.
        Third, and I think because of points one and two, the
    agency is very effective. The Commission's oversight has helped
    to ensure that our derivatives markets have functioned smoothly
    in good times and bad. I am thinking of the collapse of MF
    Global, the disruptions of COVID-19, the War in Ukraine, and
    the fraud at FTX, where the CFTC-regulated subsidiary continued
    to function as normal and the Division of Enforcement held the
    wrongdoers to account. Americans should feel confident that the
    most important little agency they have probably never heard of
    is on the job.
        I will end by saying that as impressive as it is, the CFTC
    can only be as strong, not only as its members and staff, but
    as the Commodity Exchange Act itself, which has made the U.S.
    the global gold standard for derivatives regulation, but old
    statutes are like old friends: you should visit them from time
    to time. It is important that Congress periodically inspect the
    machinery to ensure that it is equal to the task today and
    adaptable for the future. These are times of change, and as we
    sit here, there are probably lurking in labs and laptops around
    the world the seeds of new products and technologies we can't
    imagine, but that the Commission will someday contend with.
    Reauthorization is an important part of making sure the agency
    is always equipped to carry out the mission. So, again, I thank
    the Committee for its work and for the opportunity to assist in
    any way I can.
        [The prepared statement of Mr. Schwartz follows:]

    Prepared Statement of Robert A. Schwartz, J.D., Partner, Morgan, Lewis
         & Bockius; Former General Counsel, Commodity Futures Trading
                          Commission, Washington, D.C.
        Good morning, Chairman Thompson, Ranking Member Craig, and Members
    of the Committee. I am Rob Schwartz, a Partner in the Futures &
    Derivatives Practice at Morgan, Lewis & Bockius. More importantly for
    today's purposes, however, I served at the Commodity Futures Trading
    Commission (CFTC) for thirteen years, including as its General Counsel
    under Chairman Rostin Behnam, and as Acting General Counsel under
    Chairmen Christopher Giancarlo and Heath Tarbert. During the time I
    spent at the agency, I had the privilege of being involved in most
    major issues to come before the Commission, from Dodd-Frank
    implementation and the MF Global bankruptcy to event contracts and the
    agency's first forays into digital assets. And as a longtime staff
    member, I also know how the CFTC functions internally. I hope that I
    can assist you today on either front--on the substance of the Commodity
    Exchange Act (CEA) and the CFTC's regulations, or on the agency's inner
    workings. Thank you for the opportunity to appear before you to support
    your work on CFTC Reauthorization.
        The views I share are my own and do not represent those of Morgan
    Lewis, my colleagues, our clients, or any other person or organization.
        The CFTC is a special agency, and I want to highlight three aspects
    of that.
        First, the CFTC is a deliberative and bipartisan body in the truest
    sense. One of the many priceless sets of experiences I had at the
    agency was to sit many times behind closed doors with generations of
    Commissioners while they debated and deliberated on important questions
    before the agency.\1\ Democrats and Republicans of good faith would
    debate, sharpen their own thinking, compromise, and sometimes even
    convince one another to change their minds.
    ---------------------------------------------------------------------------
        \1\ All such deliberations met the requirements to close a meeting
    under the Government in the Sunshine Act. See 5 U.S.C.  552b.
    ---------------------------------------------------------------------------
        I believe that if the American people had visibility into that,
    they would be pleased to know what Washington is capable of. This is a
    highly technical field, and partisanship should not, and typically does
    not, dictate how the CFTC executes its mission. And from the
    perspective of a former staff member, I can tell you that the people
    who work at the CFTC overwhelmingly do not care if the agency is led by
    Democrats or Republicans. They look for leadership, expertise, and
    skilled problem solving, and they approach their work in the same
    dedicated way no matter what. I was personally fortunate to serve under
    high-quality leaders from both parties.
        Second, I want to highlight the depth and breadth of knowledge that
    the Commission at full strength possesses. Congress designed it that
    way. The CEA directs the President to nominate individuals with
    ``demonstrated knowledge in futures trading or its regulation, or the
    production, merchandising, processing or distribution of one or more of
    the commodities or other goods and articles, services, rights, and
    interests covered by'' the statute and ``seek to ensure that the
    demonstrated knowledge of the Commissioners is balanced'' in those
    areas.\2\
    ---------------------------------------------------------------------------
        \2\ 7 U.S.C.  2(a)(2).
    ---------------------------------------------------------------------------
        That is a tall order. As you know, the CEA contains a sweeping
    definition of ``commodity'' that includes anything that underlies a
    futures contract.\3\ As a result, it covers assets ranging from the
    first seven agricultural commodities that Congress listed in the
    statute, to oil and gas; raw materials; precious metals; interest
    rates; credit indices; and exchange rates. Ten years ago, crypto joined
    the list.\4\
    ---------------------------------------------------------------------------
        \3\ Id.  1a(9).
        \4\ CFTC Rel. No. 7231-15, CFTC Orders Bitcoin Options Trading
    Platform Operator and its CEO to Cease Illegally Offering Bitcoin
    Options and to Cease Operating a Facility for Trading or Processing of
    Swaps without Registering (Sept. 17, 2015).
    ---------------------------------------------------------------------------
        But despite the difficulty of achieving balance in those areas,
    during my tenure, Presidents of both parties achieved the goal. The
    Commissions under which I served included experts on agriculture,
    energy, financial products, international business, digital assets, and
    a great deal more. That matters, because there may be no other agency
    that touches so many areas of the economy. As former Chairman Tarbert
    put it, the CFTC is ``the most important regulator most Americans have
    never heard of.'' \5\
    ---------------------------------------------------------------------------
        \5\ Statement of Chairman Heath P. Tarbert Before the December 10,
    2019 Open Meeting (December 10, 2019), https://www.cftc.gov/PressRoom/
    SpeechesTestimony/tarbertstatement121019.
    ---------------------------------------------------------------------------
        That is all before I get to the agency's staff. CFTC economists,
    technical experts, lawyers, and others come from rural and urban
    backgrounds; have degrees that run the gamut from government and law to
    mathematics and hard sciences; include experts in digital assets; and
    in many cases have served in the military. Collectively, they bring a
    level and diversity of skill, expertise, and discipline worthy of the
    agency's mandate. As General Counsel, I relied on them heavily, and now
    as a member of the private bar, my clients are glad they are there.
        Third, and I believe as a result of points one and two, the agency
    is extremely effective. The Commodity Exchange Act and the people who
    administer it have ensured that this country's derivatives markets have
    continued to function smoothly through good times and bad. I mentioned
    the collapse of MF Global, where $1.6 billion in customer assets went
    temporarily missing but eventually were repaid; \6\ there was also the
    massive disruption to our economy from COVID-19, including when the
    price of oil dipped below zero; \7\ Russia's invasion of Ukraine; and
    the fraud at FTX, where the CFTC-regulated subsidiary was untouched and
    continued to function as normal, and the Division of Enforcement held
    the wrongdoers to account.\8\ Americans can feel confident that the
    most important little agency they probably have never heard of is on
    the job.
    ---------------------------------------------------------------------------
        \6\ Congressional Research Service, The MF Global Bankruptcy,
    Missing Customer Funds, and Proposals for Reform, at 2 (Aug. 1, 2013).
        \7\ Congressional Research Service, Crude Oil Futures Prices Turn
    Negative, at 1 (Apr. 22, 2020).
        \8\ CFTC Rel. No. 8638-22, CFTC Charges Sam Bankman-Fried, FTX
    Trading and Alameda with Fraud and Material Misrepresentations (Dec.
    13, 2022).
    ---------------------------------------------------------------------------
              * * * * *
        I will conclude by saying that as impressive as it is, the CFTC can
    only be as strong as, not only its members and its staff, but the
    Commodity Exchange Act itself. With the benefit of the CEA, the United
    States has become the gold standard for derivatives regulation
    worldwide. But old statutes are like old friends--you should visit them
    from time to time. It is critical that Congress periodically inspect
    the machinery to ensure that it is equal to the task today and
    adaptable to the challenges waiting over the horizon. As we sit here,
    there probably are lurking in labs and laptops around the world the
    seeds of new products and technologies that we cannot imagine, but that
    the Commission someday will contend with. Reauthorization is a part of
    making sure the agency is always equipped to carry out the mission.
        I thank the Committee for its work and for the opportunity to
    assist in any way that I can.

        The Chairman. Mr. Schwartz, thank you so much for your
    testimony. Mr. Schiffrin, please proceed when you are ready.

         STATEMENT OF BENJAMIN L. SCHIFFRIN, J.D., DIRECTOR OF
       SECURITIES POLICY, BETTER MARKETS, INC., WASHINGTON, D.C.

        Mr. Schiffrin. Good morning, Chairman Thompson, Ranking
    Member Craig, and Members of the Committee. Thank you for the
    invitation to testify today. My name is Ben Schiffrin, and I am
    the Director of Securities Policy at Better Markets. Better
    Markets is a nonprofit, nonpartisan, and independent
    organization founded in the wake of the 2008 financial crisis
    to promote the public interest in the financial markets,
    support the financial reforms of Wall Street, and make the
    financial system work for all Americans again.
        This year marks the 50th anniversary of the creation of the
    CFTC. Its 50 year history demonstrates that the agency is
    deeply rooted in and skilled at supporting producers in our
    agricultural markets, but also capable of responding to new and
    emerging issues in the financial marketplace, but only if given
    the appropriate authorities and resources by Congress. When
    Congress fails to provide the proper support for market
    oversight, novel products emerge and gaps develop, and even a
    willing and able CFTC is unable to meet the moment. When this
    happens, it leads to disastrous consequences for investors,
    customers, producers, and the wider economy.
        A CFTC that has the appropriate regulatory authority and
    resources is critical because the CFTC's core mission is of
    vital importance. The agency polices the integrity of
    derivatives markets in order to help producers, like farmers,
    ranchers, and manufacturers, hedge risk and develop accurate
    prices for their products. The CFTC is responsible for the
    essential functions of providing relevant information to the
    public, preventing fraud in trading, and curbing financial
    speculation unrelated to natural supply and demand. These
    functions matter to every American because they impact the
    price of everything, from the cereal they eat for breakfast, to
    the bread they need for school lunches, to the gas in their
    cars to get to work, and the oil that heats their homes.
        At a time when all Americans are fighting to make ends meet
    and suffering from an affordability crisis, it is critical that
    the CFTC focus on its primary mission to ensure that those
    everyday commodities are available to the American people in
    the right amounts, at the right time, at the right and fair
    prices. Unfortunately, the CFTC has strayed from its core
    mission. The agency now seems to be spending all of its time on
    the crypto markets. From a sheer market size perspective, this
    focus represents a mismatched use of resources. While the
    global crypto market is estimated to be just over $3 trillion,
    the CFTC separately is responsible for overseeing $380 trillion
    in notional U.S. swaps and futures contracts. Being the leading
    promoter of crypto is a distraction for the CFTC that the
    American people simply cannot afford.
        The CFTC is also taking on significant new responsibilities
    it is ill-equipped to handle with prediction markets. Better
    Markets has been warning for years that prediction market
    platforms are trying to thwart state and Tribal laws by
    asserting that the event contracts they offer on politics and
    sports are not, in fact, gambling, despite the fact that they
    let people bet on elections and sporting events. These efforts
    have accelerated in recent months and threaten everything, from
    the CFTC having the bandwidth to police traditional markets, to
    consumers losing the protections they deserve.
        The CFTC's focus on crypto and prediction markets is
    especially problematic for its ability to fulfill its core
    mission because the agency is already under-funded and
    understaffed. The agency has only been funded by Congress at
    its requested level twice--once in Fiscal Year 2021 and once in
    Fiscal Year 2023--and it is forced to oversee the $380 trillion
    in notional U.S. swaps and futures contracts with a budget of
    just $365 million. Reporting from Bloomberg also indicates that
    at least 15 percent of staff has been shed since the beginning
    of the Trump Administration, yet new areas of oversight, such
    as crypto and prediction markets, will require not only the
    addition of new staff, but also new data metrics and
    surveillance tools.
        The sheer lack of Commissioners serving at the CFTC and its
    absence of bipartisan leadership further exacerbate the
    agency's difficulties with fulfilling its core mission. The
    CFTC has been led by one Commissioner in an acting chair
    capacity since September 2025, yet the CFTC was designed to be
    a five-member bipartisan Commission. The need for a full,
    bipartisan Commission is heightened during a time when
    policymakers are considering significantly expanding the
    jurisdictional reach of the agency. The agency should not move
    forward with future rulemaking or guidance efforts until the
    CFTC has both a permanent chair and robust bipartisan
    representation amongst the Commissioners.
        Thank you, and I look forward to your questions.
        [The prepared statement of Mr. Schiffrin follows:]

        Prepared Statement of Benjamin L. Schiffrin, J.D., Director of
           Securities Policy, Better Markets, Inc., Washington, D.C.
        Good morning, Chairman Thompson, Ranking Member Craig, and Members
    of the Committee. Thank you for the invitation to testify today. My
    name is Benjamin Schiffrin, and I am the Director of Securities Policy
    at Better Markets, Inc., a nonprofit, nonpartisan, and independent
    organization founded in the wake of the 2008 financial crisis to
    promote the public interest in the financial markets, support financial
    reforms of Wall Street, and make the financial system work for all
    Americans.
    I. Introduction
        This year, 2025, marks the 50th anniversary of the creation of the
    Commodity Futures Trading Commission (``CFTC''). Now is an important
    time for the Committee to consider how to build upon the long history
    of the agency and work towards reauthorization legislation, the last of
    which expired at the end of the fiscal year (``FY'') in 2013.\1\ Today
    I will raise a number of issues related to the CFTC worthy of
    consideration in your legislative effort.
    ---------------------------------------------------------------------------
        \1\ Congressional Research Service. ``Commodity Futures Trading
    Commission: Proposed Reauthorization in the 114th Congress.'' CRS
    Report 44231, August 3, 2016. Available at: https://
    www.everycrsreport.com/reports/R44231.html.
    ---------------------------------------------------------------------------
    History of the CFTC
        Recognizing the growing complexity, importance and volume of the
    commodity futures markets, Congress enacted the Commodity Futures
    Trading Commission Act in 1974, providing for the agency to be
    established the next year. This legislative effort grew out of a long
    history of policymakers responding to public demand for more oversight
    of the essential markets that help create prices for everyday
    essentials like cotton, rice, mill feeds, butter, eggs, potatoes and
    grains--and later, metals and energy products. Reflecting the necessity
    for a dedicated, independent regulator for these quickly expanding
    market areas, Congress shifted oversight out of the U.S. Department of
    Agriculture (``USDA'') and into an expert agency with exclusive
    jurisdiction over futures trading in a wide range of commodities.
        Later, in the 1990s, markets continued to evolve and were met with
    increasing complexity and the onset of several market manipulation
    scandals.\2\ Then, late in the decade, the use of financial derivatives
    grew both in size and complexity. These new financial products,
    allowing financial firms to make leveraged bets on the performance of
    financial assets like mortgages, were exempted from regulation under a
    1993 interpretation of the Commodities Exchange Act (``CEA'') by the
    CFTC.\3\ Seeing this market explosion and fearing future financial
    instability, in 1998, the CFTC Chair Brooksley Born put out for comment
    a Concept Release for feedback that solicited the public's views on
    amending the 1993 loophole and applying a regulatory framework to
    financial derivatives using existing authorities of the agency.\4\
    ---------------------------------------------------------------------------
        \2\ Dumas, Cantrell. ``Origins of the CFTC: Protecting the
    Integrity of Commodity Markets.'' Better Markets, April 21, 2025.
    Available at: https://bettermarkets.org/wp-content/uploads/2025/04/
    Fact_Sheet_Origins_of_CFTC-4.18.25.pdf.
        \3\ Commodity Futures Trading Commission. ``Over-the-Counter
    Derivatives: Concept Release.'' Fed. Reg. 26114, May 12, 1998.
    Available at: https://www.cftc.gov/sites/default/files/opa/press98/
    opamntn.htm.
        \4\ Id.
    ---------------------------------------------------------------------------
        Unfortunately, instead of responding to these emerging risks,
    Congress instead first passed a 6 month moratorium on the CFTC
    exercising oversight of financial derivatives and then enacted the
    Commodity Futures Modernization Act of 2000 (``CFMA''). This
    legislation foreclosed the CFTC's ability to regulate these ``over-the-
    counter'' derivatives by explicitly exempting them from oversight.\5\
    ---------------------------------------------------------------------------
        \5\ For a discussion of the history that led to the passage of the
    CFMA, see Fischer, Amanda. ``We've Seen this Movie Before.'' Better
    Markets, September 25, 2025. Available at: https://bettermarkets.org/
    wp-content/uploads/2025/09/Weve-Seen-This-Movie-Before-Crypto-Fact-
    Sheet-9.25.25.pdf.
    ---------------------------------------------------------------------------
    New Authorities After the Global Financial Crisis
        The regulatory gaps created by this forbearance ultimately
    culminated in the 2008 global financial crisis, when financial
    derivatives operating in the shadows amplified the risks associated
    with predatory, subprime mortgage lending and threatened global
    economic stability. Congress then responded by passing the Dodd-Frank
    Wall Street Reform Act of 2010 (``Wall Street Reform''), which provided
    the CFTC with the responsibility to oversee these previously opaque
    financial instruments.\6\ This included new mandates for trading
    transparency, trade reporting, business conduct standards, registration
    of swap dealers and major swap participants and central clearing.\7\
    ---------------------------------------------------------------------------
        \6\ P.L. 111-203.
        \7\ Id., Title VII.
    ---------------------------------------------------------------------------
        In short, the 50 year history of the CFTC demonstrates that the
    agency is both deeply rooted in, and skilled at, supporting producers
    in our agricultural markets, but also capable of responding to new and
    emerging issues in the financial marketplace--but only if given the
    appropriate authorities and resources by Congress. When Congress fails
    to provide the proper support for market oversight, novel products
    emerge and gaps develop, and even a willing and able CFTC is unable to
    meet the moment. When this happens, it leads to disastrous consequences
    for investors, customers, producers and the wider economy.
    II. A Critical Moment for the CFTC
    A Volatile Moment for Producers and Consumers
        Now is a critical moment for the core mission of the CFTC.
    Agricultural markets are facing significant strain due to a multitude
    of factors, including the imposition of tariffs, a trade war that makes
    the export market more difficult and Administration immigration policy,
    which has created labor disruptions in some parts of the industry.\8\
    For example, according to the American Soybean Association, ``growers
    find themselves in a precarious position as the 2025 harvest season
    wraps up . . . November futures prices were between 25 percent to 30
    percent lower than at the same point in 2022.'' \9\ The Association
    likewise reports that the affordability crisis facing so many Americans
    is also being felt by farmers, with ``elevated prices for land,
    machinery, seeds, pesticides and fertilizers.'' \10\ A September 2025
    survey from the National Corn Growers Association (``NCGA)'' reveals
    that 46 percent of U.S. farmers believe the nation is nearing a farm
    crisis and 65 percent are more concerned about finances than they were
    a year ago.\11\ And while the cattle market is experiencing generally
    strong performance, the cattle futures market has experienced
    significant volatility, with record highs soon followed by markets
    hitting ``limit down'' thresholds--or fail safes designed to mitigate
    market panics--on news of the Administration potentially opening up
    [Argentinean] beef imports.\12\
    ---------------------------------------------------------------------------
        \8\ Schulz, Bailey. ``American farmers warn this year feels
    especially dire. What happens next?'' USA Today, September 15, 2025.
    Available at: https://www.usatoday.com/story/money/2025/09/15/farmers-
    corn-soybean-economic-pressures-profits/86091737007/.
        \9\ Holland, Jacquie and Scott Gerlt, Ph.D. ``The Rising Cost
    Squeeze: Soybean Farmers Face a Third Year of Losses.'' American
    Soybean Association, December 3, 2025. Available at: https://
    soygrowers.com/news-releases/the-rising-cost-squeeze-soybean-farmers-
    face-a-third-year-of-losses/.
        \10\ Id.
        \11\ Eckelkamp, Margy. ``Farmers Alarmed: U.S. Nearing Agricultural
    Economic Crisis--Steps to Reverse Course.'' AgWeb.com, September 18,
    2025. Available at: https://www.agweb.com/news/business/farmers-
    alarmed-u-s-nearing-agricultural-economic-crisis-steps-reverse-course.
        \12\ Rook, Michelle. ``Did the Administration's Plan to Lower Beef
    Prices Wreck the Bull Run in the Cattle Market?'' Drovers, November 17,
    2025. Available at: https://www.drovers.com/news/industry/did-
    presidents-plan-lower-beef-prices-wreck-bull-run-cattle-prices.
    ---------------------------------------------------------------------------
        These financial strains are starting to have a downstream impact.
    In the second quarter of 2025, the Federal Reserve Bank of Minneapolis
    reported that 93 farm operations filed for bankruptcy, up from 88 in
    the first quarter of 2025 and nearly double the 47 at the end of
    2024.\13\ Separate data from Bloomberg found that when counting small
    farms and fisheries, bankruptcies were at a 5 year high as of the
    summer of 2025, with producers citing ``higher interest rates, Trump's
    trade war and dramatically reduced demand from China.'' \14\
    ---------------------------------------------------------------------------
        \13\ Mahon, Joe. ``Farm bankruptcies have increased in the Ninth
    District, keeping some farmers afloat.'' Federal Reserve Bank of
    Minneapolis, September 25, 2025. Available at: https://
    www.minneapolisfed.org/article/2025/farm-bankruptcies-have-increased-
    in-the-ninth-district-keeping-some-farmers-afloat.
        \14\ Church, Steven and Ilena Peng. ``Trade Wars, Rates Push U.S.
    Small Farm Bankruptcies to 5-Year High.'' Bloomberg, July 23, 2025.
    Available at: https://www.bloomberg.com/news/articles/2025-07-23/
    america-small-farmers-are-hurting-with-trump-policies-loan-
    woes?sref=mQv
    UqJZj.
    ---------------------------------------------------------------------------
        Likewise, American consumers continue to feel the pinch in grocery
    stores, with prices continuing to rise with both tariffs and the
    Administration's immigration policies at least in part driving the
    increases.\15\ Increases in prices in some grocery items have been
    particularly high and exceeded the general rate of inflation--including
    certain cuts of beef, (20 percent year-over-year rise), chicken breast
    and bacon (five percent), iceberg lettuce (21 percent), bananas (nine
    percent), orange juice (12 percent) and coffee (41 percent).\16\
    ---------------------------------------------------------------------------
        \15\ Dale, Daniel. ``Fact check: Grocery prices are up, not `way
    down' as Trump claimed.'' CNN, October 24, 2025. Available at : https:/
    /www.cnn.com/2025/10/24/politics/fact-check-grocery-prices-trump.
        \16\ Martichoux, Alix. ``These 9 grocery staples have seen the
    biggest price spikes this year.'' The Hill, November 19 2025. Available
    at: https://thehill.com/homenews/nexstar_media_wire/5613092-these-9-
    grocery-staples-have-seen-the-biggest-price-spikes-this-year/.
    ---------------------------------------------------------------------------
        Producers and traders alike are further hamstrung by other recent
    policies. The government shutdown left producers without critical
    market data produced by the USDA and CFTC.\17\ This was in addition to
    pre-existing fragilities in USDA data, with DOGE-driven cuts shrinking
    the ranks of USDA staff by 15 percent and cutting off critical
    statistics useful to farmers and traders.\18\
    ---------------------------------------------------------------------------
        \17\ Polansek, Tom, P.J. Huffstutter and Karl Plume. ``Farmers,
    Traders `Flying Blind' As U.S. Shutdown Blocks Key Crop Data.''
    Reuters, October 9, 2025. Available at: https://www.reuters.com/world/
    china/farmers-traders-flying-blind-us-shutdown-blocks-key-crop-data-
    2025-10-09/.
        \18\ Huffstutter, P.J. ``Corn, debt and doubt: A record harvest
    rattles Trump's farm economy.'' Reuters, October 25, 2025. Available
    at: https://www.reuters.com/investigations/corn-debt-doubt-record-
    harvest-rattles-trumps-farm-economy-2025-10-25/.
    ---------------------------------------------------------------------------
    The Role of the CFTC
        Recognizing the strain caused by increasing grocery prices, just
    this week, President Trump signed an Executive Order to ``stop price
    fixing, anti-competitive behavior, and foreign influence that drives up
    grocery prices and threatens the security of America's food supply.''
    \19\ The Executive Order established a Food Supply Chain Task Force and
    called for the Department of Justice and the Federal Trade Commission
    to investigate price fixing and anti-competitive across the food
    sector.\20\
    ---------------------------------------------------------------------------
        \19\ Executive Order. ``Addressing Security Risks from Price Fixing
    and Anti-Competitive Behavior in the Food Supply Chain.'' December 6,
    2025. Available at: https://www.whitehouse.gov/presidential-actions/
    2025/12/addressing-security-risks-from-price-fixing-and-anti-
    competitive-behavior-in-the-food-supply-chain/.
        \20\ Id.
    ---------------------------------------------------------------------------
        While the CFTC does not directly regulate commodity prices, the
    agency does have a crucial role in policing the integrity of
    derivatives markets in order to help producers like farmers, ranchers
    and manufacturers hedge risk and develop accurate prices for their
    products. The Commission is responsible for the essential functions of
    providing relevant information to the public, preventing and policing
    fraud in trading, and curbing financial speculation unrelated to
    natural supply and demand forces in the economy.
        On this last point, Better Markets has long urged the CFTC to use
    its authority to surveil excessive speculation in commodity futures
    markets. Though the Commission enacted an updated ``position limits''
    rule, effective in 2021, to ensure that commodity futures prices
    reflected true supply and demand, rather than excess speculation,
    many--including Better Markets and two CFTC Commissioners at the time--
    argued that the rule set limits too high or were too narrowly applied
    to effectively police markets.\21\ Since then, Better Markets has
    argued for the CFTC to publicly disclosed the impact of the limits set
    in the 2021 rule, on a commodity-by-commodity basis, to determine
    whether the rule was functioning as intended.\22\
    ---------------------------------------------------------------------------
        \21\ Hall, Stephen. ``Leadership on Position Limits for Physical
    Commodities.'' Letter to CFTC Chair Rostin Behnam, November 10, 2021.
    Available at: https://bettermarkets.org/wp-content/uploads/2022/07/Ltr-
    CFTC-Re-Position-Limits-11-10-2021.pdf; see also dissents on the 2020
    final position limits rule including those by Behnam, Rostin.
    ``Statement of Dissent of Commissioner Rostin Behnam Regarding Position
    Limits for Derivatives.'' Commodity Futures Trading Commission, October
    15, 2020. Available at: https://www.cftc.gov/PressRoom/
    SpeechesTestimony/behnamstatement101520c; and Berkovitz, Dan.
    ``Dissenting Statement of Commissioner Dan M. Berkovitz Regarding Final
    Rule on Position Limits for Derivatives.'' Commodity Futures Trading
    Commission, October 15, 2020. Available at: https://www.cftc.gov/
    PressRoom/SpeechesTestimony/berkovitzstatementb101520b.
        \22\ Cantrell, Dumas. ``How Wall Street Excessive Speculation
    Impacts Your Grocery Bill.'' The Public Interest by Better Markets, May
    15, 2025. Available at: https://bettermarkets.substack.com/p/how-wall-
    street-excessive-speculation.
    ---------------------------------------------------------------------------
        The CFTC using its authority to ensure the sound functioning of
    core agricultural markets is not a partisan endeavor. During the first
    Trump Administration, in fact, the CFTC recognized this imperative
    during a time of volatile commodity prices and launched a special
    effort to combat market manipulation in agricultural markets.\23\
    During the onset of the COVID-19 pandemic, CFTC leadership under
    President Trump announced that it was their number one duty to
    ``monitor closely and prioritize agricultural and energy markets.''
    \24\ A renewed and reinvigorated focus on these issues would be
    welcomed in the current moment and consistent with the President's
    recent Executive Order.
    ---------------------------------------------------------------------------
        \23\ Zuckerman, Jason and Matthew Stock. ``Agricultural Price
    Manipulation and the CFTC Whistleblower Program.'' National Law Review,
    May 27, 2020. Available at: https://natlawreview.com/article/
    agricultural-price-manipulation-and-cftc-whistleblower-program.
        \24\ Tarbert, Heath. ``Opening Statement of Chairman Heath P.
    Tarbert Regarding the CFTC's Further Response to the Coronavirus
    Pandemic.'' Commodity Futures Trading Commission, May 28, 2020.
    Available at: https://www.cftc.gov/PressRoom/SpeechesTestimony/
    tarbertstate
    ment052820.
    ---------------------------------------------------------------------------
    III. Priorities, Leadership, Staffing and Budget of the CFTC
    Misplaced Priorities
        As described above, the core constituencies that the CFTC is meant
    to serve are facing a time of anxiety. Unfortunately, at the same time,
    CFTC leadership has strayed from serving the needs of agricultural and
    commercial producers and consumers in favor of spending nearly all of
    the agency's time on crypto markets. From a sheer market size
    perspective, this focus represents a mismatched use of resources. While
    the global crypto market is estimated to be just over $3.1
    trillion,\25\ the CFTC separately is responsible for overseeing $380
    trillion in notional U.S. swaps and futures contracts.\26\
    ---------------------------------------------------------------------------
        \25\ ``Global Cryptocurrency Market Cap Charts.'' CoinGecko,
    accessed December 6, 2025. Available at: https://www.coingecko.com/en/
    charts.
        \26\ [S]ee page 33, Commodity Futures Trading Commission.
    ``President's Budget: FY2026.'' Available at: https://www.cftc.gov/
    sites/default/files/CFTC_FY2026_Presidents_Budget.pdf.
    ---------------------------------------------------------------------------
        The best way to gauge an agency's priorities is to examine how its
    leaders spend their time. Acting Chair Caroline Pham has not published
    her external schedule since December 2023.\27\ This deviates from past
    practice under both Republican and Democratic Administrations and makes
    it difficult to state with precision how much time she's spent on core
    agricultural and manufacturing constituencies versus the crypto
    industry. However, a look at the ``Events'' page on the CFTC website
    indicates that while Acting Chair, Pham has participated in 34 speaking
    events, 19 of which were exclusively devoted to the topic of
    crypto.\28\ The 15 other events appear to have at least partially
    covered crypto, though it is difficult to tell given the limited
    information on the CFTC's website.\29\ Acting Chair Pham in the last 11
    months has also engaged in speaking events in Seoul, South Korea;
    Riyadh, Saudi Arabia; London, United Kingdom (twice); Tokyo, Japan
    (twice); Netherlands; Qatar; and Frankfurt, Germany. Domestically, her
    schedule indicates travel to New York City, Chicago, Beverly Hills and
    Ft. Lauderdale, Boca Raton, and Naples, Florida.\30\
    ---------------------------------------------------------------------------
        \27\ Commodity Futures Trading Commission. ``Commissioner Pham
    Public External Calendar.'' Accessed December 6, 2025. Available at:
    https://www.cftc.gov/About/Commissioners/CarolineDPham/
    PublicExternalCalendar; this is contrasted with both previous CFTC
    leadership and Acting Chair Mark Uyeda of the Securities and Exchange
    Commission, who published his external calendar for the duration of his
    service as the acting leader of the Commission. See: ``Chairman's
    Calendar for Acting Chairman Mark T. Uyeda.'' Securities and Exchange
    Commission, accessed December 6, 2025. Available at: https://
    www.sec.gov/foia-services/frequently-requested-documents/sec-chair-
    calendar.
        \28\ This is based on an assessment of events on the CFTC's events
    public webpage, available at: https://www.cftc.gov/PressRoom/Events.
        \29\ Id.
        \30\ Id., examining the location of the events attended by Acting
    Chair Pham on the CFTC's public webpage.
    ---------------------------------------------------------------------------
        While there is nothing wrong, per se, about an American financial
    regulator traveling domestically or abroad to share the CFTC's
    perspective on market competitiveness and oversight, the travel
    scheduled described above--in terms of both the topics represented and
    the places traveled--is a useful indicator of the Acting Chair's
    priorities. Absent from this list of travel are locations where
    American farmers and ranchers live and work, which provides a notable
    lack of perspective to inform the CFTC's priorities.
    Bipartisan Leadership
        The CFTC is also impaired by both the sheer lack of Commissioners
    serving at the agency and its absence of bipartisan leadership.
        Notably, the CFTC has been led by one Commissioner, in an Acting
    Chair capacity, since September 2025. While a nominee for Chair of the
    Commission has been considered by the U.S. Senate Committee on
    Agriculture, he is not yet confirmed by the full Senate.\31\ Further,
    the current Acting Chair has announced her intention to leave the
    agency upon the permanent Chair's confirmation,\32\ meaning the agency
    is likely to have one and only one Commissioner, at least in the near-
    term.
    ---------------------------------------------------------------------------
        \31\ Sittu, Hassan. ``Trump's CFTC Pick Clears Senate Hurdle--
    Caroline Pham's Exit Imminent?'' Yahoo! Finance, November 21, 2025.
    Available at: https://finance.yahoo.com/news/trump-cftc-pick-clears-
    senate-113944928.html.
        \32\ Id.
    ---------------------------------------------------------------------------
        The CFTC was designed by Congress to be a five-member, bipartisan
    Commission. The need for a full Commission with genuine bipartisan
    representation consistent with tradition, history, practice, and
    precedent is heightened during a time when the White House and some in
    Congress are considering significantly expanding the jurisdictional
    reach of the agency. The agency should not move forward with future
    rulemaking or guidance efforts until the CFTC has both a confirmed
    Chair and robust bipartisan representation amongst Commissioners.
    Budget
        Though the CFTC's mission is vital to every American, the agency's
    budget demonstrates that it is small, poorly funded and likely
    overwhelmed by the remit of markets it is supposed to regulate and
    police. The agency has only been funded by Congress at its requested
    level twice since FY06--once in FY21 and in FY23.\33\ And as stated
    previously, the CFTC is responsible for overseeing $380 trillion in
    U.S. notional swaps and futures contracts with just a $365 million
    budget.\34\ This does not even include potentially new areas of
    oversight such as crypto \35\ and prediction markets,\36\ which will
    require not only the addition of new staff but also new data metrics
    and surveillance tools.
    ---------------------------------------------------------------------------
        \33\ U.S. Senate Committee on Agriculture. ``Oversight of the
    Commodity Futures Trading Commission.'' Questions from Senator Dick
    Durbin to CFTC Chair Rostin [Behnam,] March 8, 2023. Available at:
    https://www.agriculture.senate.gov/hearings/oversight-of-the-commodity-
    futures-trading-commission-03-08-2023.
        \34\ Supra note 26, page 4.
        \35\ Supra note 25.
        \36\ See one estimate of nearly $28 billion in prediction market
    contract volume from January to October 2025. Crypto.com. ``Prediction
    Markets: The Rise of Event-Driven Finance.'' November 10, 2025.
    Available at: https://crypto.com/us/research/prediction-markets-oct-
    2025.
    ---------------------------------------------------------------------------
        The 2008 global financial crisis likely cost Americans $20 trillion
    in lost Gross Domestic Product output as well as lost wages due to
    unemployment and underemployment, foreclosures, homelessness,
    underwater mortgages, bankrupt businesses large and small, lost
    savings, deferred or denied retirements, and educations cut short.\37\
    Given that staggering economic and personal harm to American families,
    an investment in preventing the next crash by adequately funding the
    CFTC seems like a sensible downpayment. While CFTC funding has
    increased modestly over the years, it still pales in comparison to the
    vast markets the agency oversees. In terms of full-time equivalents
    (FTEs), 50 years ago in 1975 the CFTC had 502 employees.\38\ The
    President's budget request in FY26 asked for only 650 FTEs \39\--a
    minimal increase given the passage of time, increasing complexity of
    markets, and expanded remit of the agency. Below is a table tracking
    CFTC appropriations over time, taken from Presidential budget requests.
    ---------------------------------------------------------------------------
        \37\ Better Markets. ``Cost of the Crisis Report.'' July 2015.
    Available at: https://bettermarkets.org/wp-content/uploads/2021/07/
    Better-Markets-Cost-of-the-Crisis_1.pdf.
        \38\ See Commodity Futures Trading Commission. ``Significant Dates
    in CFTC History.'' Available at: https://www.cftc.gov/sites/default/
    files/reports/strategicplan/2012/2012strategicplan
    app0201.html.
        \39\ Supra note 26, page 3.
    ---------------------------------------------------------------------------
    CFTC Budget Authority
    2012-2025

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Various legislative efforts related to crypto have proposed an
    increase in funding for the agency, but legislative text has not been
    specific about the exact increase in appropriations.\40\ And while
    legislation allows for the collection of fees on market participants to
    fund the agency's new crypto work, those provisions may sunset after
    only a few years. Policymakers must adequately fund the Commission with
    robust, fee-funded and new appropriations--in perpetuity--if they are
    shifting significant market oversight for a retail-heavy asset class to
    the agency. One previous estimate from the CFTC projected that this
    would cost approximately $127 million annually.\41\ This additional
    funding must come in addition to halting the staffing cuts described in
    the next section.
    ---------------------------------------------------------------------------
        \40\ See H.R. 3633, the Digital Asset Market Clarity Act and the
    Senate-introduced legislation released by Senators Boozman and Booker
    on November 10, 2025. Available at:https://www.agriculture.senate.gov/
    newsroom/rep/press/release/boozman-booker-release-bipartisan-market-
    structure-discussion-draft.
        \41\ Supra note 33.
    ---------------------------------------------------------------------------
    Staff Cuts
        At a time when producers are feeling keenly anxious about the
    health and longevity of their businesses, and American households
    continue to be squeezed by the prices of everyday staples, it is not
    the time for the agency to shed its staff or shift its focus to market
    areas that are relevant but tangential to their core mission.
        Reporting from Bloomberg indicates that at least 15 percent of
    staff has been shed since the beginning of the Trump
    Administration.\42\ Current and former staff interviewed for the report
    indicate a ``regulator in disarray''--a troubling sentiment given the
    increased staff responsibilities accruing to the agency through
    Administration actions related to crypto and prediction markets.\43\
    ---------------------------------------------------------------------------
        \42\ Beyoud, Lydia, Nicola M. White and Liam Vaughn. ``Staff Cuts
    and Turmoil Hit the CFTC While the Crypto It Oversees Booms.''
    Bloomberg, August 21, 2025. Available at: https://www.bloomberg.com/
    news/features/2025-08-21/as-crypto-duties-loom-cftc-is-hit-by-staff-
    cuts-and-turmoil.
        \43\ Id.
    ---------------------------------------------------------------------------
        Further, the Acting Chair removed both the head of human resources
    and the chief financial officer of the agencies, with reporting
    asserting that individuals were investigating employee complaints
    regarding a hostile work environment created by Pham and disagreements
    about agency reimbursement for travel, respectively.\44\ A spokesperson
    for the Acting Chair asserts that the dismissals were due to unrelated
    factors.\45\ In any case, this staff attrition and turbulence surely
    does not serve the agency during this complex and busy time.
    ---------------------------------------------------------------------------
        \44\ Beyoud, Lydia. ``CFTC Acting Chair Pham Removes the HR Head
    Investigating Her.'' Bloomberg, February 6, 2025. Available at: https:/
    /www.bloomberg.com/news/articles/2025-02-06/cftc-acting-chair-pham-
    removes-the-hr-head-investigating-her?sref=mQvUqJZj.
        \45\ See statement attributable to a CFTC spokesperson in response
    to Bloomberg reporting, ``CFTC Statement on False Allegations Targeting
    Acting Chairman.'' Commodity Futures Trading Commission, February 6,
    2025. Available at: https://www.cftc.gov/PressRoom/PressReleases/9048-
    25.
    ---------------------------------------------------------------------------
    IV. Enforcement
        A combination of data, anecdotal reports and policy changes
    announced at the CFTC make clear that the law enforcement mission of
    the agency has been subordinated to concerns about creating a more
    solicitous relationship with market participants. A look at both data
    and reporting indicates that the judgement of the enforcement staff has
    been largely silenced, cases are not being brought, whistleblowers are
    not being rewarded for raising relevant noncompliance information and
    policy changes are seeking to tilt the law enforcement process in favor
    of the industry.
        To wit, the CFTC has not released its annual report for enforcement
    results for FY25. This deviates from past practice. For example, in
    FY24, the agency's annual report was released on December 4, 2024 \46\
    in FY 2023 on November 7, 2023 \47\ and in FY 2022 on October 22,
    2022.\48\ The lack of a comprehensive report on the Commission's latest
    enforcement activity makes it difficult to evaluate the efficacy of the
    enforcement program compared to other years.
    ---------------------------------------------------------------------------
        \46\ Commodity Futures Trading Commission. ``CFTC Releases FY 2024
    Enforcement Results.'' CFTC Release Number 9011-24, December 4, 2024.
    Available at: https://www.cftc.gov/PressRoom/PressReleases/9011-24.
        \47\ Commodity Futures Trading Commission. ``CFTC Releases FY 2023
    Enforcement Results.'' CFTC Release Number 8822-23, November 7, 2023.
    Available at: https://www.cftc.gov/PressRoom/PressReleases/8822-23.
        \48\ Commodity Futures Trading Commission. ``CFTC Releases FY 2022
    Enforcement Results.'' CFTC Release Number 8613-22, October 20, 2022.
    Available at: https://www.cftc.gov/PressRoom/PressReleases/8613-22.
    ---------------------------------------------------------------------------
        However, a look at the CFTC's enforcement action repository on its
    website offers some telling data about the slowdown in law enforcement
    at the agency. An analysis of releases contained on the website cites
    only four actions brought since the onset of the new
    Administration.\49\ Two of those actions involve approved settlements,
    and two involve the CFTC filing charges in a District Court; one of the
    latter instances is for an alleged recidivist accused of violating a
    past CFTC enforcement order brought during the previous
    Administration.\50\ The contrast between previous enforcement activity
    is sharp: FY24 saw the CFTC bring 58 new enforcement actions,\51\ FY23
    saw 47 new enforcement actions \52\ and FY22 saw 82 new enforcement
    actions.\53\ The CFTC appears to also have only compensated one
    whistleblower for bringing forward material information related to an
    enforcement matter during 2025.\54\
    ---------------------------------------------------------------------------
        \49\ Commodity Futures Trading Commission. ``Enforcement Actions.''
    Accessed December 6, 2025. Available at: https://www.cftc.gov/
    LawRegulation/EnforcementActions/index.htm.
        \50\ Id., searching individual enforcement action releases on the
    CFTC's public webpage.
        \51\ Supra note 46. Note that this testimony compares 2025 from the
    period of President Trump's inauguration through December 6, 2025. In
    contrast, data for 2024, 2023 and 2022 covers the fiscal year.
        \52\ Supra note 47.
        \53\ Supra note 48.
        \54\ Commodity Futures Trading Commission. ``CFTC Whistleblower
    Award Determination No. 25-WB-07.'' May 29, 2025. Available at: https:/
    /www.whistleblower.gov/sites/whistleblower/files/2025-05/No.25-WB-
    07.pdf; note that redactions to the whistleblower award, to protect the
    privacy of the individual, make it impossible to determine the case in
    which the award is related.
    ---------------------------------------------------------------------------
        The numbers don't lie and they are also supported by the agency's
    changed priorities as evidenced in other areas. The CFTC requested a 30
    percent reduction in enforcement staff in its latest fiscal year budget
    request when compared to the budget of FY24.\55\ The budget request and
    lackluster enforcement statistics also contradict the stated priorities
    of the Acting Chair. Announcing an ``enforcement sprint,'' Pham noted
    that the agency would move to quickly settle compliance-related
    violations for CFTC-regulated firms to both clear a backlog of
    enforcement actions and to position Department of Enforcement staff
    ``to refocus on fighting fraud and helping victims.'' \56\ And while
    the sprint was completed--with substantially lower fines against firms
    for self-reporting \57\--the agency has not used the commensurate
    freeing of staff resources to investigation or charge market
    participants that are defrauding everyday Americans or otherwise
    undermining market integrity.
    ---------------------------------------------------------------------------
        \55\ Supra note 26, page 5.
        \56\ Commodity Futures Trading Commission. ``Acting Chairman Pham
    Announces Successful Completion of Enforcement Sprint.'' CFTC Release
    Number 9114-25, October 4, 2025. Available at: https://www.cftc.gov/
    PressRoom/PressReleases/9114-25.
        \57\ Katten. ``Reaching the Finish Line: The CFTC Concludes Its
    Enforcement Sprint by Offering Lower Fines for Self-Reporting and
    Cooperation.'' Client Advisory, September 22, 2025. Available at:
    https://katten.com/reaching-the-finish-line-the-cftc-concludes-its-
    enforcement-sprint-by-offering-lower-fines-for-self-reporting-and-
    cooperation.
    ---------------------------------------------------------------------------
        The statistics are also supported by anecdotal evidence. Reporting
    from August from Bloomberg, informed by reporters speaking to two dozen
    current and former CFTC insiders and industry players, indicates that
    ``enforcement [has] slowed to a crawl.'' \58\ According to one attorney
    interviewed for the story, they report that their work has been totally
    impeded. ``I can't obtain bank records, I can't get evidence. I can't
    do anything,'' the staff person says.\59\
    ---------------------------------------------------------------------------
        \58\ Supra note 42.
        \59\ Id.
    ---------------------------------------------------------------------------
        Statistics and anecdotal reporting are also supported by numerous
    changes to the CFTC's rules of practice that favor market participants
    over robust law enforcement. On December 1, 2025, for example, Acting
    Chair Pham announced changes to the CFTC's process for informing firms
    that they may be subject to an enforcement action, giving firms more
    than double the time to respond to CFTC allegations, requiring CFTC
    staff to inform firms of potentially unfavorable facts or legal
    precedent in the agency's own claims against the firm, and limiting the
    length of the submission that CFTC staff can provide to firms when
    describing a potential enforcement action.\60\
    ---------------------------------------------------------------------------
        \60\ Commodity Futures Trading Commission. ``Acting Chairman Pham
    Announces Reforms to Wells Process, Amends Rules of Practice and Rules
    Relating to Investigations.'' CFTC Release Number 9144-25, December 1,
    2025. Available at: https://www.cftc.gov/PressRoom/PressReleases/9144-
    25.
    ---------------------------------------------------------------------------
        Additionally, in response to the President's Executive Order on
    ``Fighting Overcriminalization in Federal Regulations,'' \61\ the CFTC
    narrowed and made more favorable to market participants the
    circumstances in which investigative information would be passed along
    to criminal law enforcement authorities.\62\ Specifically, the policy
    requires enforcement staff to consider a host of mitigating reasons why
    a criminal referral should not be made in an effort to reserve criminal
    sanctions for cases involving difficult to prove willful wrongdoing
    (with the CFTC needing to impute the specialized expertise and
    knowledge of the law by the alleged perpetrator) and public harm.\63\
    ---------------------------------------------------------------------------
        \61\ Executive Order 14294. ``Fighting Overcriminalization in
    Federal Regulations.'' 90 Fed. Reg. 20363, May 29, 2025. Available at:
    https://www.federalregister.gov/documents/2025/05/14/2025-08681/
    fighting-overcriminalization-in-federal-regulations. Notably, the
    Executive Order explicitly exempts immigration matters.
        \62\ Commodity Futures Trading Commission. ``CFTC Issues Advisory
    on Referrals for Potential Criminal Enforcement.'' CFTC Release Number
    9094-25, July 9, 2025. Available at: https://www.cftc.gov/PressRoom/
    PressReleases/9094-25.
        \63\ Id.
    ---------------------------------------------------------------------------
    V. Prediction Markets
        While the CFTC sheds staff and narrows its enforcement mission, it
    is also--through forbearance and inaction--taking on significant new
    responsibilities it is ill-equipped to handle with prediction markets.
    Better Markets has been sounding the alarm on prediction market
    platforms increasingly trying to thwart state and Tribal law and the
    greater public interest to assert that their ``event contracts'' are
    not in fact gambling, but are somehow swaps that facilitate price
    discovery and hedging.\64\ This has accelerated in recent months and
    threatens everything from the CFTC having the bandwidth to police
    traditional markets, retail traders being exposed to fraud and
    manipulation, and the usurpation of state and Tribal law.
    ---------------------------------------------------------------------------
        \64\ Better Markets. ``Frequently Asked Questions: Kalshi's Attempt
    to get the CFTC to Unleash Gambling on U.S. Elections via Prediction
    Markets.'' March 21, 2024. Available at: https://bettermarkets.org/wp-
    content/uploads/2024/03/FactSheet_Kalshi-FAQ-3.21.24.pdf.
    ---------------------------------------------------------------------------
    History of Prediction Markets & the CFTC
        This started first with the platform KalshiEx, LLC (``Kalshi'') in
    2023 endeavoring to launch ``event contracts'' on political elections--
    namely, a contract on which U.S. political party would control either
    chamber of Congress in the coming year.\65\ Allowable wagers extended
    to $100 million.\66\
    ---------------------------------------------------------------------------
        \65\ Harty, Declan. ``Political bettors hit the jackpot as court
    clears election markets for comeback.'' Politico, October 2, 2024.
    Available at: https://www.politico.com/news/2024/10/02/election-
    betting-markets-00182165.
        \66\ Id.
    ---------------------------------------------------------------------------
        Recognizing the harm in this attempted self-certification, the CFTC
    in 2023 extending into 2024, sought to reject Kalshi's bid and to amend
    a 2010 rule implementing a provision of the CEA to further clarify the
    scope of contracts the Commission would not permit. The CEA, as further
    clarified by rule, provides that the Commission has the authority to
    determine whether an event contract listed on a Designated Contract
    Market (``DCM'') or swap exchange facility is ``contrary to the public
    interest'' if such contracts involve: (1) unlawful activity under
    Federal or state law; (2) terrorism; (3) assassination; (4) war; (5)
    gaming; or (6) other similar activity determined by the CFTC, by rule
    or regulation, to be contrary to the public interest.\67\ In its order
    rejecting Kalshi's self-certification, the CFTC noted that the
    contracts violated the statutory construction of the CEA, and posed
    potential threats to election integrity, investors, and the CFTC's
    ability to fulfill its core mission.\68\
    ---------------------------------------------------------------------------
        \67\ Section 5c(c)(5)(C) of the CEA and CFTC Regulation 40.11.
        \68\ Hall, Stephen. ``To Protect Democracy, Investors, and
    Commodity Markets, D.C. Circuit Should Uphold CFTC's Decision to
    Prohibit Gambling on Elections.'' Better Markets, January 9, 2025.
    Available at: https://bettermarkets.org/analysis/to-protect-democracy-
    investors-and-commodity-markets-d-c-circuit-should-uphold-cftcs-
    decision-to-prohibit-gambling-on-elections/.
    ---------------------------------------------------------------------------
        Kalshi sought to litigate the issue in the U.S. District Court for
    the District of Columbia.\69\ The court in that case sided with Kalshi
    narrowly on the question of election-related event contracts, and the
    CFTC later in 2024 appealed to the U.S. Court of Appeals for the D.C.
    Circuit.\70\ In May of 2025, the new leadership at the CFTC elected to
    voluntarily surrender its appeal, thereby allowing election betting on
    CFTC-regulated DCMs to move forward.\71\
    ---------------------------------------------------------------------------
        \69\ Matthews, Laura. ``Predictions market Kalshi sues CFTC for
    blocking election contracts.'' Reuters, November 1, 2025. Available at:
    https://www.reuters.com/world/us/predictions-market-kalshi-sues-cftc-
    blocking-election-contracts-2023-11-01/.
        \70\ For a description of the timeline of KalshiEx v. CFTC, see
    Hall, Stephen. ``By Dismissing Its Appeal in the Kalshi Case, the CFTC
    Turns Its Back on Election Integrity, Investor Protection, and
    Effective Oversight of the Commodities Markets.'' Better Markets, May
    5, 2025. Available at: https://bettermarkets.org/newsroom/by-
    dismissing-its-appeal-in-the-kalshi-case-the-cftc-turns-its-back-on-
    election-integrity-investor-protection-and-effective-oversight-of-the-
    commodities-markets/.
        \71\ Id.
    ---------------------------------------------------------------------------
    Gamification & the Explosion of Sports Betting
        The CFTC's reversal of position on the Kalshi litigation was a
    predicate to a total abdication on enforcing limits on allowable event
    contracts under the CEA. As a result, the Commission, along with market
    participants, have unleashed a wave of new wagering opportunities--with
    little connection to risk mitigation, hedging or price discovery--over
    the last year.\72\
    ---------------------------------------------------------------------------
        \72\ See for example an explosion in DCMs offering wagering
    opportunities on event contracts, including Kalshi, ForecastEx,
    Robinhood, Crypto.com, Underdog, PrizePicks, Polymarket and Fanatics
    approved as DCMs and many others with forthcoming plans including
    FanDuel, DraftKings, Coinbase, Aristotle, RSBIX, Truth Predict,
    Hollywood.com, MyPrize, Kraken, Gemini, ProphetX, eToro, Cboe, Clearing
    Co and Metavesco. This accounting is only a rough estimate and taken
    from a prediction market analyst X.com post. @MickBransfield, December
    3, 2025. Available at: https://x.com/mickbransfield/status/
    1996392174947295542?s=46.
    ---------------------------------------------------------------------------
        In the above-described court case against the CFTC related to
    political event contracts, Kalshi--in an attempt to explain how
    election gambling was fundamentally different from sports wagers--
    conceded that event contracts related to sporting events fell under the
    ``gaming'' category expressly prohibited under the CEA.\73\ In fact,
    the company in its court filing argued that such contracts had no
    economic value and were not appropriate to list on a DCM.\74\ And yet,
    upon the change in Administration in early 2025, Kalshi moved forward
    with a contract allowing users to bet on the outcome of Super Bowl LIX
    in 2025 (Kansas City Chiefs v. Philadelphia Eagles).\75\
    ---------------------------------------------------------------------------
        \73\ Dumas, Cantrell. ``Stop the Spread: Why the CFTC Must Shut the
    Door on Gambling in Derivatives Markets.'' Better Markets, May 8, 2025.
    Available at: https://bettermarkets.org/wp-content/uploads/2025/05/
    Better-Markets-Event-Contracts-Fact-Sheet-5.8.25.pdf; specifically,
    Better Markets notes that Kalshi in the D.C. District Court litigation
    ``conceded that `contracts on sporting events such as the Super Bowl,
    the Kentucky Derby, and Masters Golf Tournament' [consistent with the
    Congressional record at the time] were precisely the types of contracts
    Congress empowered the Commission to block. It admitted that the
    `gaming' category `reaches contracts contingent on games,' including
    `whether a certain team will win the Super Bowl,' and stated that the
    law was designed to `check on attempts to launder . . . sports gambling
    through the derivatives markets.' Kalshi even went so far as to state
    that such contracts `are probably not the type of contracts we
    want . . . listed on an exchange because they don't have any real economic
    value to them.' ''
        \74\ Id.
        \75\ Id.
    ---------------------------------------------------------------------------
        The only thing that changed between Kalshi's arguments to the court
    in 2024 and Super Bowl LIX was the CFTC's newfound unwillingness to
    enforce the law. Since the CFTC's capitulation, there has been an
    explosion in sports-related wagers listed on CFTC-regulated DCMs. For
    example, on Kalshi, users can wager on everything from the NFL, to the
    NHL, NBA, a host of college sports, a range of domestic and
    international soccer games, tennis, golf, chess and e-sports. One
    analysis found that more than \3/4\ of Kalshi's trading volume now
    comes from sports, with millions of trades exceeding over a billion
    dollars volume over just a nearly 3 month period.\76\ In addition to
    binary contracts on the winners or losers of various sports matches,
    Kalshi subsequently launched NFL same-game parlays, allowing users to
    bet not only on the winners of games, but combine bets on touchdown
    scorers, moneylines (or spreads) and the point total for the individual
    games.\77\
    ---------------------------------------------------------------------------
        \76\ O'Boyle, Daniel. ``Kalshi More Reliant On Sports Than
    DraftKings Or FanDuel, Data Shows.'' InGame, October31, 2025. Available
    at: https://www.ingame.com/kalshi-sports-data-trading-volume/.
        \77\ Gouker, Dustin. ``Kalshi Rolls Out Same-Game Parlays For
    Monday Night Football Games.'' Event Horizon,September 30, 2025.
    Available at: https://nexteventhorizon.substack.com/p/kalshi-rolls-out-
    same-game-parlays.
    ---------------------------------------------------------------------------
    Contrary to the Law & Public Interest
        Beyond sports, prediction market platforms have exploded in the
    last year, offering betting opportunities on all manner of events of
    dubious fidelity to the true purpose of derivatives markets overseen by
    the CFTC: risk management, capital formation, and price discovery.
        For example, a user can now bet on topics such as: \78\
    ---------------------------------------------------------------------------
        \78\ Examples taken from https://kalshi.com/.

    ---------------------------------------------------------------------------
       Will President Trump release the Epstein files?

       Will President Trump ``punish'' SpaceX?

       Will the United Nations' IPC classify Gaza as experiencing
            famine this year?

       Will Representative Marjorie Taylor Greene say the words
            ``traitor,'' ``Israel,'' or ``corrupt/corruption'' on CBS 60
            Minutes?

        This list of wagering opportunities raises numerous concerns.
        First, it is contrary to both Congress's intent with the CEA and
    state and Tribal law to allow this gambling-like activity to
    proliferate while claiming that the activity is within the purview of
    the CFTC. This is a problem that was foreseen by policymakers. When the
    Wall Street Reform Act amended the CEA in 2010, lawmakers were clear
    that absent legal limits, sports bettering and other gambling-style
    activity could evade state and Tribal law by claiming jurisdiction
    under the CEA.\79\ Indeed, it was not the intent of Congress for the
    CFTC to take on this responsibility. Moreover, in many states, betting
    on elections and even sports is not legal (or is only legal for
    professional sports and not collegiate sports).\80\ In other states
    where such betting is legal, state gaming commissions routinely enforce
    safeguards such as age restrictions, identity verification, wagering
    limits, self-exclusion programs, and addiction treatment resources.\81\
    States also impose special taxes on gambling activity. Many Tribes have
    likewise argued that prediction market platforms interfere with Tribes'
    rights to conduct and regulate gambling activity on sovereign land.\82\
    ---------------------------------------------------------------------------
        \79\ U.S. Senate Committee on Agriculture [Chair] Blanche Lincoln
    in a colloquy noted, ``The Commission needs the power to, and should,
    prevent derivatives contracts that are contrary to the public interest
    because they exist predominantly to enable gambling through supposed
    `event contracts.' It would be quite easy to construct an `event
    contract' around sporting events such as the Super Bowl, the Kentucky
    Derby, and Masters Golf Tournament. These types of contracts would not
    serve any real commercial purpose. Rather, they would be solely used
    for gambling.'' 156 Cong. Rec. S5907 (daily ed. July 15, 2010).
    Available at: https://www.congress.gov/111/crec/2010/07/15/CREC-2010-
    07-15-senate.pdf.
        \80\ See the CFTC's Order originally denying Kalshi's self-
    certification of election event contracts; ``CFTC Disapproves KalshiEX
    LLC's Congressional Control Contracts.'' September 22, 2023, https://
    www.cftc.gov/PressRoom/PressReleases/8780-23; see also National
    Conference of State Legislatures. ``Sports Betting on the Rise as
    States Let Gamblers Wager Online.'' Available at: https://www.ncsl.org/
    events/details/sports-betting-on-the-rise-as-states-let-gamblers-wager-
    online.
        \81\ Supra note 73.
        \82\ O'Boyle, Daniel. ``Tribes Aim To Join Kalshi-Maryland Lawsuit
    With Amicus Brief.'' InGame, June 24, 2025. Available at: https://
    www.ingame.com/tribes-join-kalshi-maryland-lawsuit/.
    ---------------------------------------------------------------------------
        Second, even if policymakers sought to have this activity overseen
    at the Federal level, the CFTC's budget for FY25 funded 127 full-time
    equivalents for the Division of Enforcement,\83\ though more departures
    amongst the staff have occurred since then. It is unfathomable that
    this level of staffing could adequately police the market for fraud and
    manipulation at the scale and size necessary to prevent malfeasance in
    prediction markets. In just the last few months, we have seen an NBA
    sports betting scandal; \84\ a financial industry executive propose to
    a New York City mayoral candidate that he abandon his bid for office
    and monetize it through prediction markets; \85\ aberrant prediction
    market trading ahead of the Nobel Peace Prize announcement; \86\ and a
    crypto CEO using his company's earnings announcement to ``troll''
    bettors in prediction markets.\87\ Each one of these examples could
    hypothetically consume one or more enforcement attorneys for a
    considerable amount of time.
    ---------------------------------------------------------------------------
        \83\ Supra note 26, page 8.
        \84\ Vardon, Joe and Mike Vorkunov. ``The NBA players, coaches and
    gamblers at the center of a Federal betting investigation.'' The New
    York Times, November 25, 2025. Available at: https://www.nytimes.com/
    athletic/6788069/2025/11/25/nba-players-coaches-gamblers-betting-
    investigation/.
        \85\ Levine, Matt. ``Bill Ackman Has a Trade for Eric Adams.''
    Bloomberg, September 8, 2025. Available at: https://www.bloomberg.com/
    opinion/newsletters/2025-09-08/bill-ackman-has-a-trade-for-eric-adams.
        \86\ Kochkodin, Brandon. ``Did The Nobel Peace Prize Expose Insider
    Trading On Prediction Market Polymarket?'' Forbes, October 10, 2025.
    Available at: https://www.forbes.com/sites/brandonkochkodin/2025/10/10/
    did-the-nobel-peace-prize-expose-insider-trading-on-prediction-market-
    polymarket/.
        \87\ Griffiths, Brent D. ``Coinbase CEO was having 'a little fun'
    when he trolled prediction markets by rattling off 5 words on an
    earnings call.'' Business Insider, December 3, 2025. Available at:
    https://www.businessinsider.com/coinbase-ceo-earnings-call-words-
    prediction-markets-bets-2025-12.
    ---------------------------------------------------------------------------
        Finally, is such gamified wagering on every aspect of humanity in
    the public interest? The co-founder of Kalshi recently noted that the
    ``long-term'' vision of the company ``is to financialize everything and
    create a tradeable asset out of any difference of opinion.'' \88\
    Another prediction markets enthusiast recently offered that the
    potential economic displacement faced by truck drivers ``at risk of
    being automated into obsolescence'' can be solved by merely hedging
    their risk on prediction markets.\89\ Such a vision of the future is
    bleak, and is already yielding harmful results for the public. Gambling
    addiction is on the rise, with more and more, and younger and younger,
    individuals seeking out treatment.\90\ Prediction markets are also
    blurring the lines between real investing and wild speculation, with
    growing nihilism about the ability to work hard and get ahead in the
    American economy, combined with a gamified user interface, driving
    increasingly casino-like activity.\91\ And troublingly, the growth of
    opportunities for constant wagering may be, according to analysts at
    Bank of America, even impairing younger Americans' creditworthiness for
    real wealth creation via loans to fund education or homeownership.\92\
    ---------------------------------------------------------------------------
        \88\ Dellinger, A.J. ``Kalshi CEO Says He Wants to Monetize `Any
    Difference in Opinion.' '' Gizmodo, December 4, 2025. Available at:
    https://gizmodo.com/kalshi-ceo-says-he-wants-to-monetize-any-
    difference-in-opinion-2000695320.
        \89\ X.com post by @TenreiroDaniel, December 4, 2025. Available at:
    https://x.com/tenreirodaniel/status/1996634259973722181?s=12.
        \90\ See Schiffrin, Ben. ``The U.S. already has a gambling
    epidemic--24 hour stock trading would only make it worse.'' Fortune,
    December 13, 2024. Available at: https://bettermarkets.org/newsroom/op-
    ed-in-fortune-the-u-s-already-has-a-gambling-epidemic-24-hour-stock-
    trading-would-only-make-it-worse/.
        \91\ Stewart, Emily. ``Everything's Casino.'' Business Insider,
    November 6, 2025. Available at: https://www.businessinsider.com/kalshi-
    polymarket-fanduel-draftkings-sports-betting-gambling-2025-11[.]
        \92\ Tsekova, Denitsa. ``Gambling, Prediction Markets Create New
    Credit Risks, BofA Warns.'' Bloomberg, November 25, 2025. Available at:
    https://www.bloomberg.com/news/articles/2025-11-25/bank-of-america-
    warns-of-mounting-credit-risks-as-gambling-booms; citing the
    ``behavioral risk'' associated with the accessibility of prediction
    market betting and warning that borrower creditworthiness is
    deteriorating due to increasing expenditures and debt in these markets.
    ---------------------------------------------------------------------------
    Stopping the Spread
        In the face of forbearance from the CFTC, many states, Tribes and
    consumers are taking action via litigation, seeking to stop the
    proliferation of various forms of event contracts. By one count,
    litigation or cease-and-desist proceedings related to the legality of
    sports-based event contracts are pending in some shape or form in
    Nevada, New Jersey, Maryland, Ohio, New York, Connecticut,
    Massachusetts, California, Wisconsin, Illinois, Kentucky, South
    Carolina, Georgia, Montana, and Arizona.\93\ In other states like
    Tennessee, more attention is being paid in local media to how
    prediction markets are disrupting the local gaming industry and may
    have downstream impacts on school funding.\94\
    ---------------------------------------------------------------------------
        \93\ X.com post by @MickBransfield, December 3, 2025. Available at:
    https://x.com/MickBransfield/status/1996383073949331472.
        \94\ Rayner, Ruby. ``Predictions market could threaten Tennessee
    gambling, which has provided some school funding.'' Chattanooga Times
    Free Press, November 28, 2025. Available at: https://
    www.timesfreepress.com/news/2025/nov/28/predictions-market-could-
    threaten-tennessee/.
    ---------------------------------------------------------------------------
        Moving forward, the proliferation of state, Tribal and consumer
    lawsuits will create a patchwork of legal decisions and tremendous
    market uncertainty. Instead of waiting for litigation to play out, the
    CFTC should instead reassert its authority under the CEA. Lawmakers
    should likewise conduct oversight of the Commission to ask difficult
    questions about why they are letting self-certification of these
    contracts proliferate, and push for answers on how the CFTC is squaring
    its recent inaction with existing law and regulation.\95\
    ---------------------------------------------------------------------------
        \95\ See for example a bipartisan letter from Senators Cortez
    Masto, Curtis, Gallego, Slotkin, Schiff, Padilla and Rosen to Acting
    Chair Pham on September 30, 2025. Available at: https://
    www.cortezmasto.senate.gov/wp-content/uploads/2025/10/2025-September-
    30-Cortez-Masto-Curtis-CFTC-Letter-Sports-Gaming-FINAL-SIGNED.pdf.
    ---------------------------------------------------------------------------
    VI. Lack of Transparency and Public Input
    Perpetual Futures and 24/7 Trading
        As the prediction markets example demonstrates, the CFTC has
    developed a troubling recent track of allowing new products to be
    introduced to the market without meaningful consideration. As another
    example, the CFTC put out a request for comment on perpetual futures
    (or derivatives contracts without an expiration date) in April 2025,
    seeking perspectives from the public.\96\ But just 2 days after the
    publication of that request, crypto exchanges began self-certifying the
    introduction of these contracts, with the exchanges advertising
    allowable leverage up to 10-to-1.\97\ The CFTC likewise sought comment
    on 24/7 trading in April 2025, with a comment deadline of May 21,
    2025.\98\ On May 9, 2025, before the comment deadline on this proposal
    was reached, Coinbase launched 24/7 trading for margined futures
    contracts.\99\ The CFTC allowed this to go forward without responding
    to public commenters, including those in the traditional agriculture
    futures market that opposed such a change.\100\
    ---------------------------------------------------------------------------
        \96\ Commodity Futures Trading Commission. ``CFTC Staff Seek Public
    Comment Regarding Perpetual Contracts in Derivatives Markets.'' CFTC
    Release 9069-25, April 21, 2025. Available at: https://www.cftc.gov/
    PressRoom/PressReleases/9069-25.
        \97\ ``Bitnomial Exchange Self-Certifies First Ever U.S. Perpetual
    Futures Contracts.'' Press Release, April 23, 2025. Available at:
    https://www.prnewswire.com/news-releases/bitnomial-exchange-self-
    certifies-first-ever-us-perpetual-futures-contracts-302435713.html.
        \98\ Commodity Futures Trading Commission. ``CFTC Staff Seek Public
    Comment on 24/7 Trading.'' CFTC Release 9068-25, April 21, 2025.
    Available at: https://www.cftc.gov/PressRoom/PressReleases/9068-25.
        \99\ Coinbase. ``24/7 futures trading has arrived.'' Coinbase Blog,
    May 9, 2025. Available at: https://www.coinbase.com/blog/24-7-futures-
    trading-has-arrived.
        \100\ National Grain and Feed Association. ``NGFA urges CFTC to
    reject 24/7 agricultural futures trading proposal.'' Press Release, May
    21, 2025. Available at: https://www.ngfa.org/ngfa-urges-cftc-to-reject-
    24-7-agricultural-futures-trading-proposal/.
    ---------------------------------------------------------------------------
    Spot Crypto Trading on Designated Contract Markets
        Meanwhile, the Acting Chair announced on December 4, 2025 that the
    agency would now allow spot crypto trading on DCMs.\101\ The Acting
    Chair did this even though the agency solicited comment on this very
    issue with a comment deadline of August 18, 2025 \102\ and again, in
    the context of providing comments on the recommendations in the
    President's Working Group Report, with a comment deadline of November
    28, 2025.\103\ While the Acting Chair in November noted to the media
    that she was ``personally guiding exchanges'' \104\ on the launch of
    spot crypto trading on DCMs, the agency has not been deliberately and
    comprehensively assessing the merits of various proposals or the public
    comment file.
    ---------------------------------------------------------------------------
        \101\ Commodity Futures Trading Commission. ``Acting Chairman Pham
    Announces First-Ever Listed Spot Crypto Trading on U.S. Regulated
    Exchanges.'' CFTC Release 9145-25, December 4, 2025. Available at:
    https://www.cftc.gov/PressRoom/PressReleases/9145-25.
        \102\ Commodity Futures Trading Commission. ``Acting Chairman Pham
    Launches Listed Spot Crypto Trading Initiative.'' CFTC Release Number
    9105-25, August 4, 2025. Available at: https://www.cftc.gov/PressRoom/
    PressReleases/9105-25.
        \103\ White House. ``President's Working Group on Digital Assets,
    Strengthening American Leadership in Digital Financial Technology.''
    July 30, 2025, Available at: https://www.whitehouse.gov/crypto/; the
    CFTC's website indicated a deadline to comment on this report of
    November 28, 2025. Available at: https://comments.cftc.gov/
    PublicComments/ReleasesWithComments.aspx?Type=ListAll&Year=2025.
        \104\ Hamilton, Jesse. ``U.S. Regulator That May Rule Over Digital
    Assets Pushing Towards Crypto Spot Trading.'' CoinDesk, November 9,
    2025. Available at: https://www.coindesk.com/policy/2025/11/07/u-s-
    regulator-that-may-rule-over-digital-assets-pushing-toward-crypto-spot-
    trading.
    ---------------------------------------------------------------------------
        A review of the comment files on spot crypto trading indicates a
    range of stakeholder perspectives that were not considered ahead of the
    December 4, 2025 spot crypto trading announcement. For example, the
    Futures Industry Association advised that the CFTC should wait for
    Congress to pass comprehensive spot crypto market trading legislation
    before moving forward with transactions outside the scope of those
    covered by section 2(c)(2)(D) of the CEA.\105\ Another commenter noted
    that with allowable transactions under 2(c)(2)(D) there remains ``a
    lack of clarity regarding the [applicable] requirements and how DCMs or
    other market participants may comply with them.'' \106\ Another crypto
    industry market participant called for the CFTC to impose strict
    leverage limits to the extent DCMs wanted to offer financed crypto
    transactions.\107\ Another firm called on the CFTC to issue new
    regulations before allowing spot crypto trading to move forward, citing
    that ``extensive customer protection rules should be put in place to
    minimize risks to retail market participants from the trading of these
    contracts, especially if platforms seek to use auto-liquidating and
    fully collateralized retail accounts to bypass Futures Commission
    Merchant (`FCM') registration.'' \108\ They also noted that
    clarifications to customer segregation rules would be needed.\109\
    Finally, Better Markets issued a comment letter citing a host of issues
    that needed to be worked through before the agency moved forward on
    spot crypto trading on DCMs, including clarifying leverage limits,
    explaining whether auto-liquidation mechanisms would be put in place,
    addressing the distinct roles of DCMs, FCMs and Derivatives Clearing
    Organizations (``DCO'') given the vertical integration in the existing
    crypto market, and clarifying the scope of eligible depositories for
    accounts holding crypto.\110\
    ---------------------------------------------------------------------------
        \105\ Lurton, Allison. ``Listed Spot Crypto Trading Initiative.''
    Futures Industry Association Comment Letter to the CFTC, August 18,
    2025. Available at: https://www.fia.org/sites/default/files/2025-08/
    FIA%20Letter%20-%20CFTC%20Spot%20Crypto%20Initiative%20--%20Final
    %208.18.25.pdf. Specifically, the letter contends that this provision
    of the CEA only permits the CFTC to oversee spot crypto transactions
    for a person that enters into, or offers to enter into (even if not
    entered into), ``any agreement, contract or transaction in any
    commodity'' with a retail participant, i.e., a person that is not an
    eligible contract participant, as defined in the Act, ``on a leveraged
    or margined basis, or financed by the offeror, the counterparty, or a
    person acting in concert with the offeror or counterparty on a similar
    basis.''
        \106\ Dutta, Karen. ``Comment for General CFTC Request Input on All
    Recommendations for the CFTC in the President's Working Group on
    Digital Assets.'' Intercontinental Exchange, Inc. [Comment] Letter to
    the CFTC, November 28, 2025. Available at: https://comments.cftc.gov/
    PublicComments/ViewComment.aspx?id=113942&SearchText=.
        \107\ Lasko, Daniel. ``Comment for General CFTC Request Input on
    All Recommendations for the CFTC in the President's Working Group on
    Digital Assets.'' dYdX Trading Inc. dba dYdX Labs Comment Letter to the
    CFTC, September 24, 2025. Available at: https://comments.cftc.gov/
    PublicComments/ViewComment.aspx?id=113721&SearchText=.
        \108\ Maratea, Andrew. ``Comment for General CFTC Request Input on
    All Recommendations for the CFTC in the President's Working Group on
    Digital Assets.'' Topstep LLC Comment Letter to the CFTC, November 26,
    2025. Available at: https://comments.cftc.gov/PublicComments/
    ViewComment.aspx?id=113935&SearchText=topstep.
        \109\ Id.
        \110\ Fischer, Amanda. ``Comment for General CFTC Request Input on
    All Recommendations for the CFTC in the President's Working Group on
    Digital Assets.'' Better Markets Comment Letter to the CFTC, November
    28, 2025. Available at: https://comments.cftc.gov/PublicComments/
    ViewComment.aspx?id=113957&SearchText=.
    ---------------------------------------------------------------------------
        As the range of issues raised in these comment letters demonstrate,
    the CFTC has abandoned a traditional process around notice and comment
    rulemaking under the Administrative Procedure Act. Instead, when Acting
    Chair Pham made the spot crypto trading announcement on December 4,
    2025 it was made via a press release with no relevant documents linked
    to understand the parameters of the products allowed. Instead, the only
    thing the public knows is that the DCM Bitnomial was granted permission
    to launch spot crypto trading on December 8, 2025. One has to go to an
    arcane page on the CFTC's website to review Bitnomial's filings, which
    suggest the exchange wants to offer trading in assets including
    Bitcoin, Ethereum, XRP and Solana.\111\ Market observers are left with
    key questions, including just how much retail leverage will be
    permitted, how the DCM is managing those leverage exposures, whether
    auto-liquidation mechanisms will be used, and why one DCM was permitted
    to move forward with these products as a first-mover before any other
    DCM. Rather than a piecemeal approach established through ad hoc
    discussions with DCMs, it would make much more sense for the CFTC to
    either promulgate a rulemaking on the topic or wait for Congress to
    pass comprehensive legislation.
    ---------------------------------------------------------------------------
        \111\ Commodity Futures Trading Commission. ``Designated Contract
    Market Products.'' Accessed December 6, 2025. Available at: https://
    www.cftc.gov/IndustryOversight/IndustryFilings/
    TradingOrganizationProducts.
    ---------------------------------------------------------------------------
    Tokenized Collateral
        In yet another example, earlier this week Acting Chair Pham moved
    forward with a pilot program without responding to the comment file the
    CFTC had solicited on the topic. Specifically, less than 2 weeks after
    the comment period closed on the CFTC's request for feedback on using
    crypto assets as collateral in derivatives markets, Acting Chair Pham
    announced a pilot program allow this activity.\112\ Even more
    disturbing than the timing of the launch of the program is the fact
    that the CFTC's press release announcing it quotes numerous crypto
    companies applauding the action--an odd action for an agency tasked
    with serving the public interest and not specific market participants.
    ---------------------------------------------------------------------------
        \112\ Commodity Futures Trading Commission. ``Acting Chairman Pham
    Announces Launch of Digital Assets Pilot Program for Tokenized
    Collateral in Derivatives Markets.'' CFTC Release 9146-25, December 8,
    2025. Available at: https://www.cftc.gov/PressRoom/PressReleases/9146-
    25.
    ---------------------------------------------------------------------------
    Withdrawals and Delays
        The CFTC has also engaged in a number of troubling withdrawals of
    guidance and delays of rules without explaining the rationale of such
    actions or appropriately abiding by public transparency requirements.
    For example, earlier this year, the Commission withdrew previous
    guidance on voluntary carbon credits.\113\ This guidance was originally
    issued to enhance transparency and standardization in the market,
    including establishing clear standards for physical delivery and other
    considerations for DCMs to support accurate pricing and enhance
    liquidity, helping to address concerns over the susceptibility of these
    contracts to manipulation.\114\ Withdrawing the guidance simply means
    that market participants are operating with less clarity. The
    Commission likewise withdrew guidance on DCO recovery plans,\115\
    creating a vacuum where market participants say a ``replacement may be
    needed'' because the previous guidance letter ``gave clarity to central
    counterparty clearinghouses.'' \116\ Finally, the agency, along with
    the SEC, extended the compliance deadline for a hedge fund transparency
    rule three separate times--from March to June 2025, then to October
    2025, then another full year to October 2026 \117\--raising questions
    from one SEC Commissioner as to whether this was just a backdoor way to
    ensure the rule never becomes effective.\118\
    ---------------------------------------------------------------------------
        \113\ Commodity Futures Trading Commission. ``CFTC Withdraws
    Guidance Regarding Listing Voluntary Carbon Credit Derivative
    Contracts.'' CFTC Release 9119-25, September 10, 2025. Available at:
    https://www.cftc.gov/PressRoom/PressReleases/9119-25.
        \114\ Dumas, Cantrell. ``Can the CFTC Tame Carbon Fraud and Create
    Trust in a Broken System?'' Better Markets, October 10, 2025. Available
    at: https://bettermarkets.org/wp-content/uploads/2024/10/
    Better_Markets_Fact_Sheet_Carbon_Markets-10.10.24.pdf.
        \115\ Commodity Futures Trading Commission. ``CFTC Staff Withdraws
    Guidance on DCO Recovery Plans and Winddown Plans.'' CFTC Release 9120-
    25, September 11, 2025. Available at: https://www.cftc.gov/PressRoom/
    PressReleases/9120-25.
        \116\ Kirkel, Janice. ``Reluctant farewell to CFTC's clearing house
    recovery guidance.'' Risk.net, October 15, 2025. Available at: https://
    www.risk.net/regulation/7962328/reluctant-farewell-to-cftc%E2%80%99s-
    clearing-house-recovery-guidance.
        \117\ Commodity Futures Trading Commission. ``CFTC and SEC Extend
    Form PF Compliance Date to Oct. 1, 2026.'' CFTC Release 9126-25,
    September 17, 2025. Available at: https://www.cftc.gov/PressRoom/
    PressReleases/9126-25.
        \118\ Securities and Exchange Commission. ``Repeal By Extension:
    Statement on Yet Another Extension of the Form PF Compliance Date.''
    Statement by SEC Commissioner Caroline Crenshaw, September 17, 2025.
    Available at: https://www.sec.gov/newsroom/speeches-statements/
    crenshaw-091725-repeal-extension-statement-yet-another-extension-form-
    pf-compliance-date.
    ---------------------------------------------------------------------------
    CEO Innovation Council
        Last month, Acting Chair Pham announced the creation of a ``CEO
    Innovation Council,'' \119\ with reporting indicating that the Council
    will advise the agency on crypto and prediction market policy.\120\
    From the press release, it is unclear if this Council will abide by
    Federal Advisory Committee Act conditions that require balanced
    membership across stakeholders,\121\ and not just another mechanism for
    crypto industry insiders to influence policy at the expense of
    traditional CFTC constituencies and public interest organizations.
    Again, we suggest a return to regular order for stakeholder input on
    these emerging topics.
    ---------------------------------------------------------------------------
        \119\ Commodity Futures Trading Commission. ``Acting Chairman
    Caroline D. Pham Seeks Nominations for CFTC CEO Innovation Council by
    December 8.'' CFTC Release 9142-25, November 25, 2025. Available at:
    https://www.cftc.gov/PressRoom/PressReleases/9142-25.
        \120\ Hamilton, Jesse. ``U.S. Crypto Regulator, CFTC, Seeking Names
    for New `CEO Innovation Council.' '' Coindesk, November 25, 2025.
    Available at: https://www.coindesk.com/policy/2025/11/25/u-s-crypto-
    regulator-cftc-seeking-names-for-new-ceo-innovation-council.
        \121\ Marchsteiner, Kathleen E. and Meghan M. Stuessy. ``The
    Federal Advisory Committee Act (FACA): Overview and Considerations for
    Congress.'' Congressional Research Service Report R47984, March 26,
    2025. Available at: https://www.congress.gov/crs-product/R47984.
    ---------------------------------------------------------------------------
    VII. Conclusion
        The CFTC touches nearly every part of our economy. It affects the
    daily lives of producers like farmers, ranchers and manufacturers, and
    has a crucial role to play in ensuring that prices for everyday staples
    reflect true supply and demand in the economy. The Committee is right
    to focus on reauthorization of the agency at this important time. As
    this testimony demonstrates, the agency has in many ways strayed from
    its traditional mission, while also deviating from bipartisan history
    and downsizing staff in ways that may likely harm the public. Agency
    leadership should shift the Commission's focus back to core issues,
    return to regular order, seriously consider public input and
    reinvigorate the bipartisan track-record that has categorized the CFTC
    for the last 50 years.

        The Chairman. Mr. Schiffrin, thank you so much for your
    testimony. At this time, Members will be recognized for
    questions in order of seniority, alternating between Majority
    and Minority Members and in order of arrival for those who
    joined us after the hearing convened. You will be recognized
    for 5 minutes, each in order, to allow us to get to as many
    questions as possible, and I recognize myself for 5 minutes.
        Ms. Crighton and Mr. Prosser, as I mentioned in my opening
    statement, this is a time for transformation in financial
    markets. As market professionals, what big derivatives public
    policy issues do you see coming down the road in the coming
    years?
        Ms. Crighton. Thank you for the question. As I mentioned in
    my opening comments, there are a few areas that we are focused
    on. One is I think the possibilities that this transformational
    technology provides to the industry at large, and we think the
    appropriate balance of that technology, along with a good
    strong policy framework, is incredibly important to pave the
    way for a strong, safe, and healthy ecosystem. In terms of
    areas that we focus on, both in our current markets as well as
    the possibilities on the forward areas that we are particularly
    worried about continue to be margin that acts as the first line
    of defense. Whether it is existing markets and traditional
    markets or what kind of the new and digital markets present,
    the adequacy of margin levels is incredibly important.
        We worry about the amount of clearing capacity in the
    ecosystem. At the moment, capacity is quite strained, and with
    new products coming to market, whether it is the Treasury
    clearing mandate, the repo clearing mandate, there is
    significant demand for additional clearing capacity. And when
    we think about kind of the nature of bank capital regulation on
    us providing that capacity and continuing to intermediate in
    these markets, the impact of that on end-users is incredibly
    significant. I will hand it over to Mr. Prosser.
        Mr. Prosser. Thank you. In the 40 years that I have been
    involved in these derivative markets, I don't know that there
    is any time that we have had the pace and scope of innovation
    happening as fast as it is today. In that environment, having a
    regulator that sits in the middle and acts like a referee, not
    only for the very new and novel, but for the mundane, making
    sure the clearinghouse is taken care of. And if you look at the
    trade routes, the way that even the traditional commodities are
    moving, who is the new producer in the world and who has new
    surpluses, it is most critical at this point that I think that
    the CFTC sits in the middle of that and makes sure that these
    markets continue to be transparent, open, and act as functional
    as they have.
        The Chairman. Well, thank you both. Ms. Stump and Mr.
    Schwartz, this is also a time of transformation at the
    Commission. With new leadership and potentially new
    jurisdiction, how can the Commission meet the moment and tackle
    the issues that Ms. Crighton and Mr. Prosser has raised, and
    what does the Commission need to continue to be a premier
    financial regulator, even as the markets continue to grow and
    change?
        Ms. Stump. As you have rightfully pointed out, there is a
    lot to do and there needs--in my opinion, the agency is
    devoting time and attention to these matters, but during a
    period of transition, it is more challenged. So, I do look
    forward to a Senate-confirmed Chairman, and I look forward to
    the agency being able to get back to regular order, and by that
    I mean having open meetings with public input, issuing rules
    that enable the public to have a say in what, and opinion on
    what is occurring in the marketplace.
        Specific to some of the things that were raised, margin
    adequacy--I will start with margin adequacy and clearing. There
    is a real issue with clearing capacity. It was well established
    when I was at the agency that it--as we brought in more
    products to the clearing environment under Dodd-Frank, which
    was a very good response to ensuring that counterparty credit
    risk was addressed, we also--at the very same time, we saw the
    banking regulators putting restrictions--proposing restrictions
    on the ability of those who acted as intermediaries to take on
    more clearing. And there seems to always be a little bit of a
    misaligned mission with the market regulators and the banking
    regulators. The banking regulators are most concerned with
    sustaining the banks, where the market regulators are concerned
    with functional markets, so we had an ongoing dialogue with the
    banking regulators when I was there to try and mitigate some of
    that, and I think that that should certainly continue. I hope
    that it does continue, and I hope that with more Commissioners,
    a Senate-confirmed Chairman, that there will be a greater
    coordination with the banking regulators and the CFTC as a
    market regulator.
        With regard to some of the market structure changes that
    Mr. Prosser mentioned in his testimony, there have been an
    enormous call--of recent days, there have been a number of
    calls for input from the public on a variety of new market
    structure changes. I do think that as those are digested by the
    new Chairman, that we will see responses in the form of
    rulemakings where the public can engage.
        The Chairman. Well, thank you very much. My time has
    expired, but hopefully we will get a chance to circle back.
    Curious to hear your insight on that, Mr. Schwartz. I will
    recognize the gentlelady from Minnesota, the Ranking Member,
    for 5 minutes.
        Ms. Craig. Thank you, Mr. Chairman. This is to Mr. Prosser.
    I greatly appreciate your testimony and specific
    recommendations for Congressional action in reauthorizing the
    CFTC, particularly your call for funding and staff at the
    agency to allow it to keep pace with market growth,
    technological complexity, and, of course, global
    competitiveness. I also noted you are urging the Committee to
    ensure that regulatory standards prioritize the needs of
    commercial end-users and consumers, not just financial
    intermediaries, new market entrants, or speculative interests.
    How does the Committee do that? Are there specific changes in
    the Commodity Exchange Act that we need to think through in
    order to achieve that?
        Mr. Prosser. I am not qualified to recommend specific
    changes to the Commodity Exchange Act, but I would say that as
    we go forward with the new challenges with new entrants in the
    marketplace, the traditionals have worked pretty well. The
    regulatory environment that we have dealt with the traditional
    markets, and you think about the Ukraine War and Chernobyl all
    the way back and weather events, and we have navigated those
    relatively well. The markets have bent when we needed to, and
    we changed regulation as we came out of 2008. So, I would
    suggest that they have done pretty well in our traditional
    markets.
        We are very interested in what the innovations are going to
    bring, and we are going to ask that the separation of those
    regulatory regimes between the traditional markets and some of
    the new--what might be good for the new side might not be good
    for the traditional markets. We don't want to squash innovation
    because I don't want these markets moving overseas. I don't
    want the price of soybeans to be discovered in Monte Grosso
    instead of on the Mississippi and Illinois Rivers, and part of
    that is making sure that we do continue to innovate, but we
    need to do that with an eye towards making sure that the stuff
    that is working now continues to work.
        Ms. Craig. Well, speaking of somebody who borders the
    Mississippi River, thank you for that. This is really to the
    whole panel. The Republicans on the House Appropriations
    Committee defied the Administration's budget request to
    increase the agency's funding for Fiscal Year 2026 and,
    instead, proposed cutting the agency's funding from full Fiscal
    Year 2025 levels by eight percent. Talk to me a little bit
    about, obviously, we have new innovations coming with, really,
    additional responsibilities coming to CFTC. So, do any of you
    think that the cut is appropriate, necessary, and--particularly
    considering the new responsibilities that Congress may give
    them? And we will start, I guess, from my right to my left. Mr.
    Schiffrin.
        Mr. Schiffrin. Thank you for the question. As I said in my
    opening statement, I think now is the time to be increasing
    funding for the CFTC and not decreasing it, especially if the
    CFTC is going to be asked to now oversee things like crypto and
    the prediction markets. It seems impossible for it to fulfill
    those new responsibilities and also the essential functions
    that it already has without additional funding and additional
    staffing.
        Ms. Craig. Couldn't agree more with you. Mr. Schwartz?
        Mr. Schwartz. Thank you. You can tell from Mr. Prosser's
    testimony that the private-sector does not want a hobbled CFTC.
    It is important. They depend on it, and there has generally
    been bipartisan support for making sure the agency is
    adequately funded, and it is under-funded now, let alone can we
    predict how difficult it would be in the future as its
    responsibilities appear very likely to increase.
        Ms. Craig. I am going to run out of time. Ms. Crighton?
        Ms. Crighton. Thank you. FIA supports an adequately staffed
    and resourced CFTC, and we will defer to Congress on what that
    means.
        Ms. Craig. Mr. Prosser.
        Mr. Prosser. I am going to defer----
        Ms. Craig. Good. Dawn?
        [Laughter.]
        Ms. Stump. Well, thank you. Yes, I do believe that the
    agency could certainly do well with more resources. Given
    budget situations, I know all agencies are being asked to do
    more with less, and the CFTC is no different.
        Ms. Craig. Thank you, and in my 30 seconds, Mr. Schiffrin,
    let's talk just a minute about enforcement at the CFTC. Give me
    your thoughts on what needs to happen. It has been pretty
    lackadaisical.
        Mr. Schiffrin. Thank you for the question. Exactly. I think
    we have seen CFTC enforcement ground to a halt, and I think
    that is problematic. If you don't have the cop on the beat
    acting like a cop on the beat, you are not going to have the
    protections that are there to prevent fraud and manipulation do
    what they are supposed to do.
        Ms. Craig. Thank you all so much, and with that, Mr.
    Chairman, my time has expired, and I yield back.
        The Chairman. I thank the gentlelady. I now recognize the
    gentleman from Oklahoma, former Chairman of this Committee, Mr.
    Lucas, for 5 minutes.
        Mr. Lucas. There is nothing like being a recovering
    Chairman, Mr. Chairman.
        [Laughter.]
        Mr. Lucas. Thank you, and thank you to our witnesses for
    being here today. The subject of today's hearing is, of course,
    the reauthorization of the Commodity Futures Trading
    Commission, a Commission that has served our ag and energy
    markets for over 50 years. The authorization for the CFTC
    expired over a decade ago, as we have discussed. Reexamining
    the Commission, its functions and its authorities, is a worthy
    goal in light of the changes the world has gone through since
    the Commission's expiration. Farmers and ranchers use tools
    like the derivatives that CFTC regulates to manage price
    volatility and mitigate risk, and that is why it is a
    particularly relevant time to examine the Commission as
    uncertainty in the farm economy has elevated. Keeping
    derivatives markets affordable and accessible is essential for
    our producers to supply the food, fiber, and energy our world
    needs.
        Ms. Stump, the CFTC coordinates with the Securities
    Exchange Commission as the products and firms they regulate
    often interact. Take us back up to the 40,000 level for just a
    moment and explain why two separate and distinct regulators for
    commodities and securities is valuable to consumers.
        Ms. Stump. I think, oftentimes, it is misunderstood. First
    of all, thank you for the question. It is very relevant. I
    think oftentimes it is misunderstood, even sometimes by the
    marketplace, the distinction between the CFTC and the SEC.
    Certainly they both regulate some of the same entities. There
    have been suggestions that the two should be merged. I have
    often scratched my head by this proposition, given that
    Congress has given each agency a very distinct how-to in the
    way they carry out their missions.
        The CFTC has embedded in its purpose to promote innovation.
    That is not in the SEC's mandate. They both are responsible for
    protecting customers in the case of the CFTC, protecting
    investors in the case of the SEC, but this innovation is very
    distinct in this purpose of the CFTC. And I think Congress has
    done a remarkable job of explaining to the CFTC how they want
    them to go about being a regulator that embraces innovation.
    The SEC does not have that mandate.
        Mr. Lucas. You are exactly right. CFTC is proactive. SEC is
    reactive. Beginning with Ms. Crighton, and I want Mr. Prosser's
    thoughts on this as well, last week I met with Vice Chairman
    Michelle Bowman at the Federal Reserve's Board of Governors,
    who is finalizing a new capital framework proposal. I was
    disappointed to see that in the original Basel Endgame proposal
    significant capital penalties on clearing derivatives for end-
    users, reducing the availability of these required services.
    Can you speak to the importance of cross-agency collaboration
    between CFTC and the banking regulators?
        Ms. Crighton. Thank you, and I am happy to do that. As we
    think about two of the most significant impacts that have
    reduced the amount of clearing capacity available, in
    particular, to commodities end-users, one has been the lack of
    margin adequacy, and the other has been the punitive nature of
    bank capital, and so, we too, were quite disappointed to see
    the changes that were proposed previously. And I think, back to
    Ms. Stump's comments, part of the benefit of interacting with
    the CFTC is, as deep derivatives markets experts, we were able
    to articulate the impact of what that proposed regulation would
    mean, in particular on the amount of clearing capacity we would
    be able to provide. And so, in their partnership, we were able
    to work hand in hand with the banking regulators to articulate
    what would happen. Clearing businesses over the course of the
    last 5 years have seen capital between 2020 and 2022 double,
    and then what was proposed 2 years ago with the Basel III
    Endgame re-proposal that capital would have been increased by
    another 80 percent, which would have served to further decrease
    the amount of capacity we provide.
        Mr. Lucas. Any thoughts, Ed?
        Mr. Prosser. These markets need capacity, not just for a
    normal Thursday morning, but for when geopolitical events
    happen, for when weather happens. This FCM capacity issue is
    real, and it is real in the country. We need regulators to work
    together to make sure that we have adequate protections from
    the FCMs through bankruptcy and all of the things that that
    works on, but we need to make sure that we don't put burdens or
    barriers to those that want to participate in those markets.
    And I think that Basel III was one of those, the idea that the
    capital requirements for those would have been so high, that it
    seemed impossible to me. So, we need agencies to work together
    to make sure that we have as much capacity for FCMs to clear
    these derivative products because that matters to those end-
    users in the country, particularly the small end-users in the
    country that don't have the market power to find other FCMs.
        Mr. Lucas. Thank you. Mr. Chairman, my time has expired. I
    will submit a couple questions in writing to the witnesses.
        The Chairman. Very good.
        I thank the gentleman. I now recognize the gentleman from
    California, Mr. Costa, for 5 minutes.
        Mr. Costa. Thank you very much. Mr. Chairman, I obviously
    concur that we need to deal with the reauthorization, and
    Congress needs to do its job. But when we talk about the
    Commodity Futures Trading Commission and the traditional areas
    in which you provide oversight with regards to derivatives and
    others, there is an area that hasn't really been brought up to
    the degree that I am concerned about, and that is the red flags
    on so-called event contracts. And also, in California where I
    come from and a lot of Indian gaming authority, these look a
    lot less, to me, like risk management tools that Congress ever
    intended the Commission to deal with, and now you are engaged
    in unauthorized online gambling for everything from sports
    events to even war, and I don't think that was intended. Mr.
    Schwartz, are you familiar with the five categories that are
    prohibited under the Commodity Exchange? I assume all of you
    are.
        Mr. Schwartz. I am familiar with the five categories. It is
    rather than a flat prohibition, it is----
        Mr. Costa. Or terrorism, assassinations, gaming, or any
    activity otherwise prohibited under Federal law, right?
        Mr. Schwartz. Yes, sir.
        Mr. Costa. Okay. Given that framework, why do we allow,
    then, folks to go ahead and bet on things like sporting events
    or wars?
        Mr. Schwartz. Well, it is because the statute gives the
    CFTC discretion. It says it may make a determination that a
    given contract is contrary to the public interest. The CFTC
    hasn't done that, and so that is why----
        Mr. Costa. Don't you think the statute expressly prohibits
    event contracts based upon war, terrorism, assassination,
    gaming, or activities that are otherwise illegal under Federal
    law?
        Mr. Schwartz. No. It is a yellow light rather than a red
    light and delegates to the CFTC to deal with individual cases.
        Mr. Costa. What courageous actions are you taking on a
    yellow light?
        Mr. Schwartz. Well, the CFTC has the authority to take a
    look and see if it is contrary to the public interest to have
    that trading on an exchange.
        Mr. Costa. In that light, do you think Congress did not
    intend to allow companies to offer products that led
    individuals to bet on sporting events?
        Mr. Schwartz. It certainly indicates a concern.
        Mr. Costa. It is a concern, but what are we doing about it?
        Mr. Schwartz. Well----
        Mr. Costa. I mean, let me give you some examples, and I
    would ask others to participate in this if you care to. Six
    hundred and fourteen million dollars have been bet on who will
    win the Super Bowl. I like football, but I don't think that
    that is the business that the Commission ought to be engaged
    in, $13 million how many tweets Elon Musk will make in the
    month of December--I don't give a damn, frankly, but I don't
    think it is a part of your jurisdiction--or $34 million whether
    the United States will attack or bomb Venezuela. My gosh. I
    mean, what is this about? Three million whether Russia will
    conquer Ukraine or a city in Ukraine?
        I mean, news often makes this sound like what is happening
    in that part of the world with regards to the war, gambling on
    life and death on Ukrainian or on the battlefield is rife with
    conflicts of interest. Where in the hell are we going with
    this?
        Mr. Schwartz. Well, I will leave the policy questions to
    policymakers. I think I won't quibble with anything that you
    said.
        Mr. Costa. I mean, we are gambling on tragedy and death.
        Mr. Schwartz. No, the concern is very, very valid.
        Mr. Costa. The industry has gone more than $2 billion. I
    find this exasperating. Every single month, and there is no
    oversight?
        Mr. Schwartz. The CFTC has not taken any action.
        Mr. Costa. Well, what about states that are trying to
    enforce their own laws?
        Mr. Schwartz. That is an important separate issue, I think.
    To my mind, I don't have any doubt that these products meet the
    definition of swap and are within the CFTC's exclusive Federal
    jurisdiction. I don't think Congress intended state gambling
    regulators to be having a say on what is allowed to trade on a
    designated contract market. That is separate from the policy
    question.
        Mr. Costa. But by expressly refusing to bless contracts
    that, effectively, let people bet on sports or other
    jurisdictions, you are either blessing or not those who want to
    ban sports betting.
        Mr. Schwartz. I won't quibble with that statement either.
        Mr. Costa. Well, it just seems to me that we are not doing
    our job. My time has expired, Mr. Chairman, and I would like to
    get, obviously, other members of the panel to comment on this,
    but I think this is a serious issue that we are overlooking at
    this point in time. And I will submit other questions in the
    future, but I think this is that we need to drill down on.
    Thank you very much for the time.
        The Chairman. I thank the gentleman.
        Mr. Costa. My time has expired.
        The Chairman. I thank the gentleman. I now recognize the
    gentleman from California, Mr. LaMalfa, for 5 minutes.
        Mr. LaMalfa. Thank you, Mr. Chairman. I appreciate it.
    Thank you, Mr. Thompson. I just wanted to pick up on that topic
    with how is it in the bailiwick of CFTC that we would--farmers
    obviously rely on the futures markets in many, many aspects.
    So, sports betting is somehow being defined as being in the
    bailiwick of CFTC. We are talking about--they are being called
    trades when it is just flat-out gambling in this gray market
    area. So, with farmers needing this help, needing this ability
    to have trades and have CFTC's attention, that with more and
    more time being devoted towards, basically, being a Federal
    gambling regulator. And anybody on the panel who wants weigh in
    on this, maybe especially Mr. Schwartz, Ms. Stump, does CFTC
    have the capacity under its current budget staffing and
    regulatory authority to be overseeing so-called markets
    offering betting on these sports events and other casino-style
    games?
        Mr. Schwartz. Well, as I have said, I don't think the CFTC
    has adequate resources now.
        Mr. LaMalfa. Yes.
        Mr. Schwartz. So, expanding its remit without expanding its
    capacity is not helpful.
        Mr. LaMalfa. Ms. Stump?
        Ms. Stump. So, this provision was included in the Dodd-
    Frank Act. At that time, there was very little interest in
    these sorts of event prediction market contracts.
        Mr. LaMalfa. How long ago was that?
        Ms. Stump. I am sorry?
        Mr. LaMalfa. How long ago--how long ago was that?
        Ms. Stump. 2010.
        Mr. LaMalfa. Yes. Okay. No, it is skyrocketing, of course,
    yes.
        Ms. Stump. These markets have developed since then, but
    nonetheless, the CFTC is tasked to oversee these types of
    prediction markets to the extent that they are put on a CFTC
    regulated exchange. The CFTC wears so many different hats, and
    to Mr. Schwartz's point, they often find themselves switching
    gears on a fairly frequent basis, whether it is dealing with
    position limits in the ag markets, or wagering, if you will, on
    an event contract market energy, disruptions. There is no way
    for the CFTC to know when they get to work on any given day
    what they are going to deal with.
        Mr. LaMalfa. Yes. Look, it is fair to think of energy and,
    of course, agriculture as a commodity and a market for it, but,
    basically, gaming/gambling within that purview just seems kind
    of absurd to me. We have other entities that should be really
    having the responsibility, whether it is state-level gambling
    commissions or the Indian gaming regulatory, anywhere else
    seems like, especially with the workload you would have. And me
    being from agriculture and this being the Agriculture
    Committee, as important as it is for stability and agriculture
    and those options, what--shouldn't this responsibility be
    shifted elsewhere where it would be more appropriate?
        Ms. Stump. I can only speak to--I will leave the
    authorities and their allocation to Congress. I can only speak
    to the fact that the statute currently provides the CFTC with a
    review of these contracts.
        Mr. LaMalfa. Would your workload be easier if it didn't
    have this portion, or would CFTC's----
        Ms. Stump. The workload?
        Mr. LaMalfa. Would CFTC's workload be easier and more
    focused if it didn't have this area to oversee, especially not
    in 2010, but in 2025?
        Ms. Stump. Well, the workload would certainly be less.
        Mr. LaMalfa. Yes.
        Ms. Stump. That said, I actually think the culprit here is
    the fact that when the CFTC wrote this rule in 2011, that it
    didn't sufficiently take into account the public interest
    determination that is required by the statute.
        Mr. LaMalfa. Interesting. Do you want to expound on that a
    little bit more?
        Ms. Stump. Sure. The way the statute's written, in my
    opinion, is that the agency is tasked to make two
    determinations. One is a threshold question--are any of these
    contracts one of those five enumerated things, including
    gaming--and then subsequent to that, they may make a
    determination that the contract is not within the public
    interest. When the agency wrote the rule----
        Mr. LaMalfa. I think that is a key point, the public
    interest. What is the public interest in this portion?
        Ms. Stump. I completely agree with you.
        Mr. LaMalfa. Would it be better off in a completely
    different entity that is much more specialized, or experienced
    in, basically, online gambling? So, with that, I appreciate it.
    Mr. Chairman, thank you for the opportunity, and I will yield
    back.
        Mr. Johnson [presiding.] Ms. Salinas, you are recognized
    for 5 minutes.
        Ms. Salinas. Well, thank you, Mr. Chairman, and thank you
    to our Ranking Member, and thank you to our panelists for being
    here today.
        The Trump Administration has nominated a chair for the
    CFTC, but has not moved to fill the remaining seats, and even
    as industry and consumer advocates warn about emerging risks in
    some of these emerging markets: crypto, the growth of
    prediction markets, and rapid technological advancements. Given
    the President's lack of urgency in filling these remaining
    seats, his own personal financial interests related to
    cryptocurrency and the increasing complexity of the CFTC's
    regulatory responsibilities, I have serious concerns that the
    Trump Administration is purposefully handicapping CFTC's
    capacity. For the whole panel, how does leaving the CFTC
    without a full board in combination with the mass firings the
    Administration has undertaken weaken enforcement, and does it
    create opportunities for bad actors to slip through the cracks?
        Mr. Schiffrin. I think absolutely, as I said in response to
    Ranking Member Craig's question. I think if you don't have a
    CFTC that not only has the resources that it needs, but that
    has a full complement of Commissioners, it is not going to be
    able to do its job. It is not going to be able to do the job
    that it has traditionally been asked to do, and it is not going
    to be able to do the job that it is increasingly asked to do in
    new and evolving areas. And so, you need the CFTC not just to
    have, as I talked about before, a fully--a fully funded agency,
    but you have to have a full complement of Commissioners.
        Mr. Schwartz. I will answer by saying that in my experience
    at the CFTC when the Commission was at full capacity, when it
    had Commissioners with different expertise, balanced expertise
    like the statute requires, opposing views, it was a strength
    for the Commission to be able to deliberate with perspectives
    that come from those places.
        Ms. Crighton. FIA believes a full Commission is important,
    and it is good for market safety and soundness.
        Mr. Prosser. One of the benefits of having a full
    Commission is the diversity of viewpoints that all the
    Commissioners bring. And obviously, I am a little selfish in
    this side; but, as we bring on a full Commission, we would
    certainly hope that one of them would be deeply involved in
    agriculture and agriculture's issues, and be able to stand out
    and support us in those. So, we continue to say that we want a
    fully funded, a fully staffed CFTC, and that is certainly one
    of the reasons why.
        Ms. Salinas. I share your concern, Mr. Prosser. Ms. Stump?
        Ms. Stump. I agree with everything that has been said. I
    was very fortunate when I was a Commissioner to serve with four
    other individuals that were willing to come to the table and
    not only negotiate, but listen, and that is the important
    point. Many different viewpoints, many different backgrounds is
    critical, but also a willingness to work together and deal with
    very challenging issues.
        Ms. Salinas. Thank you. As we, Members of Congress,
    consider reauthorizing the CFTC, it is critical to remember
    that the Commission is the only Federal financial regulator
    funded solely, as you mentioned, Ms. Stump, through the
    appropriations--through annual appropriations because it has
    been reauthorized since 2008. This is the case despite massive
    market growth in swaps, crypto--we have been talking about this
    all morning--prediction markets, as well as emerging
    technological risks. Markets are getting more volatile,
    financial fraud is getting more sophisticated, and yet the
    Trump Administration is pushing a deregulatory agenda while
    Congress allows the CFTC to operate without a modern
    reauthorization. So, for, again, the whole panel, can you speak
    to the risk that is posed by the CFTC continuing to operate in
    a rapidly changing financial landscape without a
    reauthorization, and how are our growers being affected by
    this?
        Ms. Stump. I will just briefly say that I think it is
    necessary to reauthorize the agency for the very reasons you
    outlined. There is a tremendous amount of market evolution that
    has occurred since 2008, and just for frame of reference, I
    worked on that bill, and I had a child who was 2. He is now in
    college.
        [Laughter.]
        Ms. Stump. So, I would just say that I do think it is a
    worthwhile endeavor for the Committee and Congress to consider
    reauthorization--reauthorizing the agency with updated, current
    parameters.
        Mr. Prosser. I think from the end-user community, the idea,
    and Dawn said this in her remarks, the certainty that
    reauthorization brings matters. And that is really, from our
    perspective, is knowing that they are going to be there,
    knowing that they are going to be the referee matters to the
    end-user community.
        Ms. Salinas. Thank you, and my time has expired. I yield
    back.
        Mr. Johnson. Mr. Scott, you are recognized.
        Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. Ms.
    Stump, you have already talked about how important it is for
    the Commission to engage in research activities. We have had
    some discussion about technology and how fast those
    advancements are moving. What are the challenges or impediments
    to the Commission best fulfilling the mandate that they have to
    promote responsible innovation?
        Ms. Stump. Thank you for the question. Yes, I think
    Congress had the foresight in 1974 when the agency was created
    to include in the statute a research and information program. I
    would say that that language is slightly outdated now and could
    benefit from an update. I mean, things--technology was very
    different in 1974 and the task was very different in 1974, so
    to the extent that the Committee would update that, I think
    that is worthwhile.
        Mr. Austin Scott of Georgia. Yes.
        Ms. Stump. As to impediments, there have been occasions
    when the agency would have benefited from obtaining information
    from the private-sector because when we talk about technology,
    the private-sector is where the most beneficial information
    would be for the CFTC to conduct this research. And there are
    occasions when Federal procurement laws has prevented them from
    doing so.
        Mr. Austin Scott of Georgia. Part of it gets to the
    definition of a gift. We most oftentimes think of a gift as
    something of a monetary value or a physical item when
    technology--the definition there. And so, I want to move to
    you, Mr. Schwartz. My colleague, Congresswoman Kristen McDonald
    Rivet, and I, we introduced the CFTC Research and Development
    Modernization Act (H.R. 6598, Commodity Futures Trading
    Commission Research and Development Modernization Act of 2025)
    to rewrite the CFTC's mandate for research and development
    activities. Specifically, it modernizes and, hopefully, will
    future proof the Commission's research and development mandate
    and provide an opportunity for the Commission to create a new
    research and development plan. How might clearer requirements,
    definitions, and authorities around this mandate improve
    operations of the Commission?
        Mr. Schwartz. Well, to pick up on something that
    Commissioner Stump said, the language is 50 years old now, and
    it authorizes or directs the Commission to have a research and
    information program about things like determining the
    feasibility of using computers for trading. You know, I think
    we are all satisfied that it is feasible. The Commission has
    moved on.
        [Laughter.]
        Mr. Schwartz. But it would be helpful to have a clear
    mandate to tell the--look, the Commission would always rather
    have clear direction from Congress to execute rather than to
    set the mission for itself and make sure that it doesn't cross
    any lines. The appropriations issue is very, very important, so
    I think all involved would appreciate that kind of legislation.
        Mr. Austin Scott of Georgia. So, I will stay with you, Mr.
    Schwartz. No other regulator currently exercises authority over
    entities registered with the Commission, such as futures
    exchanges, clearinghouses, or FCMs, for activities subject to
    the Commodity Exchange Act. If a state regulator were able to
    unilaterally determine that a transaction was subject to state
    law, what would be the consequences of state regulators also
    exercising concurrent jurisdiction over an exchange, a
    clearinghouse, or an FCM for that transaction?
        Mr. Schwartz. That is a question that was asked back in
    1974, and Congress answered it with exclusive jurisdiction for
    the CFTC. You would have a patchwork, and that is probably too
    generous, of 50 states and the District of Columbia regulating
    activities that occurred on, for example, the designated
    contract market. I don't think it is workable.
        Mr. Austin Scott of Georgia. All right. Those are my
    questions, Mr. Chairman, and I will yield the 1 minute and 5
    seconds back. Thank you.
        Mr. Johnson. Very good. Mr. Scott banks the 1 minute for
    future use in some future hearing, and with that, the good
    gentleman from Illinois, Mr. Jackson, you are recognized.
        Mr. Jackson of Illinois. Thank you, Mr. Chairman. Thank
    you, Ranking Member. Once again, I would like to follow up on
    the earlier discussed question on the unique features of the
    agency being the only U.S. financial regulator that is not
    funded directly by the industry that it oversees, and there is
    this explosion now going on in sports betting. I am very much
    concerned about the susceptibility of the young people to these
    market conditions.
        So, over the last decade, we have witnessed the explosion
    in legalized sports wagering, an industry that has grown faster
    than many of our traditional financial markets. And we know
    whenever capital, technology, and human behavior converge at
    this speed, history teaches us that risk accelerates also. In
    finance, we would call this a systemic creep. This isn't where
    we want to go, but this is where we can unintentionally end up,
    the danger that small, unregulated activities aggregate into a
    structure capable of inflicting broad harm. We call these young
    persons students and athletes, but after the gamblers and other
    people surround them and prey upon them, then they are cast
    aside as adults and have to fend for themselves. And
    considering that the sports is gaining money and, at the same
    time, the President is reducing the oversight when there is
    more profitability, this is an open question.
        Probably starting with you, Mr. Schwartz, do you think the
    Administration is going in the right direction having reduction
    in enforcement of 20 percent for oversight, at the same time
    there is more money, more profitability available? Will this
    create more harm for students or more safety?
        Mr. Schwartz. Well, I certainly share your concern about
    young people. I have my 15 year old behind me here in the
    audience today, and if I find out that he has been betting on
    sports or taking positions on a futures exchange, I am going to
    take away his phone.
        [Laughter.]
        Mr. Schwartz. So, I think it benefits everybody to have a
    strong enforcement program, not to turn against my son, but
    against the actual wrongdoers, and I don't think that the--I
    think most parts of the private-sector would agree. It depends
    on who the enforcement program is looking at, but that is a
    very important aspect of what the CFTC does.
        Mr. Jackson of Illinois. Mr. Schiffrin, and I would ask
    that to you. Is the Administration going in the right direction
    in asking for reduction, and the agency has no means by which
    to generate funds to safeguard the protection of students?
        Mr. Schiffrin. Thank you for the question. As I said
    earlier, no, I think it is the wrong direction. I think the
    funding for the CFTC needs to be increased, not decreased. I
    also think that it needs to be increased so the CFTC can focus
    on its core mission. I am not sure that the Commodity Futures
    Trading Commission is the right regulator to regulate what is,
    essentially, sports gambling. And so, we want to see if--but if
    it is going to be forced to do that, it needs to have way more
    funds than it has currently.
        Mr. Jackson of Illinois. Okay. And today, as we--look, the
    danger is not theoretical. The decisions that this body will
    make will have long-lasting impact. It is already pressing
    against the lives of young people. Many of these NCAA students
    are students that are able to make more money than professors.
    Students, the ones that went to college are being preyed upon.
    I would ask that to you, Mr. Prosser. What should the agency
    ask for, for funding, if you have an opinion that, sir.
        Mr. Prosser. I don't have an opinion on funding, and I can
    say that from our side, as we look at all the new innovations
    that are happening, it is not really our place to say whether
    it is good or bad. But I think that it is better to have that
    debate with a fully funded, fully staffed Commission in place
    to make sure that all of the participants get to have input and
    then to have a decision rather than to do it in a vacuum.
        Mr. Jackson of Illinois. Thank you. I will ask that of Ms.
    Crighton, please.
        Ms. Crighton. Thank you. I will echo Mr. Prosser's
    comments. I am not a lawyer, but I am a risk manager. So, two
    places that I would encourage, not only Congress, but the CFTC
    to focus on is the risk management framework that will and,
    ultimately, potentially apply to these contracts when one is
    thinking about segregation of default funds. So, where there is
    an intersection of these new products with more traditional
    products and end-users, we have to think about the segregation
    of default funds to protect those communities from one another
    and insulate them from each other. And I would also encourage
    everyone to think about the impact of direct clearing. By
    removing intermediaries, by removing, in particular, the asset
    segregation and customer protections that we provide, and when
    they go directly to the clearinghouse, many of those
    protections go away. So, there are kind of two very practical
    considerations that should be part of this as well.
        Mr. Jackson of Illinois. Well, I have exceeded my time. Ms.
    Stump, I wish I could have gotten to you as well. Maybe next
    time. Mr. Chairman, Ranking Member, I yield back, but there is
    a fine line between the fandom--the speculation and the
    coercion are now blurred at an accelerating speed. I hope that
    we fully fund this, and I strongly disagree with the
    Administration in cutting back funding for oversight.
        Mr. Johnson. Mr. Jackson yields back. Thank you, sir. The
    chair is recognized for 5 minutes.
        I have been heartened by how many of my colleagues on both
    sides of the aisle have emphasized the need to reauthorize the
    CFTC, and, of course, thanks to all of our witnesses for so
    eloquently explaining why that matters. Of course, it is not
    just people in this room who agree. In fact, National Grain and
    Feed has asked me to submit for the record a statement asking
    us to reauthorize, and unless there is objection, that will be
    submitted.
        [The statement referred to is located on p. 90.]
        Mr. Johnson. All right. Ms. Crighton, perhaps a year ago, I
    submitted a letter to then CFTC Chairman, Russ Benham, asking
    for them to revisit and strengthen the clearinghouse margin
    methodology to better support end-users as they do risk
    management planning and liquidity planning. Give us an update.
    Where are we at with that?
        Ms. Crighton. Thank you for your work on that letter. We
    greatly appreciate it, and we felt like it sent a strong
    statement to the Commission to prioritize their focus on margin
    adequacy. I think as we look to where we are now,
    unfortunately, we haven't seen as much progress as we would
    like on behalf of the clearinghouses in terms of thinking about
    what is an appropriately calibrated risk margin regime. And so,
    we do think that should be a priority for the incoming chair to
    focus on the safety and soundness of the clearinghouses and
    think about kind of making some revisions to what that margin
    framework is.
        Mr. Johnson. So, you say we haven't made enough progress.
    Has substantial progress been made at all?
        Ms. Crighton. In short, no, and I think as we continue to
    live through various events that have created market
    volatility, we see what the impact of that is. And so, in many
    perspectives, you would say we withstood recent volatility
    quite well, we are not aware of any defaults as part of the
    ecosystem. But what ultimately happens when we see margins go
    too low in times of low volatility and we enter into a period
    of intense volatility, not only do we create a scenario where
    we have large increases in initial margin that is required, we
    have a requirement for a significant amount of variation margin
    or mark-to-market that is required on behalf of the community
    to post. And so, what that means is it actually undermines the
    credibility and, ultimately, the capacity that we are all
    willing to stand in and provide, and so that becomes an
    important topic. It kind of ultimately feeds to the
    conversation that we have been having with the end-user
    community, so not enough progress.
        Mr. Johnson. Yes. Thanks very much. Mr. Schwartz, I thought
    your testimony was excellent in at least a couple of different
    ways. I think you did a good job reminding all of us that
    despite these many market shocks in the last years, the stuff
    that the CFTC has within their jurisdiction held up pretty gosh
    darn well. I also liked how you talked about the diverse
    expertise that exists within the Commission. You also
    mentioned, at least in your oral testimony, that your main
    concern was you were concerned that they don't have enough
    resources, so talk to us a little bit about the expertise
    within the agency. Are there particular areas where you think
    there is a deficiency, and do you get the sense that the
    Commission has a plan to address that?
        Mr. Schwartz. I will just say that it is impossible for any
    one Commissioner or chair to have a balanced expertise in all
    of the areas that I listed. So, I am not going to pick apart
    the knowledge of any one individual, but it needs to be broader
    because the markets are extremely broad. It touches, again, as
    I said, many, many areas of our economy, probably more than any
    other regulator, so you have to make sure that the Commission
    has the expertise the statute requires, and you ought to make
    sure that it is adequately staffed because the shedding of
    staff has not just been numbers. It has been some of the most
    experienced and knowledgeable people at the agency, and I don't
    know how you address that, but it is going to be important to
    get people with talent and education and experience into those
    positions, certainly before crypto legislation comes out and
    while the markets are expanding in some of the ways we have
    discussed.
        Mr. Johnson. Sure. Commissioner, I have always understood
    the power of the self-certification process, which I think
    helps to balance the outside expertise, the innovation you
    talked about, as well as leveraging the expertise inside the
    agency. Do we feel like that is holding up well here in the
    longer haul?
        Ms. Stump. Well, I am a huge proponent of the self-
    certification process. I do know that, well, I will start by
    saying that without the self-certification process, the task
    that Congress has given the agency to promote innovation might
    be hindered. The self-certification process permits a more
    expedited process for various new products to come to market,
    but I would also like to take the opportunity to dismiss the
    fallacy that this sort of a process is without any oversight.
    Certainly, with the vast number of new products that are coming
    to market currently, there is a lot of work for the agency to
    do, but they have to do this through examinations. They have to
    do rule enforcement reviews of any of the entities that are----
        Mr. Johnson. Sorry. I need to give myself the hook,
    Commissioner.
        Ms. Stump. That is okay.
        [Laughter.]
        Mr. Johnson. If you would be willing to submit any other
    comments for the record, that would be wonderful. Thank you.
        Ms. Stump. Great.
        The Chairman [presiding.] All right. I am now pleased to
    recognize the gentlelady from Ohio, Ms. Brown, for 5 minutes.
        Ms. Brown. Thank you, Mr. Chairman. The Commodity Futures
    Trading Commission was created 50 years ago to ensure that
    farmers, ranchers, and energy producers, and manufacturers
    could rely on fair, transparent markets to manage risk. For
    decades, that meant corn, soybeans, cattle, oil, and
    electricity, markets that affect the price of food on our
    kitchen tables and gas in our cars, but today the CFTC is being
    asked to do far more.
        In addition to its traditional responsibilities, it is now
    on the front lines of regulating crypto derivatives, digital
    commodities, algorithmic trading, and new prediction-style
    contracts that blur the line between finance and gambling.
    These markets operate 24/7 across borders and at incredible
    speed. That means the job of protecting market integrity,
    preventing manipulation, and safeguarding customers have become
    more complex and more demanding than ever before. At the same
    time, the agency is expected to oversee hundreds of trillions
    of dollars in futures in swaps markets while operating with a
    Commission that has been reduced to a single sitting member and
    a budget that is a fraction of the size needed to keep up with
    the market policies. That imbalance should concern all of us
    because when markets move faster than the regulators, everyday
    people are often left to pay the price. We have seen what
    happens when financial innovation outpaces oversight or when
    Congress leaves regulatory gaps: a global financial crisis. We
    cannot afford to repeat those mistakes in crypto or prediction
    markets.
        So, Mr. Schiffrin, the CFTC regulates traditional
    agriculture energy markets and emerging areas, like crypto and
    prediction-style contracts. It is operating with just one
    Commissioner and a relatively flat budget. What specific new
    resources, staffing, technology funding, or enforcement
    authority must Congress authorize in order to prevent the
    agency from putting consumers and producers at risk?
        Mr. Schiffrin. Thank you for the question. Congress simply
    needs to ensure that if the CFTC is going to be tasked with not
    just fulfilling its traditional responsibilities that you
    mentioned, ensuring that the prices of commodities are fair and
    are set by supply and demand, but also take on the
    responsibilities for things like crypto and prediction markets,
    it has the resources it needs to properly oversee those
    markets, and that would require tremendous new sources of
    funding and staffing. And one of the reasons for that is
    because, as you kind of alluded to, traditionally, the CFTC has
    been focused on markets that have sophisticated institutional
    players, but the products--the new products that you are
    talking about are really geared towards retail investors, and
    the CFTC has not traditionally had a focus on protecting retail
    investors. And so, if that is going to now be its focus, it
    needs to kind of have the resources and staffing to shift its
    focus.
        Ms. Brown. Thank you, and, Ms. Crighton, what are the risks
    to clearinghouse stability today if the agency staffing and
    resources do not grow alongside its mission?
        Ms. Crighton. Thank you. From a risk management
    perspective, we are incredibly focused on what is the framework
    that these contracts may be margined under and how are--all of
    the financial resources that are at the clearinghouse, how are
    they brought to bear in the event of a default or an extreme
    stress situation. So, one of the things that we want to make
    sure is that we are thinking about, particularly on
    clearinghouses where there is an intersection of end-users as
    well as retail investors in these event-type contracts, that we
    are thinking about segregating the default fund and segregating
    the resources that backstop those contracts. And we think
    insulating those two very distinct pools of risk is an
    incredibly important step.
        Ms. Brown. Thank you, and back to you, Mr. Schiffrin. What
    are the risks to market stability, rulemaking legitimacy, and
    enforcement credibility when an agency overseeing hundreds of
    trillions of dollars is operating with only one sitting
    Commissioner?
        Mr. Schiffrin. Well, as was referred to earlier, right, if
    the CFTC can't act through regular order, it is going to be
    harder for it to fill its role of, essentially, being the cop
    on the beat, right? That is what we are talking about. We are
    talking about the CFTC policing the derivatives markets, and if
    there is just one Commissioner and not a full complement of
    Commissioners, and there is no bipartisan discussion and the
    CFTC doesn't have the resources that it needs, it is not going
    to be able to fill its cop-on-the-beat function.
        Ms. Brown. Thank you so much. Reauthorization is not just
    about keeping the lights on. It is about making sure the CFTC
    actually has the tools, the staffing, the leadership, and the
    funding to do the job Congress expects of it. If we expand the
    CFTC's mission without expanding its capacity, we aren't
    strengthening oversight. We are weakening it in ways that will
    be felt by farmers, consumers, and everyday families, and with
    that, Mr. Chairman, I yield back.
        The Chairman. I thank the gentlelady. I now recognize the
    gentleman from Indiana, Mr. Baird, for 5 minutes.
        Mr. Baird. Thank you, Mr. Chairman, and thank you,
    Committee Members and witnesses, for being here.
        It is really helpful to have the expertise that you possess
    to share with us so that we can make better decisions about
    whatever it is we are talking about, in this case, the CFTC
    reauthorization. So, I am going to start off, Mr. Prosser, with
    the idea that you mentioned: real-world uncertainty in the
    soybean oil market due to delayed Federal guidance on the
    biofuels policy. So, how does regulatory uncertainty, whether
    it is the EPA, the Treasury, the lack of CFTC reauthorization,
    how does that translate into volatility and increased risk for
    farmers and other commercial end-users?
        Mr. Prosser. Markets are pretty good at pricing risk, and
    uncertainty increases risk, and that price flows through to
    either the consumer or the producer. If you take the biofuels
    policy and the different contortions that we have had trying to
    get it started and un-started and reauthorized, and we are
    going through a process now at the EPA to try to finalize it,
    all of those, as we try to determine the possibility of it
    happening or not happening, needs to get priced in these
    markets. And I think that has been a really interesting
    experiment in how these markets work.
        As we get more certain, we throw those prices--that we can
    actually pay more to the farmer and sell products cheaper than
    when the process is more uncertain. And, certainly, the
    political process we have gone through around renewables has
    created uncertainties that have thrown soybean oil markets,
    soybean meal markets, and, to some extent, soybeans kind of in
    that arena where uncertainty was priced in a negative way.
        Mr. Baird. Thank you. Anyone else have a comment in that
    regard about the soybean oil?
        [No response.]
        Mr. Baird. If not, my next question goes to Ms. Stump.
    Drawing on--you have a lot of experience both in and out of
    commodity futures trading. And so, drawing on your work during
    the financial crisis and the implementation of Dodd-Frank, what
    lessons should Congress keep in mind as it approaches this as
    we approach this reauthorization?
        Ms. Stump. Having worked on the legislative side during a
    crisis and during a time when we didn't have a crisis, I think
    the policy outcomes are much better when you adjust the
    Commodity Exchange Act outside of a crisis environment.
    Oftentimes, during the development of Dodd-Frank--and I am not
    suggesting that there weren't great changes made in the
    financial crisis in response to what was going on, but it is
    very challenging to legislate in the midst of a crisis. We
    would be far better served to address changes to the Commodity
    Exchange Act before the event of a crisis.
        Mr. Baird. You mentioned in your testimony a new product
    and technology that may already be in development around the
    world. What emerging risks should Congress be thinking about
    now before they come into the market?
        Mr. Schwartz. I think the self-regulatory model that the
    Commodity Exchange Act established is very helpful in this
    regard because as new challenges come over the horizon, the
    Commission has the ability to deal with them quickly and
    flexibly, and it is not constrained by the same kinds of rigid
    rules that other regulators might be. And so, it doesn't have
    to rigid rules can lead to loophole-seeking behavior and just
    kind of hinder the agency from reacting quickly. So, I would
    just urge Congress to consider the importance of the
    principles-based regulations, self-regulatory model that the
    Commission has, and allow the markets to develop in an
    innovative way, but also not handcuff the agency from
    addressing issues as they arise.
        Mr. Baird. So, thank you. And we have about 25 seconds
    left, so the other two that I haven't got to, I would like to
    have a chance to talk to you, but do you have any comments to
    add? You got about 16 seconds now.
        [Laughter.]
        Ms. Crighton. Maybe I will just add, I agree. I think there
    are a significant amount of merits to the self-certification
    model, but I think given the number of new products that are
    coming to market, it is worth taking a closer look at that.
        Mr. Baird. Thank you, and I yield back.
        The Chairman. I thank the gentleman. I am now pleased to
    recognize the gentleman from Alabama, Mr. Figures, for 5
    minutes.
        Mr. Figures. Thank you, Mr. Chairman and Ranking Member.
    Thank you to all the witnesses for sitting through this.
    Normally when you see me, it means that you are very close to
    the end, but given the participation today, that may not be the
    case as Members come back and forth, so I apologize if I am not
    near the end.
        But, look, it has been hit on pretty regularly here today
    and pretty consistently in terms of the staffing challenges, in
    terms of the overall Commission, the current structure of the
    Commission there being down to one Commissioner. And I just
    want to go down the line and just, in light of CFTC's expanded
    jurisdiction that we are considering here, expanded crypto
    market participation, do we think that given recent reductions
    in force that we have seen, given the overall staffing
    situation at the Commission currently, do we think that the
    Commission is best set up for success given the current status
    of staffing and the Commission structure where we currently
    are? And we can just go down the line. Ms. Stump?
        Ms. Stump. Well, I am not familiar with the specifics of
    their staffing needs. I will leave that to the current
    Commission, but I will say the CFTC has always punched above
    its weight, and I am certain that they will continue to do so.
        Mr. Figures. Mr. Prosser?
        Mr. Prosser. One Commissioner is not enough. We need a full
    Commission with all their various backgrounds and interests,
    and especially in these markets that continue to evolve and
    innovate. But we would continue to encourage--even though the
    political process goes through--however it needs to happen, we
    need to get the Commission fully staffed. And again, I would
    repeat the idea that we would like some of those to have an ag
    background.
        Mr. Figures. Ms. Crighton?
        Ms. Crighton. Thank you. Yes, FIA supports a fully staffed
    and resourced Commission. We think the diversity of expertise,
    the diversity of opinions, the durability of the policy that it
    will create is incredibly important for safety and soundness.
        Mr. Schwartz. Yes, I will add that a fully staffed
    Commission is not important merely to restrain activity in the
    private-sector, but I know that people in the private-sector
    are concerned about things like getting new exchange
    applications approved and getting new clearing applications
    approved. And without the right staff, that it is simply not
    going to be doable in an orderly or timely fashion.
        Mr. Schiffrin. It would be impossible for the CFTC to
    adequately regulate the crypto markets, the prediction markets,
    and the traditional derivatives markets with the funding and
    staffing it has now. And I also think not only is a full
    complement of Commissioners important for bipartisanship, but
    it is important for the diversity of views, even if you are
    putting bipartisanship aside, right? As was alluded to earlier,
    if you just have one person, that person can't possibly have
    expertise in all the different areas that the CFTC has to
    oversee. So, putting aside bipartisanship, you need at least
    more than one Commissioner to get all those views in the
    building.
        Mr. Figures. Yes, and, Mr. Schiffrin, are we in a ticking-
    time-bomb situation given the current staffing in your view, or
    can things be sustained, but we are going to hit a cliff at
    some point?
        Mr. Schiffrin. No, I think it is a disaster waiting to
    happen.
        Mr. Figures. Thank you. And also, on the accessibility
    standpoint, and, I mean, accessibility through the lens of who
    can actually participate in and benefit from the markets that
    CFTC oversees. And for many rural farmers and small producers,
    including those in states like Alabama that I represent,
    broadband limitations make it incredibly difficult, sometimes
    impossible, to access pricing tools and education, risk
    management platforms, or even basic agency information, and
    these producers rely on future markets the most, yet they face
    some of the steepest barriers. Ms. Crighton, with the current
    staffing, shrinking outreach capacity, technology deficits,
    does CFTC currently have the resources necessary to improve
    accessibility of those sort of educational materials, complaint
    systems, market information for customers with limited
    broadband access?
        Ms. Crighton. I would say I have less of a view on that,
    but what I can offer in terms of follow-up from here is both
    resources from an FIA and Goldman Sachs standpoint. Goldman
    Sachs has been investing heavily in rural communities, and we
    would love to follow up with you on that.
        Mr. Figures. All right. Thank you.
        I yield back, Mr. Chairman.
        The Chairman. I thank the gentleman. I now recognize the
    gentleman from Indiana, Mr. Messmer, for 5 minutes.
        Mr. Messmer. Thank you, Mr. Chairman, and thank you all for
    taking time to highlight the importance of the CFTC this
    morning.
        Earlier this week, the President, alongside Secretary
    Rollins and Bessent, announced bridge payments to our farmers
    that, while this assistance is what the producers in my
    district need to stay in business next year, they are the first
    to say they would never have wanted to take these payments.
    American farmers would rather rely on healthy markets that
    honor their investment rather than have to accept Federal ad
    hoc assistance. Mr. Prosser, you shared the American
    derivatives markets are a vital tool for farmers in risk
    management of their operations. From your perspective as a
    commercial end-user, could you further explain the role of
    futures and option markets in helping agriculture producers
    plan and manage seasons of market volatility and shrinking
    margins?
        Mr. Prosser. For the end-users, the derivatives markets,
    again, are not an opportunity to speculate. We use them as
    risk-aversion tools. When a farmer asks us to buy his crop, we
    will offset that risk in a futures market, therefore, stripping
    off what is a flat price risk and a basis risk or a freight
    differential to the delivery point. This allows us a lot more
    capacity because we are not taking the whole price risk. It
    allows us also to weather extreme price events, whether that be
    geopolitical or weather. The idea of having a functional
    derivative market in those ag commodities allows the whole
    industry to price farther out with more capacity to provide
    more price certainty, not just for farmers, but for consumers.
        Mr. Messmer. Okay. Thank you. Certainly, it is important
    for farm operations, as any other--certainly it is important
    for farm operations, as far as any of the business. Earlier
    this year, the Committee spent months working on the CLARITY
    Act to provide regulatory certainty for innovators in digital
    asset space. Mr. Prosser, you highlighted the importance of
    protecting the marketplace for our farmers, while also
    incentivizing innovative technologies to establish roots in
    America. Could you speak to the CFTC's unique role in ensuring
    that there is both fertile ground for new industries to
    innovate and stable footing for commercial hedgers?
        Mr. Prosser. I think that we are most interested in the
    regulatory environment that we have for our traditional markets
    and protecting those to be open and transparent. There is going
    to be a debate about where this new innovation is going and how
    it is going to be regulated. And our initial interest is in
    making sure that those two Venn diagrams don't necessarily
    intersect or the direct--or the amount that they intersect is
    limited to the part of the industries that work. Where am I
    trying to go?
        So, the one in the back of my mind is 24/7 trading: 24/7
    trading might be absolutely adequate for some of the new
    innovations. We don't believe it works for our traditional
    markets. Again, the derivative markets or derivative cash
    markets, our cash markets don't trade like that. It creates
    holes in liquidities. So, having a fully funded, fully staffed
    CFTC would allow us to come to our regulator, lay out the
    reasons why certain things that might work for crypto or events
    don't work for the traditional markets, and hopefully we keep
    the regulatory regimen the same for the traditional markets we
    have today.
        Mr. Messmer. Thank you. The CFTC's work provides a
    foundation for the entire fabric of an American industry.
    Unfortunately, the absence of a reauthorization package--some
    of the Commission's regulations have grown stale. In fact,
    Representative McClain Delaney and I just introduced the CFTC
    Charitable Organization Exemption Act of 2025 (H.R. 6655) to
    address regulatory issues at the CFTC that has unnecessarily
    plagued our churches for decades. Although the fix has been
    approved by this Committee three times and passed the House
    floor twice, failure to reauthorize the CFTC has kept the
    solution from being implemented, exempt our churches from
    regulation. Ms. Stump and Mr. Schwartz, I know there are other
    similar issues impacting other industries that could be
    addressed through a simple reauthorization of the Commission.
    How important is it that we reauthorize the CFTC, not just fund
    it, to bring substantive improvements to a variety of
    industries?
        Ms. Stump. I think it is very important. I think that there
    are a number of things since the last reauthorization that
    warrant improvement--refinement is the word I would use--and
    this is the opportunity.
        Mr. Messmer. Okay. Thank you.
        Mr. Schwartz. I would just add quickly that I don't think
    churches and universities need to be regulated as commodity
    pool operators, so I think we are in agreement on that.
        Mr. Messmer. Okay. Thank you. I yield back my time.
        The Chairman. I thank the gentleman. I now recognize the
    gentleman from California, Mr. Carbajal, for 5 minutes.
        Mr. Carbajal. Thank you, Mr. Chairman and Ranking Member.
    Thank you to all the witnesses for taking time to be with us
    today.
        Mr. Schiffrin, my office has been hearing increased
    concerns surrounding online betting. Stakeholders have warned
    that this emerging unregulated gambling industry, also known as
    prediction markets, is abusing the CFTC self-certification
    process and that the Commission has not taken sufficient action
    to stop illegal futures contracts. Right now, for example,
    individuals can put a bet on who will win the Super Bowl or
    whether Democrats or Republicans will take the control of the
    House of Representatives next November, even though we know who
    that will be.
        [Laughter.]
        Mr. Carbajal. All these bets are being waged without proper
    oversight or safeguards in place. We have seen betting scandals
    in the NBA, MLB, and NCAA where bad actors were discovered as a
    result of information sharing, monitoring, strict regulations
    at the state level. However, these same protections are not in
    place for prediction markets. Given this landscape, do you
    believe the CFTC has expertise and experience to regulate what
    is, effectively, a multibillion dollar gambling industry, and
    how would the CFTC address problem gambling, underage gambling,
    or cheating under this system?
        Mr. Schiffrin. No, I don't think the CFTC has the authority
    or expertise to regulate sports gambling. It is the Commodity
    Futures Training Commission. It is supposed to regulate the
    derivatives markets, and these event contracts, although they
    want to call them trading on derivatives, that is not what they
    are. These are event contracts that, essentially, allow betting
    on sports. Take tonight's Thursday night football game, right?
    You can go on sites like Kalshi and Polymarket and,
    essentially, put a bet on either of the teams, and if the team
    that you put a bet on wins, you get money. That is gambling,
    that is sports betting, and the CFTC really has no expertise or
    authority in that area.
        Mr. Carbajal. Thank you. Mr. Schwartz, you mentioned in
    your testimony that during your time at CFTC, you witnessed
    what happened behind closed doors with Commissioners while they
    deliberated important questions before the agency. You stated
    that Democrats and Republicans of good faith would debate,
    sharpen their own thinking, compromise, and sometimes even
    convince one another to change their minds. You also pointed
    out that partisanship should not and typically does not dictate
    how the CFTC executes its mission. With there being only one
    sitting Commissioner currently on the CFTC and a growing
    concern that it could stay that way, do you believe this is
    creating partisanship within the agency in how it executes its
    mission, and do you have concerns if it remains with only one
    Commissioner in charge?
        Mr. Schwartz. Well, it certainly diminishes, eliminates the
    ability to meet, and deliberate, and sharpen thinking and to
    persuade one another, so I think it is just inherent in only
    having one Commissioner. I am not going to comment on anybody's
    partisanship, but there is currently one individual who makes
    the decisions for the Commission, and it is inevitably going to
    be that one person's decision that controls, partisan or
    otherwise.
        Mr. Carbajal. Thank you. Mr. Prosser, as you likely know,
    the CFTC has seen a 20 percent reduction in staff. This
    reduction could impact the agency's ability to execute
    essential functions of protecting customers/consumers,
    preventing fraud, and encouraging market efficiency. In your
    testimony, you mentioned your support for full funding and
    staffing of CFTC in order for it to keep up with the
    technological complexity, market growth, and global
    competitiveness. What current functions and processes at the
    CFTC are you concerned could be impacted by this reduction in
    staff?
        Mr. Prosser. I don't have any specifics. The thing that
    concerns me is markets can be mundane for long periods of time
    and quickly change, and we don't get to understand when or the
    magnitude of those changes until it happens, and having a fully
    funded, fully staffed CFTC at the ready to for the next
    inevitable market event is, we think, wise.
        Mr. Carbajal. Thank you. Mr. Chairman, I yield back.
        The Chairman. The gentleman yields back. I now recognize
    the gentleman from Alabama, Mr. Moore, for 5 minutes.
        Mr. Moore. Thank you, Mr. Chairman. I appreciate all the
    witnesses being here today, and I am happy that the Committee
    is holding a hearing on CFTC's reauthorization, and certainly
    our desire is that we ensure that CFTC can continue conducting
    oversight with stability.
        Ms. Stump, the CFTC is uniquely positioned to provide
    robust oversight while also providing cryptocurrencies the
    ability to operate without over-regulation. How do you see the
    pending market structure legislation advancing the priority of
    both conducting the oversight and allowing the market to
    prosper with cryptocurrency?
        Ms. Stump. Well, when I started at the agency, I repeatedly
    raised the alarm bells that I do not believe the agency has
    adequate authority, nor do I think any regulator has authority,
    to regulate a component of the market which is a non-security
    spot, and this has become a point that has been raised
    repeatedly at the agency. The marketplace is desperate to have
    their product regulated, and so we should meet that with
    appropriate authority for the CFTC to regulate the spot market
    outside of the security spot market. I would note that since
    that time, the agency and the marketplace have found a way to
    enter the CFTC space for retail commodities in the spot
    component, but I would also like to note that I don't think
    that is the cleanest approach, and I think the legislation
    advancing would be a cleaner authority for the CFTC.
        Mr. Moore. I guess I will ask this to kind of all the
    witnesses and give you, I don't know how much time I have. I
    have 3 minutes, so it doesn't give you a lot of time. But the
    rulemaking effect on agriculture is going to be different for a
    lot of firms and from the financial institutions, obviously.
    What is the right balance for the regulatory environment when
    it comes to rulemaking to protect participants without being
    overly prescriptive--that would be a good word--and what is the
    right balance in enforcement to weed out the bad actors and not
    restrict normal market activity? And, Mr. Prosser, if you want
    to start and we will work our way down, and when I run out of
    time, I will just throw up my thumb and say, ``Okay.'' Go
    ahead, sir. Oh, okay. Go ahead, Ms. Crighton. That will be
    great. Whoever is the expert. I guess you all are. So, Mr.
    Schwartz, it is down to you now.
        Mr. Schwartz. The right balance is spelled out in the
    statement of purpose in the statute. An illustrative part of
    that is responsible innovation, and it lists things like market
    integrity on the one hand, in addition to foster competition is
    one part of it, but also to protect customers. I think if the
    agency governs according to the mandate, that it will get the
    right balance, and I think it usually does.
        Mr. Moore. Very good. Anybody else? I have still got a
    little bit of time, more than I thought. You all went fast. Mr.
    Prosser.
        Mr. Prosser. I guess I am just going to--I don't know that
    we know the right balance. We have been talking about event
    contracts here, and the example of the day seems to be betting
    on the Super Bowl. What happens if we had an event contract
    that bet on the size of the corn carryout?
        Mr. Moore. Yes.
        Mr. Prosser. Then all of a sudden I might be interested as
    a traditional end-user. So, the balance and where we go with
    the regulatory environment, I think these markets will innovate
    faster than we expect them to, and having a CFTC that is there
    to meet those challenges is terribly important.
        Mr. Moore. I agree. I agree. Anybody else want to? Mister,
    is it Schiff? I can't see your name.
        Mr. Schiffrin. Schiffrin.
        Mr. Moore. It is at an angle. Okay. Go ahead. Oh, Mr.
    Schiffrin, go ahead.
        Mr. Schiffrin. No, I was just going to say, look, I just
    think it is important that the rules innovate along with the
    products. And so, you hear a lot about innovation and new
    products coming onto the market, and that is all well and good,
    but if you don't have the rules that innovate along with it,
    you are going to have fraud and manipulation that doesn't go
    detected.
        Mr. Moore. Thank you for that. Mr. Chairman, I am out of
    questions, so I will yield back you, sir.
        The Chairman. The gentleman yields back now. I now
    recognize the gentleman from North Carolina, Mr. Davis, for 5
    minutes.
        Mr. Davis of North Carolina. Thank you so much, Mr.
    Chairman, and to our Ranking Member. Mr. Chair, I want to start
    out by sharing with you, I am from eastern North Carolina, and
    I believe I heard one of the witnesses today is a dairy farmer
    in Brooklyn.
        [Laughter.]
        Mr. Davis of North Carolina. I don't know that I have met
    many----
        Mr. Schwartz. Grandson of. Grandson of.
        [Laughter.]
        Mr. Schwartz. But, yes, there was such a thing until----
        Mr. Davis of North Carolina. Okay.
        Mr. Schwartz. Yes. It has been a while.
        Mr. Davis of North Carolina. Well, being from rural eastern
    North Carolina, many farmers operate on thin margins, and often
    face severe weather and global price shocks. My value here is
    simple: access to markets must not depend on ZIP Code. So, to
    the Commissioner, my question would be, what reforms,
    regulatory or statutory, would reduce barriers to prevent
    rural, small-scale, or minority farmers from fully benefiting
    from derivative markets without increasing row type?
        Ms. Stump. I think that the reforms that there may not be
    any reforms that are necessary. Maybe more direction from
    Congress in the way of a dialogue. The way the statute is
    currently constructed, it permits a variety of people to
    participate in the markets, and it is designed that way very
    intentionally so that it is not exclusive. Traditionally, the
    people who have come to the marketplace have been more
    institutional in nature, but we are seeing an increased
    participation from the retail community. And the point has been
    made that maybe that warrants a different conversation about
    protections, and that may be relevant here, so.
        Mr. Davis of North Carolina. Thank you. I have been serving
    as Ranking Member, and we have been navigating this
    cryptocurrency digital asset space. And my question is for you
    also, Madam Commissioner, if the Senate and the House actually
    comes together and we move forward with some sort of regulatory
    framework agreement providing clarity, what happens if, then,
    the CFTC is not authorized?
        Ms. Stump. Technically, the authorities continue, the
    responsibilities of the agency continue, and, as has been
    apparent over the last decade, the agency operates as it is
    intended.
        Mr. Davis of North Carolina. No, I understand it continues,
    but what is the net effect is what I am getting at.
        Ms. Stump. I think--I think the net effect is that the
    Commission and the staff are left to make--apply parameters of
    the Act that may not have been designed with current markets in
    mind, and so----
        Mr. Davis of North Carolina. And that leads to my next
    question then. I mean, we are here having a meaningful
    conversation, but what steps are currently being taken,
    regardless of reauthorization or not?
        Ms. Stump. I think the agency, at least when I was serving,
    we were able to bring in some experts. But, I think the most
    important thing that this agency does that may be slightly
    different from other market regulators is we have a constant
    dialogue with the marketplace, and the point has been made that
    that is best done when you have a full complement of
    Commissioners. I would agree. And in the absence of updating
    the statute, I do think that the market participants should
    feel that there is an open door at the agency, such that those
    who are tasked to carry out the Act, even without the benefit
    of refinements from Congress, can do so in a way that is
    responding to current situations.
        Mr. Davis of North Carolina. And my question to Mr.
    Schwartz, and I do look forward to shaking your hand, too, by
    the way.
        [Laughter.]
        Mr. Davis of North Carolina. We are here talking about
    reauthorization of the CFTC. I know there has been a lot of
    questions regarding the prediction market, but, regardless of
    all the conversations, I am trying to understand what are the
    implications in terms of the functions of the agency if there
    is reauthorization or not with prediction markets.
        Mr. Schwartz. Well, like a broken record, agency capacity
    is very important, but to pick up on something that
    Commissioner Stump said, this is a statute that is aging and
    even the parts that were revised in Dodd-Frank. The statutory
    definition of swap includes anything that is or in the future
    becomes commonly known to the trade as a swap. These sports
    prediction markets, these sports event contracts are
    undoubtedly commonly known to the trade as swaps, so the CFTC
    has the exclusive jurisdiction, but it is obviously something
    that not everybody--I think that most people did not anticipate
    the way this would go.
        Mr. Davis of North Carolina. Well, again, thank you to all
    the witnesses for being here, and we look forward to continuing
    conversation. This is a very important topic, as we all know
    and understand. I yield back, Mr. Chairman.
        Mr. Johnson [presiding.] And the chair thanks Mr. Davis for
    his substantial leadership on the Commodity Markets, Digital
    Assets, and Rural Development Subcommittee. With that, the
    gentleman from Tennessee is recognized for 5 minutes.
        Mr. Rose. Thank you, Mr. Chairman, and thanks, Chairman
    Thompson and Ranking Member Craig, for holding this important
    hearing, and thank you to all of our witnesses for being with
    us today. Ms. Stump, the Whistleblower Office and the Customer
    Protection Fund are critical tools for the Commission. Can you
    briefly describe how these tools help to protect customers in
    the marketplace?
        Ms. Stump. Yes. The whistleblower provision incentivizes
    those who may have knowledge of a violation to come to the
    CFTC. If that information is, in fact, utilized in a material
    way to bring an enforcement action with a monetary sanction
    over $1 million, that money is put in the Customer Protection
    Fund from which the whistleblower may be compensated between
    ten and 30 percent of the monetary sanction. At the point which
    the fund reaches $100 million, that money then begins to
    accumulate back to the Treasury.
        Mr. Rose. Thank you. Mr. Schwartz, for the past several
    years, the Commission's Whistleblower Fund has been in danger
    of running out of money. Can you briefly describe or briefly
    explain the issue for us and what the consequences of that
    might be?
        Mr. Schwartz. I will try to be brief. So, the Customer
    Protection Fund is used for two things. One is to pay
    whistleblower awards, the second is to fund the Office of
    Whistleblower, including staff salaries, and it also funds the
    Office of Consumer Education and Outreach. If you have a--an
    award, and this has only happened a few times and threat of it
    has only happened a few times, that would be large enough to
    deplete the fund down to zero, then you have to furlough the
    entire staff of the Office of the Whistleblower. So, the office
    can't function. The program shuts down. The other thing that
    happens is, typically, the contributions to the Customer
    Protection Fund are small, so there are these incremental
    additions that get out of the hole, and especially if you have
    further debt on a large claim to a whistleblower, it could take
    forever to get there. So, it is the furloughing of staff and
    the deeply difficult task of replenishing the fund for other
    whistleblower awards.
        Mr. Rose. While you were General Counsel, Congress passed
    legislation to try to address the issue. Please explain the
    current fix, if you will, and is it sufficient to address this
    issue for the long haul?
        Mr. Schwartz. Well, what it does is it creates a second
    account that can hold up to $10 million that can be used to
    fund the office operations, staff salaries, and the like, so
    that is good. When these patches exist, they are not under
    threat of furlough, but Congress has had to do this over and
    over again, so that is not something that you want to do. I
    think a permanent fix would be justified, and it also doesn't
    solve the problem of having to replenish the fund in these
    incremental amounts.
        Mr. Rose. Any particular recommendations for what the
    broader fix should be?
        Mr. Schwartz. Yes. I think when a large monetary or any
    monetary sanction that could lead to a whistleblower award is
    collected, it should--or at least up to 30 percent of it--that
    could be--the top-level whistleblower award should continue to
    be accessible to the Commission to use to pay for awards that
    large so it won't hobble the office.
        Mr. Rose. Thank you, and, Mr. Schwartz, has the--or, yes,
    Mr. Schwartz. Has the CFTC's expired authorization since 2013
    created perceptions of instability that discourage
    international participants from listing products on the U.S.
    exchanges?
        Mr. Schwartz. Well, I think because of the nomenclature, it
    probably does make certain people nervous. It certainly sounds
    like the Commission is about to go out of business, or is more
    than a decade overdue, so I agree with Commissioner Stump when
    she said some other way of doing this, it would probably be
    preferable.
        Mr. Rose. Ms. Crighton, in what ways might foreign
    regulators exploit the U.S. reauthorization gap to attract
    swaps in futures volumes, such as through lighter-touch rules
    on clearing or data reporting, thereby gaining derivatives
    market share from American firms?
        Ms. Crighton. Yes. Thank you. Look, I think we are well
    regulated in every jurisdiction in which we operate, and we
    think the system of substituted compliance and deference works
    particularly well.
        Mr. Rose. Thank you. My time is about to expire. I yield
    back, Mr. Chairman.
        Mr. Johnson. The chair threw both Mr. Harris and Mr. Rose
    for a loop by taking them out of order. The chair begs their
    indulgence and will provide them both a personalized tour of
    the world's only corn palace as an apology gift.
        [Laughter.]
        Mr. Johnson. With that, Mr.----
        Mr. Rose. I have already been.
        [Laughter.]
        Mr. Johnson. Yes, very good. Mr. Vindman, you are
    recognized.
        Mr. Vindman. Thank you, Mr. Chairman, and thank you to all
    the witnesses for appearing here today.
        So, the thing I hear most from the farmers in my district
    is that input costs are too high. Costs for seed, fertilizer,
    repair parts are, frankly, just too high. They have been high
    for years, and that affects prices at the grocery store. So, my
    question for each of you, and we can go in line starting from
    Ms. Stump. I would like to ask each of you, what is the single
    most important thing that this Committee can do to lower costs
    for Americans at the grocery store?
        Ms. Stump. Well, that one may be well beyond my expertise,
    but I will say with regard specifically to the Commodity
    Futures Trading Commission, I think your oversight is very
    important to ensure that the markets continue to function in a
    way that those input provide--those that service your farmers
    are able to take advantage of the markets to manage their own
    price risk.
        Mr. Prosser. I think I mentioned earlier that the market
    prices uncertainty negatively--and I think that the things that
    the CFTC regulates and the derivative markets which it
    oversees, particularly in the things that I deal with every
    day--corn, beans, wheat--the things that we that--the food and
    the fiber in the United States, providing certainty in the
    regulatory environment, certainty for the participants in the
    market would help.
        Ms. Crighton. Thank you. I think to add on from my seat,
    the focus on margin, particularly a well-calibrated margin
    regime, is critically important for us to provide the services
    that we need to--particularly, to the end-user community.
        Mr. Schwartz. I will add that in the time of rising prices
    because of reasons, it would be particularly unhelpful if there
    were manipulation in the markets that you are describing. So, I
    think ensuring that the CFTC is able to police effectively its
    markets, be it the enforcement program or market surveillance,
    I think that is the kind of thing that the agency can do, and I
    think that is the capability that Congress should ensure that
    it has.
        Mr. Schiffrin. Yes. The CFTC needs to have adequate
    resources and staffing to fulfill its core mission, and the
    Committee needs to ensure that the CFTC's focus is its core
    mission, which is ensuring that prices for commodities reflect
    supply and demand, and not excessive speculation.
        Mr. Vindman. Thank you, and I appreciate that. And I
    appreciate your comment on predictability, Mr. Prosser,
    because, frankly, I think one of the areas that we see a lack
    of predictability is the tariff regime and the effect it is
    having on farmers in my district and around the country, but I
    do want to turn my attention briefly to prediction markets and
    event market regulation. And my question is, are there any
    topics, and I will start with Mr. Schwartz. Are there any
    topics that are out of bounds? I mean, ultimately, some people
    can certainly perceive these as bets on just about everything,
    like, how many school shootings there might be. As we all know,
    the President is both aged and infirm. People could be betting
    on whether he is going to make it through his current term. Are
    there things that are out of bounds for these markets?
        Mr. Schwartz. Well, look, I wouldn't list those contracts
    if I had a futures exchange. I think it would be helpful if the
    CFTC has some direction from Congress on this score. It is a
    delegation to examine topics like that, and if the CFTC is in
    need of further direction on that point, then I think the
    policy question has to come back to Congress to resolve.
        Mr. Vindman. Mr. Schiffrin?
        Mr. Schiffrin. I think there are--at least there should be,
    right? If the statute says that event contracts on things like
    gaming aren't permissible and the event contracts is listing a
    bet on who's going to win the football game, it should be
    pretty easy for the CFTC to say this is not the type of event
    contract that is permissible. And when Congress was debating
    Dodd-Frank, Senator Lincoln said exactly that. That is why the
    language about gaming was included in the statutory
    authorization because, otherwise, you would have people doing
    event contracts on the Super Bowl. That is literally the
    example that was given--one of the examples that was given, and
    now here we are. And so, I think the CFTC needs to make it
    clear that that is not appropriate.
        Mr. Vindman. So, thank you for that, and, obviously, I
    think this is meant to illustrate the fact that there are and
    there should certainly be areas that are out of bounds for
    these contracts. And we have talked about gambling, we have
    talked about predictions on some terrible events, and we have a
    role to play. So, thank you for that, and I yield back.
        Mr. Johnson. Thank you, sir. Mr. Harris, you are
    recognized.
        Mr. Harris. Thank you, Mr. Chairman, and thank you to all
    the panels for your presence and your expertise today.
        As a pastor for the last 36 years, I know firsthand that
    churches oftentimes operate with very limited administrative
    resources. And for this reason, many churches and nonprofits
    use common risk management tools, like swaps, to help manage
    retirement plans and educational or charitable endowments,
    providing long-term financial stability for these funds.
    However, due to the broadened definitions of the Dodd-Frank Act
    in 2010, these organizations, as you know, unexpectedly found
    themselves swept into a regulatory category that was never
    intended for them. And so, Mr. Schwartz, I just want to ask you
    if you can take a moment to explain how Dodd-Frank's broad
    definition of commodity pool unintentionally swept these
    ministry and nonprofits into a Wall Street regulatory
    framework.
        Mr. Schwartz. Yes, sir. The definition of commodity pool
    includes any collective investment vehicle. And so, if it were
    pension plans and other entities that had an interest in the
    pool like you are describing, it would be a collective
    investment vehicle that includes any one of a series of
    commodity interests. So, it is a low bar to clear for any
    investment vehicle like you are describing, and that is how it
    ended up in that category.
        Mr. Harris. Okay. Thank you. Well, and the fact is, as I am
    sure we can all agree, and as already mentioned when my
    colleague from Indiana mentioned it earlier, church pension
    plans and charitable endowments are not the same as Wall Street
    hedge funds and were never intended to be affected by this law.
    And, Commissioner Stump, during your time as a CFTC
    Commissioner, did you ever recognize the tremendous burden and
    uncertainty that these classifications were placing on
    churches, their retirees, and other nonprofit organizations?
        Ms. Stump. Yes. Actually, when Congress asked us to provide
    assistance in designing refinements that might be necessary in
    the context of reauthorization, I believe all of the
    Commissioners, while we didn't vote on this, we agreed that
    this was probably an unintended consequence of--and I would
    just like to point out, again, regulating in the midst of a
    crisis oftentimes results in these sorts of things. So, it is
    best to manage these things outside of a time when we are
    hurried.
        Mr. Harris. Exactly, and prior to your time as a
    Commissioner, the CFTC did issue a no-action letter in 2014
    offering temporary relief for church pension plans and a 2017
    no-action letter offering relief for university endowments, but
    these letters, of course, can be revoked at any time. So, I
    guess my question is, in your view, should faith-based
    nonprofits, which operate on long-term stewardship models, be
    forced to rely on temporary administrative relief instead of
    having clear statutory certainty from Congress?
        Ms. Stump. Oh, absolutely not. There should be--in the case
    that no-action relief is a useful tool for the agency, it is
    best if we can have Congress speak to correcting it, or have
    the agency, and by that I mean their Commissioners' vote to
    change it, but in this case, I do not believe the Commissioners
    can vote to change it without an act of Congress.
        Mr. Harris. Yes. Well, and I will say as Congress
    undertakes the CFTC reauthorization, are there any specific--in
    the last minute we have, specific recommendations that, really,
    either you or Mr. Schwartz would be willing to offer us to
    ensure that religious charities, church pension plans, and
    other nonprofits are shielded from these regulatory
    requirements that were never intended for them? Either of you.
        Mr. Schwartz. You could either--I guess, two ways--put in a
    carve-out from the definition of commodity pool, or you could
    direct the Commission to issue rules and regulations to ensure
    that that is the result that comes out of it.
        Mr. Harris. Okay.
        Ms. Stump. And I would expect that the agency would do so
    very quickly because I am unaware of any Commissioner that has
    felt that this was the intended result.
        Mr. Harris. Excellent. Well, thank you very much, and, Mr.
    Chairman, I yield back.
        Mr. Johnson. Thank you very much. With that, Mr. Vasquez,
    you are recognized.
        Mr. Vasquez. Thank you so much, Mr. Chairman. Before I
    begin my remarks, I would like to submit for the record a
    statement from the Indian Gaming Association.
        [The statement referred to is located on p. 108.]
        Mr. Vasquez. I want to start by saying something that may
    get overlooked in this issue, but when we talk about CFTC, we
    are also dealing with Tribal sovereignty. I have seven
    sovereign nations in my district. Some of them operate gaming
    operations. For me, being here from southern New Mexico and the
    Tribes that are in our district, including Mescalero, Akima,
    [speaking native language] Laguna, Santa Ana, so many others,
    they depend on us to uphold our trust and treaty obligations as
    a nation to them, and that includes protecting the gaming
    compacts that they negotiated with the U.S. Government in good
    faith. Now, in New Mexico, Tribal gaming isn't just the
    business for the Tribes. It is jobs for all New Mexicans,
    provides for education, funds for housing. It is the foundation
    of the economy for rural and Native American communities.
        And when it comes to sports betting, the rules are simple.
    In New Mexico, it only happens at Tribal casinos under Tribal,
    Federal, and state regulation, with strong safeguards in place
    to ensure tax revenue supports state and Tribal priorities,
    prevents underage betting, and protects those who struggle with
    gambling addiction. But now we are seeing that companies are
    trying to get around those rules by calling sports bets
    something else--event contracts or prediction markets--and they
    are using the CFTC's process to do so. So, from where I sit and
    from where New Mexico Tribes sit, bets on sports, regardless if
    they happen inside the casino or not, should be treated and
    regulated as sports betting.
        Now, what worries me is that the CFTC allows these
    companies to move forward unchecked, and we are going to end up
    with unregulated and unsafe online sports betting that are
    offered by unlicensed operators with none of the protections
    the Tribes and the states have spent decades building and have
    to follow. And the people who lose the most in my district are
    those Tribes who have very little, if no other, economic means.
    So, I want to dig into that, and, Mr. Schwartz, can you help me
    understand why a contract on the outcome of a sporting event is
    not considered gambling, and where do you draw that line?
        Mr. Schwartz. It comes from the statutory definition of
    swap that Congress passed in the Dodd-Frank Act. It was not
    trying to be narrow or nuanced. This was coming out of the
    financial crisis. It felt it important enough to give the CFTC
    broad jurisdiction, but because there are not those kinds of
    nuances in the definition, it would sweep in quite a lot. As I
    mentioned before--I am not sure you were you were present for
    it--the definition includes anything that is or in the future
    becomes commonly known to the trade as a swap. And we have them
    listed on designated contract markets offered by futures
    commission merchants, cleared by derivatives clearing
    organizations. If you look at the CFTC's product submission
    webpage, you see all of the submissions on this subject, and
    they are submitted as swap, swap, swap, swap, swap. So, I don't
    have any doubt that they fit within that definition but that is
    not the same thing as what the policy should be.
        Mr. Vasquez. Sure. So, do you agree then that the intent,
    essentially, of providing a product like this is akin to
    gambling and should be regulated likewise?
        Mr. Schwartz. I don't think I am the right person to answer
    that question.
        Mr. Vasquez. Why is that?
        Mr. Schwartz. I prefer to leave policy to the policymakers.
        Mr. Vasquez. Okay. Well, you are our issue expert, so the
    policy experts can't make the policy without having your
    expertise.
        Mr. Schwartz. Yes, I am to provide whatever legal
    assistance that I can.
        [Laughter.]
        Mr. Vasquez. Okay. Thank you so much. I appreciate it. One
    other question, Mr. Schwartz. Do you believe that regulating
    gambling is part of the CFTC's core mission? Is that something
    that you feel the CFTC is doing today?
        Mr. Schwartz. This is an old issue. It used to be illegal
    in many or most states to trade futures contracts on corn or
    wheat, and there is just a long-running debate on where the
    line should be between gambling and derivatives trading. And
    this is just the latest iteration of that, and I think the
    policymakers should look at it through the same lens.
        Mr. Vasquez. Thank you, Mr. Schwartz. I appreciate your
    answers, and I will just end with this. If online sports
    betting suddenly shifts into the CFTC's purview and the
    traditional system for these types of activities get bypassed
    along with Tribal compacts that the U.S. Government has made,
    it is going to impact Tribal revenue, it is going to have an
    impact on Tribal authority, and in New Mexico, that is a real
    impact on our schools and our rural communities and those
    casinos that depend on that revenue. So, this has a huge impact
    on rural New Mexico, it has a huge impact on Tribes, and this
    Committee has a responsibility to make sure that CFTC is
    enforcing the laws as Congress has passed, obviously make sure
    that we modify those that we understand are outside of the law.
    And so, as we discuss reauthorization, I hope we are going to
    continue to protect consumers and that we stand with all our
    Tribes across the country and those in New Mexico. Thank you,
    Mr. Chairman. I yield back.
        Mr. Johnson. Thank you. Mr. Mann, you are recognized.
        Mr. Mann. Thank you, Mr. Chairman, and thank to all of our
    witnesses for being here today. Good to see you, Mr. Prosser. I
    know we saw each other at the K State football game earlier
    this fall.
        Mr. Prosser. Go, Cats.
        Mr. Mann. Precisely, yes.
        [Laughter.]
        Mr. Mann. He took the words out of my mouth. The CFTC plays
    a critical role in today's economy, ensuring our markets
    function as they should for farmers, ranchers, and ag
    producers. In the big 1st District of Kansas and throughout the
    country, these markets are essential risk management tools that
    allow them to hedge a lot of uncertainty and secure prices in a
    very volatile environment. The CFTC's oversight helps keep
    those tools reliable and effective. However, as has been
    mentioned many times, the agency has gone over 15 years without
    a full reauthorization and it is way over past time to update
    and reauthorize.
        Just a handful of questions. Again, thank you all for being
    here. First for you, Mr. Schwartz: commodity futures and swaps
    markets are global markets. In fact, one of the largest
    clearinghouses registered with the CFTC is located in London.
    Can you speak to the importance for global regulators to be
    able to coordinate, share information with, and learn from one
    another as they surveil and regulate these markets?
        Mr. Schwartz. Yes, you put your finger on it. These markets
    are global, and things like systemic risk and wrongdoing don't
    recognize international borders, but on the other hand, there
    are differences in between the localities, right? They may have
    different practices in one part of the world, there are
    certainly different laws all over the world, and the CFTC's
    jurisdiction is primarily domestic. So, it is absolutely
    critical that they would be cooperating with foreign
    regulators, and information sharing is inherent in that.
        Mr. Mann. In your mind, would detailing staff to and from
    foreign regulators, like the UK or EU, support the global
    sharing of knowledge and experience and, ultimately, allow the
    CFTC to best serve the markets that, at the end of the day,
    helps Kansas and our ag farmers?
        Mr. Schwartz. Yes. Having those kinds of perspectives at
    the ready without having to engage in some kind of
    international process would be, I would think, very helpful to
    the agency, yes.
        Mr. Mann. And at the end of the day that would help our ag
    producers, right, I mean, which is which matters for these
    markets.
        Mr. Schwartz. Sure.
        Mr. Mann. Thank you. Quick question for you, Ms. Crighton,
    and good seeing you again. The protection of customer funds at
    an FCM is one of the bedrock principles for futures
    regulations. Can you briefly talk about how that process works
    both day to day in the event of a bankruptcy, and what happens
    if funds are held in a segregation account? If those funds are
    insufficient, how are customers made whole?
        Ms. Crighton. Sure. Nice to see you as well, and thank you
    for the question. You are right. I think one of the most
    important principles that we focus on as an FCM is our ability
    to segregate assets and protect client assets. And when we
    think about some of the newer structures that are being
    proposed, these sort of direct clearing models, we have to take
    a very careful look at how are assets protected in those new
    structures. Customers move from being a customer of an FCM and
    having those protections to being a counterparty to the
    clearinghouse where, in the event of a bankruptcy, they become
    a general creditor. And so, that is a very distinct difference
    in those two models, and it is one that we have to pay careful
    attention to.
        And the customer protection regime is one that we focused
    on quite heavily within the FTX discussion, right? When you
    think of these new structures, what does that actually mean?
    So, we segregate assets. We hold them into accounts designated
    for the benefit of customers in the event that we were ever to
    default. And if there was ever a shortage of assets in those
    segregation funds, one of the things that we are looking for is
    what we call the Griffin fix, and it is kind of cementing in
    statute the prioritization of customers. In the event that
    there were a shortage, they would be prioritized over other
    general creditors of the FCM.
        Mr. Mann. That is very helpful, though. Thank you. Last
    question, entirely different direction, for you, Mr. Prosser.
    In your testimony, you mentioned convergence and its importance
    to the real-world work of moving ag commodities around the
    planet. Can you speak to what convergence is and why that is
    important to the work that Scoular does?
        Mr. Prosser. The idea that, ultimately, these derivatives
    derive their value from a real commodity, the things we make
    food and fiber out of, is central to why they work as risk
    mitigation tools. And this is why the Commission has a role to
    play in physical markets because they do, as we come into
    delivery, help us go to a benchmark price that reflects the
    physical price of the commodities that these represent, and
    because of that process, they become integral hedge tools for
    producers as well as consumers.
        Mr. Mann. Great. Yes. Well, thank you all for being here. I
    yield back the balance of my 1 second, Mr. Chairman. Thank you.
        [Laughter.]
        Mr. Johnson. Very good. Thank you, Mr. Mann. Ms. Budzinski,
    you are recognized.
        Ms. Budzinski. Thank you, Mr. Chairman. Thank you, Ranking
    Member. I appreciate all the witnesses' time today for this
    important discussion on reauthorizing the Commodity Futures
    Trading Commission.
        I represent a district in central and southern Illinois. I
    come to this hearing really with a clear priority, which is
    making sure our derivatives markets continue to serve the real
    economy, especially the farmers, grain handlers, biofuel
    producers, and cooperatives who rely on these markets every
    single day. For producers in my district, futures markets are
    not abstract financial tools. They are lifelines, risk
    management tools that help determine whether a family farm
    survives in a volatile season like we have right now, whether a
    grain elevator can offer competitive bids, and whether rural
    communities can count on stable economic conditions.
        Right now, we are asking the Commodity Futures Trading
    Commission to do more than ever at a time when it has less
    capacity than ever. The agency has just one sitting
    Commissioner and four vacancies, an unprecedented situation for
    a regulator overseeing trillions of dollars in market activity.
    As the Commodity Futures Trading Commission is asked to keep up
    with rapid changes in technology, data systems, digital assets,
    and increasingly complex clearing operations, I support
    responsible innovation, but we have to be honest about the
    tradeoffs. If growing responsibilities aren't matched with real
    resources, we risk weakening oversight where it matters most
    for my district: our agricultural markets. So, as we move
    forward with this reauthorization, my hope is simple: that we
    give the Commodity Futures Trading Commission the tools and
    resources it needs to keep up with today's markets, and that we
    never lose sight of the farmers and rural businesses who rely
    on these markets every day to manage real-world risks. Central
    and southern Illinois helps feed and fuel this country, and our
    producers deserve strong, modern, and well-regulated markets
    that put their needs first.
        I appreciate our witnesses being here today, and again, I
    have a couple of questions. First, I wanted to direct to Ms.
    Crighton, and my question for you is, as margin and collateral
    requirements continue to evolve, how can reauthorization
    promote stability and sound risk management while also
    accounting for the liquidity constraints faced by smaller
    agricultural firms?
        Ms. Crighton. Thank you for the question.
        Ms. Budzinski. Yes.
        Ms. Crighton. I am going to separate those things a bit,
    and I think referencing Commissioner Stump, I think the CFTC
    has the ability to act and engage with us on margin now.
        Ms. Budzinski. Yes.
        Ms. Crighton. And I will say kind of parallel to that is,
    it is incredibly important to reauthorize, right? But kind of
    specifically on your question on margin, it serves as what we
    think of as the first line of defense. It is the capital, it is
    the collateral that sits with the FCM to mitigate a risk issue,
    to be the protections for the ecosystem in the event of a
    default. And when margin levels go too low and then we hit a
    period of real stress, what we find is an incredible stress and
    strain on the system where customers, end-users have to quickly
    source cash, which can have a broader destabilizing effect.
        Ms. Budzinski. Yes.
        Ms. Crighton. So, as margin levels continue to drift lower,
    one of the things that we think is most important is we think
    about recalibrating what those margin levels are so they don't
    drift so low. And if you have the ability for kind of more
    healthy projections, you have the ability to then source more
    stable funding so you are not looking at sourcing additional
    cash when everyone else is and cash is just more expensive.
        Ms. Budzinski. Right.
        Ms. Crighton. So, I don't think it is necessarily intuitive
    when we say higher or stronger margins. A more robust margin
    regime is one of the right answers, but we think it is because
    it gives that stability and durability of funding, and so you
    are not raising your costs when you really don't want to.
        Ms. Budzinski. Okay. Thank you for that, and I am going to
    squeeze in maybe one more question. Mr. Schiffrin, what
    improvements to transparency do you think Congress can or
    should prioritize in this reauthorization to better support
    commercial end-users' understanding of market conditions and
    risk?
        Mr. Schiffrin. Thank you for the question.
        Ms. Budzinski. Yes.
        Mr. Schiffrin. Well, I think that if the CFTC is going to
    take on newfound responsibilities in emerging markets, it needs
    to make sure that investors in those new and emerging markets
    have the disclosures that they need to understand the risks.
        Ms. Budzinski. Yes.
        Mr. Schiffrin. So, when you are talking about things like
    24/7 trading or prediction markets or perpetual futures, those
    are new and novel products that have new and novel risks, at
    the Commission we should make sure that investors have the
    disclosures that they need to understand those products.
        Ms. Budzinski. Is there anything specifically that you
    might recommend that in the reauthorization that we should be
    doing to get to that just to communicate more around the risks
    around some of these emerging markets?
        Mr. Schiffrin. Nothing comes to mind specifically, but I am
    happy to work with your office and get back to you on that.
        [Laughter.]
        Ms. Budzinski. Okay. Thank you. Thank you. I will yield
    back.
        Mr. Prosser. There are opportunities for the Commission to
    publish data about the market participants, who's buying, who's
    selling, and the cadence at which they do that, and we would
    encourage that to become more frequent.
        Ms. Budzinski. Thank you for that. Thanks.
        Mr. Johnson. Mr. Taylor from Ohio, your 5 minutes.
        Mr. Taylor. Thank you, Mr. Chairman, and thank you, Ranking
    Member, for holding this hearing today, and thank you to the
    witnesses for your time and expertise. And the sacrifices you
    make to be here don't unnoticed, and we appreciate it.
        Mr. Schwartz, the definition of swap is rooted in a broad
    statutory definition passed as part of the Dodd-Frank Act,
    which was further defined by the CFTC and the SEC. What are
    some of the possible consequences of poorly considered efforts
    to narrow the definition of a swap?
        Mr. Schwartz. Well, if it were narrowed too far, and
    financial innovation oftentimes includes regulatory avoidance,
    you could get into a situation where the CFTC didn't have
    jurisdiction that it needed. You could have systemic risk
    problems. You could have anti-fraud, anti-manipulation
    problems. So, that is something that Congress and the CFTC need
    to consider very, very carefully.
        Mr. Taylor. Okay. Thank you, and staying with you, Mr.
    Schwartz, it is my understanding that the Environmental and
    Energy Markets Advisory Committee was created by the Commodity
    Exchange Act, while the other four advisory committees were
    created by the CFTC, pursuant to the Federal Advisory
    Committees Act (Pub. L. 92-463). Despite all being advisory
    committees, because EEMAC was created in a different way, EEMAC
    is subject to different rules. How does administering the
    advisory committees according to two different sets of rules
    unnecessarily complicate agency operations, and can you talk
    more about some of the differences between the rules?
        Mr. Schwartz. Sure. Thank you. It is an administrative
    burden. There is, I can tell you, one expert in the Federal
    Advisory Committee Act in the Office of the General Counsel.
    She spends probably more than 50 percent of her time on this,
    and there are two sets of rules. It doesn't need to be so. I
    mean, some of the differences under the FACA, you have to
    submit various reports, documents, charters for approval by
    GSA. You don't have to do that for the EEMAC because it is
    exempt from the FACA. It is created differently. There are
    different rules as far as number of members from each
    committee. I don't know that there is justification that
    anybody sat down and thought about before they made two
    different sets of rules. It would just be easier to process if
    there were one set of rules for everyone.
        Mr. Taylor. Okay. I appreciate your perspective on that. As
    we work to reauthorize the CFTC, we have the opportunity to
    make improvements to ensure maximum efficiency toward its
    mission, to promote the integrity, resilience, and vibrancy of
    the U.S. derivative markets. One area, as Mr. Schwartz spoke
    about, where I think we can make an improvement is streamlining
    the advisory committee structure so all advisory committees
    operate equally. By all counts, the advisory committees serve a
    great purpose and provide great insight to the Commission, and
    it doesn't make sense that we have one advisory committee
    operating with different rules. To fix this, I will be
    introducing the CFTC Advisory Committee Improvement Act of 2025
    (H.R. 6899), which will eliminate the single authorization for
    EEMAC and replace it with a generic authorization for all
    advisory committees. I know in D.C. we like to make things
    complicated sometimes, but I think by standardizing the
    operating structures, we can make things better for the
    American people. I look forward to continuing to work with my
    colleagues on the CFTC authorization, and I am going to let you
    guys off a minute-and-a-half early. I yield back.
        Mr. Johnson. Very good. Thank you, Mr. Taylor. Mr. Davis,
    any closing comments for the record?
        Mr. Davis of North Carolina. Thank you, Mr. Chairman. Of
    course, when we talk about today's hearing, we have heard from
    some amazing witnesses on many issues and challenges
    confronting the CFTC, Mr. Chairman, and we have received
    several statements from the American Gaming Association, Indian
    Gaming Association, the NFL, all around the issue of event
    contracts on sporting events, and ask for unanimous consent for
    these statements to be entered into the record so that they
    could be shared with Members.
        [The documents referred to are located on p. 103.]
        Mr. Johnson. Anything else, sir?
        Mr. Davis of North Carolina. Yes. And last, I just want to
    thank you again and thank our witnesses.
        Mr. Johnson. A couple of our witnesses noted the strong
    tradition of nonpartisan decision-making at the Commission. Of
    course, we expect that at the staff level, but that has also
    been true at the Commissioner level, just really good technical
    expertise. I think we have also seen that spirit of non- and
    bipartisanship today as people talk about the importance of the
    CFTC. We have had words used by our witnesses and by Members--
    nimble, innovative, effective--and that is really why
    reauthorization is so incredibly important. If we want to
    continue to have this be the best little regulator that America
    has never heard of, as Mr. Schwartz said, continue to be a
    leading example of a quality, principles-based regulation, then
    Congress better do our gosh darn job, and I think today was a
    really, really good additional step toward that goal.
        With that, under the Rules of the Committee, of course the
    record is going to remain open for 10 days so our witnesses and
    Members can augment the record.
        And unless anyone else has anything pressing, the hearing
    on this Committee on Agriculture is now closed. Thanks.
        [Whereupon, at 12:35 p.m., the Committee was adjourned.]
        [Material submitted for inclusion in the record follows:]
      Submitted Letter by Hon. Doug LaMalfa, a Representative in Congress
     from California; on Behalf of Hon. Kenneth Kahn, Chairman, Santa Ynez
                            Band of Chumash Indians
    December 11, 2025

      Re: CFTC Reauthorization/``Event Contracts'' That Function as Sports
                Wagering or Casino-Style Gaming

        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        On behalf of the Santa Ynez Band of Chumash Indians (``Chumash
    Tribe'' or ``Tribe''), thank you for the opportunity to submit this
    statement for the record as the Committee considers reauthorization of
    the Commodity Futures Trading Commission (CFTC) and potential
    amendments to the Commodity Exchange Act (CEA).
        The Santa Ynez Band of Chumash Indians operates the Chumash Casino
    Resort, a full Class III Tribal gaming facility offering a broad mix of
    Las Vegas-style gaming. Guests can play more than 2,300 slot machines,
    including video poker and progressive titles, alongside over 45 table
    games such as blackjack, baccarat, roulette, and poker. The one thing
    you will not find at our resort is a sports book as over 80% of
    California voters opposed such a proposition in 2022.
        The Tribe supports well-regulated derivatives markets that serve
    legitimate commercial and risk-management purposes. However, we write
    to express serious concern about the increasing effort by certain
    vendors to use the CEA to facilitate sports wagering and other gaming-
    like products through so-called ``event contracts.'' Without clear
    statutory barriers, these instruments risk becoming a federally enabled
    pathway for betting activity that directly conflicts with Tribal
    interests, Tribal-state compacts, and long-settled Federal policy
    governing gaming.
    The CFTC Is Not a Sports Wagering Regulator and Is Unfamiliar with
            Gaming Oversight
        Sports wagering and casino-style games are not simply ``another
    financial product category.'' They involve unique issues of integrity
    monitoring, suspicious wagering detection, responsible gaming
    safeguards, consumer harm risks, age and location controls, and the
    close relationship between wagering and underlying contests. These are
    specialized regulatory domains that have historically been handled
    through state gaming regulators and, in Indian Country, through the
    Federal and compacting framework that respects Tribal sovereignty.
        The CFTC's expertise is in derivatives markets--market structure,
    clearing, manipulation, and risk transfer--not in the operational
    realities of sports books, gaming compliance, or the public policy
    tradeoffs that states and Tribes have navigated for decades. The Tribe
    is concerned that, absent explicit direction from Congress, the CFTC
    will be placed in the untenable position of approving or allowing
    products that function as gaming, without the institutional tools,
    experience, or framework to regulate them as gaming.
    Without Congressional Barriers, Vendors Will Innovate Toward Casino-
            Style Products
        The Tribe is particularly concerned that vendors such as Kalshi and
    others will continue to design contracts that, while styled as
    ``events'' or ``derivatives,'' will increasingly mimic casino-style
    games in their structure and consumer experience.
        That evolution is predictable. If a platform can successfully offer
    contracts that resemble bets on athletic outcomes, the commercial
    incentives will naturally push toward:

       high-frequency, short-duration contracts resembling in-play
            wagering;

       ``prop-style'' contracts that resemble parlays or other
            consumer betting formats; and

       contract structures that imitate games of chance or casino-
            style gameplay mechanics through rapid resolution and repeated
            participation.

        In practice, this would allow gambling-like activity to scale
    nationwide under a commodities-law label, bypassing the licensing,
    enforcement, and public interest protections that states and Tribes
    rely upon--and undermining Tribal gaming operations that fund essential
    governmental services.
    Requested Action: Amend the CEA To Draw a Bright Line
        The Chumash Tribe respectfully urges the Committee to amend the CEA
    to make clear that the CFTC should not approve, permit, or otherwise
    facilitate contracts that constitute sports wagering or casino-style
    gaming, including products whose predominant purpose and practical
    effect is consumer betting rather than bona fide risk management.
        Specifically, the Tribe recommends Congress:

      1.  Define and exclude sports wagering and casino-style gaming
                (including substantially similar products) from CFTC-
                authorized instruments, regardless of labeling.

      2.  Direct the CFTC to treat sports- and casino-style event contracts
                as ``contrary to the public interest,'' and therefore not
                permissible under the CEA.
    Conclusion
        Tribal governments have built gaming enterprises within a carefully
    balanced legal framework that respects sovereignty and state policy
    choices, and that supports critical governmental services for our
    communities. The Tribe strongly encourages Congress to ensure that CFTC
    reauthorization does not inadvertently create a Federal on-ramp for
    sports betting or casino-style gaming through the derivatives laws.
        Thank you for your consideration.
                Respectfully submitted,

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Kenneth Kahn,
    Chairman,
    Santa Ynez Band of Chumash Indians.
                                     ______

    Submitted Statements by Hon. Doug LaMalfa, a Representative in Congress
                         from California; on Behalf of:
                                  Statement 1
       hon. rodney a. butler, chairman, mashantucket pequot tribal nation
    Reauthorization of the Commodity Futures Trading Commission
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        On behalf of the Mashantucket Pequot Tribal Nation (MPTN), thank
    you for the opportunity to submit this statement for the record as the
    Committee considers reauthorization of the Commodity Futures Trading
    Commission (CFTC) and potential amendments to the Commodity Exchange
    Act (CEA).
        MPTN supports well-regulated derivatives markets that serve
    legitimate commercial and risk-management purposes. However, we are
    deeply concerned that the CEA is increasingly being invoked as a
    vehicle to facilitate widespread sports wagering--and potentially
    casino-style gaming--through products marketed as ``event contracts''
    or similar financial instruments. These developments threaten Tribal
    sovereignty and undermine Connecticut's carefully negotiated gaming
    framework with federally recognized Indian Tribes.
        MPTN is a federally recognized Indian Tribe with inherent sovereign
    authority and substantial governmental and economic interests in
    Connecticut. MPTN operates gaming facilities pursuant to the Indian
    Gaming Regulatory Act (IGRA) and long-standing agreements with the
    State of Connecticut. Revenue from these operations funds essential
    governmental services, including public safety, education, health care,
    housing, infrastructure, and cultural preservation for the Mashantucket
    Pequot people.
    Connecticut's Gaming System Is Built on Tribal-State Agreements
        Connecticut's gaming framework is unique and deliberate. For
    decades, gaming in the state has been governed by negotiated agreements
    between the state and two federally recognized Tribes--MPTN and the
    Mohegan Tribe. These agreements reflect a carefully balanced exchange
    of rights and obligations, under which Tribal gaming exclusivity has
    generated substantial and consistent revenue for the state while
    supporting Tribal sovereignty, self-determination and economic
    stability.
        In recent years, Connecticut has expanded lawful gaming to include
    sports wagering and online gaming--but only through legislation that
    reaffirmed the central role of the Tribes and subjected all such
    activity outside Tribal lands to strict regulatory oversight by the
    Connecticut Department of Consumer Protection. Tribal gaming operators
    remain subject to extensive licensing, integrity monitoring, consumer
    protections, responsible gaming requirements, and age and geolocation
    controls.
        This system reflects clear policy choices by the state and the
    Tribes, and it depends on respect for the Tribal-state agreements that
    underpin it.
    Event Contracts Threaten to Undermine Connecticut Law and Tribal
            Agreements
        MPTN is increasingly concerned that sports-related ``event
    contracts'' offered by vendors such as Kalshi and Crypto.com threaten
    to bypass Connecticut's gaming laws and negotiated agreements entirely.
    Although these vendors assert that their products are financial
    instruments governed by the CEA, in practice the products function as
    sports bets--allowing consumers to wager money on the outcomes of
    sporting events with no connection to bona fide hedging or commercial
    risk management.
        These products directly compete with lawful Tribal gaming
    operations in Connecticut while avoiding the regulatory obligations set
    by state and Tribal regulators and longstanding agreements between the
    state and the Tribes. Event contracts are being marketed to Connecticut
    residents, including on Tribal lands, without authorization from state
    or Tribal regulators and without regard to the Tribal-state framework
    that governs gaming in the state.
        Allowing gambling-like products to operate nationwide under the CEA
    erodes the value of the Tribal exclusivity commitments that Connecticut
    and the Tribes have relied upon for decades and destabilizes a system
    that has worked for both the state and the Tribes.
    The CFTC Is Not a Gaming Regulator and Should Not Override State-Tribal
            Policy Choices
        The CFTC's mission and expertise center on derivatives market
    integrity, clearing, and enforcement against fraud and manipulation.
    The Commission is not designed or equipped to regulate sports wagering
    or casino-style gaming, which raise distinct public-interest concerns,
    including consumer protection, wagering integrity, responsible gaming,
    and respect for state and Tribal sovereignty.
        In Connecticut, those responsibilities are addressed through
    Tribal-state agreements, state law, and gaming regulators--not Federal
    commodities law. Allowing gambling-like products to proceed under the
    CEA risks transforming the CFTC into a de facto national gambling
    regulator and displacing Connecticut's carefully negotiated gaming
    system without Congressional authorization.
        Such an outcome would undermine IGRA, erode Tribal-state
    agreements, and weaken a framework Congress has long recognized as
    essential to Tribal self-determination and economic development.
    Without Clear Limits, Event Contracts Will Continue to Expand Toward
            Casino-Style Gaming
        MPTN urges the Committee to recognize the strong commercial
    incentives driving these products. If sports-style event contracts are
    permitted to scale under the CEA, vendors will predictably design
    offerings that increasingly resemble casino-style gaming--short-
    duration outcomes, rapid repeat play, and wagering mechanics
    indistinguishable from regulated sports betting.
        Without clear statutory boundaries, these products will proliferate
    in Connecticut outside of state and Tribal oversight, undermining
    regulatory authority and Tribal revenues that support essential
    governmental services.
    Requested Congressional Action: Draw a Bright Line in the Commodity
            Exchange Act
        MPTN respectfully urges the Committee to include in any CFTC
    reauthorization legislation targeted amendments to the CEA that:

       Clarify that the CFTC may not approve, permit, or otherwise
            facilitate contracts that constitute sports wagering, including
            contracts whose predominant purpose and practical effect is
            consumer betting rather than bona fide hedging or commercial
            risk management.

       Prohibit event contracts and similar instruments that
            function as casino-style games or otherwise replicate gambling
            mechanics, regardless of how such products are labeled or
            marketed.
    Conclusion
        MPTN appreciates the Committee's leadership in overseeing the
    nation's derivatives markets. Modernization, however, must not come at
    the expense of Connecticut's Tribal-state gaming framework, Tribal
    sovereignty, or the integrity of negotiated agreements that have served
    the state and the Tribes for decades. We urge Congress to act now to
    ensure that the CEA does not become a Federal workaround for sports
    betting and casino-style gaming--activities that directly conflict with
    Connecticut law and undermine Tribal self-determination.
        Thank you for the opportunity to submit this statement for the
    record.
                                  Statement 2
    hon. austin lowes, chairman, sault ste. marie tribe of chippewa indians
    Reauthorization of the Commodity Futures Trading Commission
        On behalf of the Sault Ste. Marie Tribe of Chippewa Indians, I urge
    the Committee to oppose unlicensed and unregulated sports betting being
    offered under the guise of ``event contracts'' under the Commodity
    Exchange Act. These products function as sports wagering, yet are
    designed to evade Michigan law and the Tribal-state gaming compacts
    that protect consumers, uphold Tribal sovereignty, and fund essential
    public services. Allowing them to proliferate would directly undermine
    the Tribe's gaming operations, disrupt Michigan's carefully regulated
    gaming system, and weaken long-standing cooperative agreements between
    the state and Tribal Nations.
        If unchecked, these platforms will siphon revenue from regulated
    Tribal and state gaming, provide no support for problem-gambling
    prevention, and expose Michigan residents--including those on Tribal
    lands--to gambling without meaningful oversight or safeguards. The CFTC
    is not a gaming regulator, and the Commodity Exchange Act should not be
    used as a backdoor to impose nationwide sports betting at the expense
    of Tribal Nations and states. We respectfully urge the Committee to
    reaffirm that gambling regulation belongs to states and Tribal
    governments--not Federal commodities law.
                                  Statement 3
                mark macarro, chairman, pechanga band of indians
    Reauthorization of the Commodity Futures Trading Commission
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        On behalf of the Pechanga Band of Indians, thank you for the
    opportunity to submit this statement for the record as the Committee
    considers reauthorization of the Commodity Futures Trading Commission
    (CFTC) and potential amendments to the Commodity Exchange Act (CEA).
        The Pechanga Band supports well-regulated derivatives markets that
    serve legitimate commercial and risk-management purposes. However, we
    are deeply concerned that the Commodity Exchange Act is increasingly
    being invoked as a vehicle to facilitate widespread sports wagering--
    and potentially casino-style gaming--through products marketed as
    ``event contracts'' or similar financial instruments. These
    developments threaten Tribal sovereignty and undermine California's
    voter-approved gaming framework.
        The Pechanga Band of Indians is a federally recognized Indian Tribe
    with inherent sovereign authority and substantial governmental and
    economic interests in California, employing nearly 5,000 people and
    generating an economic impact of over $1.1 billion for the State of
    California. The Tribe operates a gaming facility pursuant to the Indian
    Gaming Regulatory Act (IGRA) and Tribal-state compacts with the State
    of California. Revenues generated from these operations fund essential
    governmental services, including public safety, education, health care,
    housing, infrastructure, and cultural preservation for our citizens.
    California's Gaming Framework Is Voter-Approved and Constitutionally
            Grounded
        California's gaming system is distinct and deliberate. Tribal
    gaming in the state is grounded in the California Constitution and
    repeatedly reaffirmed by California voters. Through ballot initiatives
    and the compacting process under IGRA, voters and policymakers have
    made clear choices about where, how, and by whom gaming may occur in
    California.
        Under this framework, Class III gaming--including casino-style
    gaming and sports wagering--is permitted only pursuant to Tribal-state
    compacts approved by the Legislature and the Governor, and subject to
    rigorous oversight. This system reflects a careful balance between
    Tribal sovereignty, state interests, and public accountability. It has
    provided regulatory certainty, strong consumer protections, and
    critical economic support for Tribal governments across California.
    Event Contracts Circumvent California Law and Voter Intent
        The Pechanga Band is increasingly concerned that sports-related
    ``event contracts'' offered by vendors such as Kalshi and Crypto.com
    are bypassing California's constitutional and statutory gaming
    framework altogether. Although these vendors claim their products are
    financial instruments governed by the CEA, in practice the products
    function and are advertised as sports bets--enabling gambling on the
    outcomes of sporting events with no connection to bona fide hedging or
    commercial risk management.
        These gaming products directly conflict with California law and
    voter intent. They compete with lawful Tribal gaming operations that
    are subject to strict regulatory oversight and public accountability.
    These unregulated gaming contracts are being marketed to California
    residents--including on Tribal lands--without approval from the state,
    without voter authorization, and without regard to Tribal-state compact
    obligations.
        Allowing sports betting to operate nationwide under the CEA is an
    affront to states' rights. It effectively circumvents California's
    constitutional framework and nullifies the choices California voters
    have repeatedly made regarding gaming.
    The CFTC Is Not a Gaming Regulator and Should Not Set Gambling Policy
            for California
        The CFTC's expertise lies in regulating derivatives markets to
    ensure market integrity and protect against fraud and manipulation. It
    was never designed or equipped to regulate sports wagering or casino-
    style gaming, which raise distinct public-interest concerns, including
    consumer protection, wagering integrity, responsible gaming, and
    respect for state and Tribal sovereignty.
        In California, those responsibilities are addressed through the
    IGRA framework, Tribal-state compacts, and state constitutional
    processes--not Federal commodities law. Allowing sports betting
    products to proceed under the CEA would transform the CFTC into a de
    facto national gambling regulator and displacing California's voter-
    approved system without Congressional authorization.
        Such an outcome would undermine IGRA, erode Tribal-state compacts,
    and weaken a framework Congress has long recognized as essential to
    Tribal self-determination and economic development.
    Without Clear Limits, Event Contracts Will Continue To Evolve Toward
            Casino-Style Gaming
        The Pechanga Band urges the Committee to recognize the strong
    commercial incentives driving these products. If sports-style event
    contracts are permitted to scale under the CEA, vendors will
    predictably design offerings that increasingly resemble casino-style
    gaming--short-duration outcomes, rapid repeat play, and wagering
    mechanics indistinguishable from regulated sports betting. In fact,
    recent news reports indicate Kalshi has recently launched ``combos,'' a
    version of the popular and profitable parlays offered by regulated
    sports book operators.
        Without clear statutory boundaries, these products will proliferate
    in California outside of voter approval, state oversight, and Tribal
    gaming regulation.
    Requested Congressional Action: Draw a Bright Line in the Commodity
            Exchange Act
        The Pechanga Band of Indians respectfully urges the Committee to
    include in any CFTC reauthorization legislation targeted amendments to
    the Commodity Exchange Act that:

       Clarify that the CFTC may not approve, permit, or otherwise
            facilitate contracts that constitute sports wagering, including
            contracts whose predominant purpose and practical effect is
            consumer betting rather than bona fide hedging or commercial
            risk management.

       Prohibit event contracts and similar instruments that
            function as casino-style games or otherwise replicate gambling
            mechanics, regardless of how such products are labeled or
            marketed.
    Conclusion
        The Pechanga Band of Indians appreciates the Committee's leadership
    in overseeing the nation's derivatives markets. Modernization, however,
    must not come at the expense of California's Constitution, voter-
    approved gaming policies, or Tribal sovereignty.
        We urge Congress to act now to ensure that the Commodity Exchange
    Act does not become a Federal workaround for online sports betting and
    internet casinos--undermining both state sovereignty and the economic
    foundations of Tribal governments.
        Thank you for the opportunity to submit this statement for the
    record.
                                  Statement 4
     hon. charles martin, tribal chairman, morongo band of mission indians
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        On behalf of the Morongo Band of Mission Indians (``Morongo'' or
    ``Tribe''), thank you for the opportunity to submit this statement for
    the record in connection with the Committee's work to reauthorize the
    Commodity Futures Trading Commission (CFTC) and consider potential
    amendments to the Commodity Exchange Act (CEA).
        The Morongo Band of Mission Indians operates Morongo Casino Resort
    & Spa and Casino Morongo, offering extensive Class III gaming with
    thousands of slots, a wide range of table games (including blackjack,
    baccarat, roulette, craps, pai gow, and proprietary poker variants), a
    large poker room, and bingo. However, Morongo does not operate a retail
    sportsbook because sports wagering remains illegal in California after
    voters rejected 2022 ballot measures (Propositions 26 and 27) that
    would have authorized sports betting at Tribal casinos and online
    statewide.
        Morongo supports well-regulated derivatives markets that serve
    legitimate commercial purposes--especially those that allow producers,
    businesses, and market participants to manage risk. At the same time,
    Morongo is deeply concerned by efforts to use the CEA to facilitate or
    expand sports betting and casino-style wagering through so-called
    ``event contracts'' or other instruments that function in practice as
    gambling. Whatever label is applied, these products resemble and
    operate as wagering on the outcome of athletic contests or games of
    chance--not traditional hedging or risk-management tools.
        For Tribal governments, these developments are not academic. Tribal
    gaming is a cornerstone of Tribal economic development and governmental
    self-determination. It supports essential governmental services such as
    public safety, healthcare, housing, education, and infrastructure.
    Tribal gaming is also governed by a carefully balanced framework of
    Federal law and Tribal-state compacts that reflect state policy choices
    and respect Tribal sovereignty. Allowing sports wagering or casino-
    style gambling to proliferate nationwide under the guise of commodities
    regulation threatens that balance, undermines compacting, and risks
    preempting state and Tribal regulatory structures that Congress has
    long recognized as central to gaming policy.
        Morongo respectfully urges the Committee to amend the CEA to
    provide clear statutory direction that the CFTC should not approve,
    permit, or otherwise facilitate contracts or instruments that
    constitute betting on sporting events or casino-style games.
    Specifically, Morongo encourages Congress to:

      1.  Clarify that ``gaming'' and ``sports wagering'' are outside the
                proper scope of CFTC-regulated derivatives when the
                product's predominant purpose and practical effect is
                consumer wagering rather than bona fide hedging or
                commercial risk transfer.

      2.  Direct the CFTC to treat event contracts tied to sporting events,
                athletic performance, or casino-style games as contrary to
                the public interest, including because they conflict with
                long-standing Federal policy respecting state and Tribal
                authority over gaming.

      3.  Prevent Federal preemption of state and Tribal gaming policy
                through CEA mechanisms, including by ensuring the CFTC
                cannot use self-certification processes or other procedural
                paths to enable markets that replicate sports books or
                online casino products.

      4.  Protect Tribal sovereignty and the Federal Tribal-state
                compacting framework by requiring that the CFTC's
                determinations explicitly account for impacts to Tribes and
                to state-Tribal compacts whenever proposed products
                implicate gaming-like activity.

        Morongo recognizes that Congress may consider expanding or refining
    the CFTC's authority in other contexts. But any reauthorization should
    strengthen the Commission's ability to police manipulation, fraud, and
    market abuse in legitimate derivatives markets--not create a pathway to
    nationalize sports betting or casino-style gambling through Federal
    commodities law.
        For these reasons, Morongo respectfully requests that the Committee
    incorporate into its reauthorization package targeted amendments to the
    CEA that draw a bright line between legitimate derivatives and gambling
    products--and that reaffirm Congress's intent that gaming remains
    regulated through the appropriate Federal, state, and Tribal
    frameworks, not through the CFTC.
        Thank you for your consideration.
                Respectfully submitted,

    Charles Martin,
    Tribal Chairman,
    Morongo Band of Mission Indians.
                                  Statement 5
       james siva, chairman, california nations indian gaming association
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        My name is James Siva, and I serve as Chairman of the California
    Nations Indian Gaming Association (CNIGA), which represents 57
    federally recognized Tribal governments in California. Thank you for
    the opportunity to provide testimony regarding our perspective on the
    reauthorization of the Commodity Futures Trading Commission (CFTC).
        This is a timely matter: Congress urgently needs to conduct
    oversight of the CFTC and revise its authorizing statute. Why? For
    nearly a year the CFTC has failed to exercise its authority to halt
    actions which clearly violate the letter and spirit of the Commodity
    Exchange Act (CEA) and CFTC regulations, and in so doing allowed
    private actors to violate the sovereignty of Tribal nations in
    California and across the country.
        I am referring to the proliferation of so-called prediction markets
    operating under the guise of ``sports event contracts.'' In fact, these
    contracts are nothing more than a clever ruse to conduct illegal sports
    betting across the nation. This includes gaming on Tribal lands, which
    is a violation of the Indian Gaming Regulatory Act.
        If the CFTC cannot or will not act to halt this illegal activity,
    Congress must do so.
    Congress and CFTC Regulations Explicitly Rejected Sports Event Futures
            as Gambling
        The intent of Congress in enacting the Commodity Exchange Act, and
    the CFTC in its implementing regulations, was to exclude gaming in
    CFTC-regulated markets. This was made explicitly clear during debate on
    the most recent modernization of the CEA in 2010, when the then-Senate
    Agriculture Committee Chairman stated \1\ * the purpose of Sec. 745 \2\
    of the bill, identifying ``gaming'', and other contracts as not in the
    public interest:
    ---------------------------------------------------------------------------
        \1\ 156 Cong. Rec. S5[09]6 (daily ed. July 15, 2010).
        * Editor's note: references annotated with  are retained in
    Committee file.
        \2\ 7 U.S.C.  7a-2(c)(5)(C).

              ``. . . I maintained this provision in the conference report
            to assure that the Commission has the power to prevent the
            creation of futures and swaps markets that would allow citizens
            to profit from devastating events and also prevent gambling
            through futures markets.
              ``The Commission needs the power to, and should, prevent
            derivatives contracts that are contrary to the public interest
            because they exist predominantly to enable gambling through
            supposed `event contracts.' It would be quite easy to construct
            an `event contract' around sporting events such as the Super
            Bowl, the Kentucky Derby, and Masters Golf Tournament. These
            types of contracts would not serve any real commercial purpose.
            Rather, they would be used solely for gambling.''

        The CFTC acted on this direction from Congress in developing its
    implementing regulations,\3\ which explicitly prohibit contracts
    involving gaming:
    ---------------------------------------------------------------------------
        \3\ 17 CFR  40.11.

              (a) Prohibition. A registered entity shall not list for
            trading or accept for clearing on or through the registered
    ---------------------------------------------------------------------------
            entity any of the following:

                      (1) An agreement, contract, transaction, or swap
                    based upon an excluded commodity, as defined in Section
                    1a(19)(iv) of the Act, that involves, relates to, or
                    references terrorism, assassination, war, gaming, or an
                    activity that is unlawful under any state or Federal
                    law;

        Years ago, Congress and the CFTC itself acted to ensure that
    futures markets would not be become a sports betting loophole, yet
    today prediction markets brazenly flout this law with impunity.
    Prediction Markets Are Operating Illegal Online Sports Betting
        Despite a clear regulatory prohibition and direction from Congress,
    online platforms registered with the CFTC as Designated Contract
    Markets (DCM) are currently offering online sports betting while
    asserting that sports event contracts are somehow legitimate futures.
    These sports event contracts are gaming in every sense of the word and
    are advertised as such by the operators. However, they lack the robust
    safeguards required by state, Tribal, and Federal law, and conceal that
    in these prediction markets, the platform also often acts as the house
    by taking the other side of consumers' bets.
        Prediction markets claim to Congress, the CFTC, and courts that
    sports bets are simply event futures contracts; however, their own
    advertising \4\ describes such contracts as legalized sports betting in
    all 50 states. In countless instances, these entities advertise their
    products to consumers as ``legal betting'', including describing their
    offerings as legal in states which currently prohibit all forms of
    sports betting.
    ---------------------------------------------------------------------------
        \4\ Source: Dustin Gouker, Ten Times Kalshi Said People Could Bet
    On Things, Event Horizon, https://nexteventhorizon.substack.com/p/ten-
    times-kalshi-said-people-could (last accessed December 16, 2025).
    ---------------------------------------------------------------------------
        One advertisement by prediction market Kalshi claims it is ``The
    First Nationwide Legal Sports Betting Platform'',\5\ a frequent theme
    in prediction market advertising:
    ---------------------------------------------------------------------------
        \5\ Source: https://nexteventhorizon.substack.com/p/ten-times-
    kalshi-said-people-could (last accessed December 16, 2025).

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The same prediction market also ran advertisements during the
    annual college basketball tournament in California--where all sports
    betting is illegal--urging viewers to ``Make $ on March Madness'' and
    claimed to be ``Legal in California''. Prediction markets are
    intentionally misleading consumers to believe that they are conducting
    legal gaming activities. It is clear from prediction markets'
    advertising that consumers are intended to view these sport event
    futures contracts as gaming.
        The hypocrisy is stunning. While spending millions to advertise
    ``legalized sports betting in all 50 states,'' prediction markets
    simultaneously argue that state and Tribal gaming laws do not apply to
    them.
        Prediction market sports event futures lack virtually all of the
    core safeguards required by state and Tribal law. Unlike licensed
    sportsbooks, prediction markets actively seek to avoid compliance with
    state gaming laws, do not operate pursuant to Tribal-state compacts,
    and frequently lack mandatory age-verification, responsible-gaming
    programs, advertising restrictions, and problem-gaming funding
    requirements. Legal gaming systems also impose integrity monitoring,
    data-sharing with leagues and regulators, limits on bet types, and
    robust consumer-protection standards, including dispute resolution and
    enforcement mechanisms tailored to betting activity.
        While prediction markets have argued that they differ from legal
    sports betting in that they simply facilitate peer-to-peer transaction
    and do not operate as the house by taking the other side of bets,
    recent litigation \6\ indicates that claim is false. Rather, it appears
    prediction markets utilize subsidiaries to conceal their role as the
    house:
    ---------------------------------------------------------------------------
        \6\ Pelayo v. Kalshi Inc., No. 1:25-cv-09913 (ALC), Compl.
    (S.D.N.Y. Nov. 26, 2025).

              ``Kalshi Trading LLC and KalshiEX, both wholly owned
            subsidiaries of Kalshi, operate as highly sophisticated `market
            makers,' which bet against consumers when their bets stray from
            Kalshi's internal projected odds. A Kalshi representative
            called Kalshi Trading `one of many `peers' in the peer-to-peer
    ---------------------------------------------------------------------------
            ecosystem.' Kalshi Trading is not a peer; it is the House.''

        Thanks to prediction markets' intentional avoidance of the
    comprehensive public oversight, integrity, and consumer safeguards that
    states and Tribes have long deemed essential for legal gaming, it is
    not unreasonable to suggest that today underage children are gambling
    away their parents' savings in the churches, schools and other
    institutions that are designed to protect them.
    Sports Futures on Tribal Lands Violate Federal, Tribal, & State Law
        The enactment of the Indian Gaming Regulatory Act (IGRA) in 1988
    created a clearly defined structure governing gaming on Tribal lands.
    Tribal governments may operate gaming on Tribal land in states in which
    gaming is legal, subject to limitations of state law and, frequently,
    Tribal-state gaming compacts delineating the scope of gaming which may
    be operated. IGRA also created the National Indian Gaming Commission,
    the only Federal gaming regulatory entity. Under IGRA, only Tribal
    governments may operate gaming on Tribal land, and they may only do so
    in compliance with state and NIGC requirements.
        Tribal gaming has been one of the primary economic development
    tools available to Tribes. In states where Tribal gaming occurs, Tribes
    have been able to help address their members' health care, education,
    housing, and other needs. Tribal gaming has been beneficial not only
    for Tribes and their members, but for surrounding communities and
    states, too. In 2021, CNIGA found that members' enterprises supported
    an astounding 85,000 jobs across our state.
        In California, all sports betting is prohibited. Neither Tribal
    governments, the state, nor commercial entities may offer sports
    betting on lands under Tribal or state jurisdiction.
        However, today, prediction markets are offering online sports
    betting, as described in their own words, on Tribal lands in California
    and across the nation. Again, this is a crystal clear violation of
    Federal law, Tribal gaming ordinances, and state gaming laws.
    State Attorneys General and Regulators Agree: Sports Futures Are
            Illegal Sports Bets
        The Tribal governments CNIGA represents are not alone in objecting
    to the illegal online sports betting offered by these prediction
    markets. Dozens of states have taken legal action in court, or
    regulatory action through state gaming oversight agencies, to halt the
    illegal online sports betting offered by prediction markets.
        CFTC regulations allowing platforms to self-certify event contracts
    without pre-clearance from the agency enable an ecosystem in which
    prediction markets are able to launch gaming products first, then
    litigate after developing a customer base and generating immense
    revenue. This business model has resulted in an incredible 26 lawsuits
    in which states, Tribes, classes, and individuals all argue that these
    companies are violating the law and exploiting consumers, including
    vulnerable populations. An amicus brief \7\ joined by 34 state
    attorneys general \8\ supporting litigation against a prediction market
    operator notes:
    ---------------------------------------------------------------------------
        \7\ Brief of Amici Curiae of Nevada, Ohio, 32 Other States,
    District of Columbia, and Northern Mariana Islands Supporting
    Appellants, KalshiEX LLC v. Flaherty, No. 25-1922 (3d Cir. June 17,
    2025).
        \8\ Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware,
    Hawaii, Idaho, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland,
    Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nevada, New
    York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode
    Island, South Carolina, South Dakota, Tennessee, Utah, Vermont,
    Washington and Wisconsin.

              ``Initially, it claims that its events contracts do not count
            as sports gambling. As a legal matter, that depends on
            definitions within state law. But, as a real-world matter, the
            activity Kalshi facilitates is obviously sports betting.
              ``To confirm as much, one must only peruse Kalshi's website.
            The website has an entire category dedicated to `sports'
            where--through a few easy clicks--people can bet on things like
            the Steelers winning more than eight games this season or the
            Ravens winning the Super Bowl. Baseball fans can similarly play
            the odds on whether the Phillies or the Mets will win the
            National League East.''

        State gaming regulators are also engaging to prevent the
    proliferation of this illegal online gaming, which they believe lack
    the safeguards established gaming systems impose to ensure integrity,
    consumer protection, and oversight. For example, the Pennsylvania
    Gambling Control Board stated in an October letter \9\ to Congress:
    ---------------------------------------------------------------------------
        \9\ Pennsylvania Gaming Control Board, Letter from Kevin F.
    O'Toole, Executive Director, to Members of Congress (Oct. 3, 2025).

              ``Sports prediction markets operating outside established
            regulatory frameworks raise significant integrity concerns due
            to their vulnerability to manipulation. Our frameworks involve
            mandatory data sharing between licensed operators and sports
            leagues, sophisticated monitoring systems to detect suspicious
            betting patterns, and strict rules prohibiting participation by
    ---------------------------------------------------------------------------
            athletes, officials, and other insiders.''

        Notably, any sports event contract found by state gaming regulators
    to be illegal sports betting under state law--as has occurred in at
    least a dozen states--is therefore also in violation of CFTC regulatory
    prohibition on contracts which are unlawful under Federal or state law.
    The CFTC Has Failed to Act
        Despite evidence in plain sight, and prediction markets' own words
    that sports event futures constitute illegal gaming, a September 2025
    CFTC staff letter \10\ notes ``the Commission has not . . . taken any
    official action to approve the listing for trading of sports-related
    event contracts,'' because ``all sports-related event contracts that
    are currently listed for trading . . . have been listed pursuant to
    self-certifications.'' In essence, the CFTC argues that it has not
    taken action because, by self-certifying their gaming products,
    prediction markets have demonstrated their compliance. This is a
    flagrant violation of CFTC regulation, and it is clear that the self-
    certification system is failing to provide sufficient safeguards
    against illegal online gaming.
    ---------------------------------------------------------------------------
        \10\ CFTC Staff Letter No. 25-36 (September 30, 2025).
    ---------------------------------------------------------------------------
        In other words, the CFTC is asleep at the wheel.
        Recent court documents show that one prominent prediction market
    reported more than $1 billion in gaming volume in a single month, with
    90% of that coming from so-called sports event contracts. The sheer
    volume of this activity demands greater scrutiny by the CFTC, yet the
    Commission has failed to take any substantive action whatsoever.
    If the CFTC Won't Act, Congress Must
        Tribal gaming was authorized by Congress to support government
    services and enable our nations to address generations of broken
    promises and underinvestment in our communities. In California, that
    has resulted in Tribal governments having the exclusive right to offer
    casino-style gaming under the state Constitution and our Tribal-state
    gaming compacts. It is a travesty that rogue corporations are allowed
    to offer bets to our own casino patrons that we cannot offer ourselves,
    and so I respectfully ask that the House and Senate step in without
    delay. Congress must take immediate action to reaffirm the integrity of
    the CEA, restore the proper balance between Federal and Tribal-state
    authority, and protect consumers from predatory, unregulated online
    gaming.
        The CFTC's dereliction of its responsibility may be due to a lack
    of resources, or, unlikely as it is, the CFTC may be unaware of the
    illegal activity occurring on its watch. Regardless of the reason, the
    outcome is the same: prediction markets are disregarding Federal,
    Tribal, and state laws to generate massive revenues at the expense of
    consumers and those who comply with the law.
        Unless Congress reaffirms the boundary between legitimate
    derivatives markets (which should be insulated from state law and
    interference) and gaming activity, these companies will continue to
    expand unchecked.
        Thank you for the opportunity to provide testimony. CNIGA stands
    ready to assist the Committee as it continues its oversight of the CFTC
    and considers legislative solutions tothis growing problem.
                                  Statement 6
            hon. lucas sprague, chief, saginaw chippewa indian tribe
    Reauthorization of the Commodity Futures Trading Commission
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        On behalf of the Saginaw Chippewa Indian Tribe of Michigan, thank
    you for the opportunity to submit this statement for the record as the
    Committee considers reauthorization of the Commodity Futures Trading
    Commission (CFTC) and potential amendments to the Commodity Exchange
    Act (CEA).
        The Saginaw Chippewa Tribe supports well-regulated derivatives
    markets that serve legitimate commercial and risk-management purposes.
    However, we are increasingly concerned that the Commodity Exchange Act
    is being invoked to facilitate widespread sports wagering--and
    potentially casino-style gaming--through products marketed as ``event
    contracts'' or similar instruments. These developments were not
    intended under the Commodity Exchange Act, threaten Tribal sovereignty
    and undermine Michigan's carefully constructed gaming regulatory
    framework.
        The Saginaw Chippewa Tribe is a federally recognized sovereign
    Indian Tribe with governmental authority and substantial economic
    interests in Michigan. The Tribe operates gaming facilities pursuant to
    the Indian Gaming Regulatory Act (IGRA), Tribal regulations and a
    Tribal-state gaming compact with the State of Michigan. Revenue
    generated from these operations supports essential governmental
    services for our citizens, including public safety, education, health
    care, housing, infrastructure, and cultural preservation.
    Michigan's Gaming Framework Reflects Deliberate Policy Choices
        Michigan has made deliberate and comprehensive policy choices
    regarding gaming. Sports wagering and internet gaming are lawful in the
    state only because the Michigan Legislature enacted detailed statutory
    frameworks and entrusted oversight and enforcement to the Michigan
    Gaming Control Board (MGCB). Tribal and commercial internet gaming
    operators are subject to extensive licensing requirements, integrity
    monitoring, consumer protections, responsible gaming safeguards, and
    strict age and geolocation controls.
        Tribal gaming in Michigan operates within the framework Congress
    established under IGRA, which is grounded in respect for Tribal
    sovereignty and implemented through comprehensive Tribal regulations,
    Federal oversight and negotiated Tribal-state compacts. This system has
    provided regulatory certainty, economic stability, and strong consumer
    protections while supporting Tribal self-determination and economic
    development.
    Event Contracts Threaten to Circumvent Michigan Law and Tribal Compacts
        The Saginaw Chippewa Tribe is deeply concerned that sports-related
    ``event contracts'' offered by vendors such as Kalshi and Crypto.com
    threaten to bypass Michigan and Tribal gaming laws and regulatory
    system entirely. Although these vendors assert that their products are
    financial instruments governed by the CEA, in practice the products
    function as sports bets--allowing consumers to wager money on the
    outcomes of sporting events with no connection to bona fide hedging or
    commercial risk management.
        These products compete directly with lawful commercial and Tribal
    gaming operations in Michigan while avoiding the regulatory obligations
    imposed by Federal, Tribal and state law and Tribal-state compacts.
    Event contracts are being offered to Michigan residents, including on
    Tribal lands, without licensure or approval by the MGCB or the Tribes
    and without regard to Michigan law or compact requirements.
        This approach creates an uneven and unfair playing field. Tribal
    gaming operators remain subject to extensive regulatory oversight and
    enforcement, while event-contract vendors claim nationwide authority to
    offer gambling-like products outside of state and Tribal regulatory and
    licensing systems.
    The CFTC Is Not a Gaming Regulator
        The CFTC's mission and expertise lie in regulating derivatives
    markets to protect against fraud, manipulation, and systemic risk. It
    is not designed to regulate sports wagering or casino-style gaming,
    which raise distinct public-interest concerns, including consumer
    protection, wagering integrity, responsible gaming, and respect for
    state and Tribal sovereignty.
        In Michigan, those responsibilities rest with the MGCB and, in
    Indian Country, with Tribal gaming regulators operating under IGRA.
    Allowing gambling-like products to proceed under the CEA risks
    displacing Michigan's regulatory framework and effectively establishing
    national gambling policy through commodities law--without Congressional
    authorization and without involvement from states or Tribes.
        Such an outcome would also undermine IGRA and the Tribal-state
    compacting process that Congress has long recognized as essential to
    Tribal self-government.
    Without Clear Limits, Event Contracts Will Continue to Expand Toward
            Gambling
        If sports-style event contracts are permitted to scale under the
    CEA, vendors will predictably design products that increasingly
    resemble casino-style gaming-short-term outcomes, rapid repeat play,
    and wagering mechanics indistinguishable from regulated sports betting.
    Without clear statutory boundaries, these products will continue to
    proliferate in Michigan outside of state and Tribal oversight.
    Requested Congressional Action
        The Saginaw Chippewa Indian Tribe respectfully urges the Committee
    to include in any CFTC reauthorization legislation targeted amendments
    to the Commodity Exchange Act that:

       Clarify that the CFTC may not approve, permit, or otherwise
            facilitate contracts that constitute sports wagering, including
            contracts whose predominant purpose and practical effect is
            consumer betting rather than bona fide hedging or commercial
            risk management.

       Prohibit, or deem contrary to the public interest, event
            contracts and similar instruments that function as casino-style
            games or otherwise replicate gambling mechanics, regardless of
            how they are labeled or marketed.
    Conclusion
        The Saginaw Chippewa Indian Tribe appreciates the Committee's
    leadership in overseeing the nation's derivatives markets.
    Modernization, however, must not come at the expense of Michigan's
    gaming laws, Tribal sovereignty, the IGRA or the integrity of the
    Tribal-state compacting system. We urge Congress to act now to prevent
    the Commodity Exchange Act from becoming a Federal workaround for
    sports betting and casino-style gaming-activities that directly
    conflict with Michigan law, the IGRA and undermine Tribal self-
    determination.
        Thank you for the opportunity to submit this statement for the
    record.
                                  Statement 7
         matthew j. wesaw, chairman, pokagon band of potawatomi indians
    Reauthorization of the Commodity Futures Trading Commission
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        On behalf of the Pokagon Band of Potawatomi Indians (Pokagon Band),
    a federally recognized Indian Tribe, thank you for the opportunity to
    submit this statement for the record as the Committee considers
    reauthorization of the Commodity Futures Trading Commission (CFTC) and
    potential amendments to the Commodity Exchange Act (CEA).
        The Pokagon Band supports well-regulated derivatives markets that
    serve legitimate commercial and risk-management purposes. However, we
    are deeply concerned that the CEA is increasingly being used to
    facilitate widespread sports wagering--and will be used for casino-
    style gaming--through products marketed as ``event contracts'' or
    similar financial instruments. These developments threaten Tribal and
    state sovereignty and undermine the carefully constructed gaming
    regulatory frameworks in both Michigan and Indiana, where the Pokagon
    Band exercises governmental authority and operates gaming facilities
    under the Indian Gaming Regulatory Act (IGRA).
        The Pokagon Band has substantial governmental, economic, and
    regulatory interests in southwest Michigan and northern Indiana. We
    conduct gaming operations in both states within our Indian lands under
    IGRA and negotiated Tribal-state compacts. We also conduct sports
    wagering and internet gaming beyond our Indian lands in Michigan under
    state law. Revenue from these operations funds essential governmental
    services for our citizens and others, including public safety,
    education, health care, housing, infrastructure, and cultural
    preservation. Importantly, under the Tribal-state compacts, the Pokagon
    Band shares tens of millions of dollars each year with both states and
    their local units of government.
    Michigan and Indiana Have Distinct but Deliberate and Comprehensive
            Gaming Frameworks
        Both Michigan and Indiana have made deliberate and carefully
    calibrated policy choices regarding gaming--choices that are unique and
    reflect state law, Tribal sovereignty, and local public interests.
        In Michigan, sports wagering and internet gaming are lawful outside
    of Indian lands only because the Michigan Legislature enacted
    comprehensive statutory frameworks, under which the Michigan Gaming
    Control Board (MGCB) provides robust regulatory oversight. Tribal and
    commercial operators are licensed under state laws for these activities
    and are subject to licensing, auditing, integrity monitoring, consumer
    protection requirements, responsible gaming safeguards, and age and
    geolocation controls. Importantly, Tribal gaming operations within
    Indian lands in the state operate pursuant to IGRA and Tribal-state
    compacts that reflect a balance between Tribal sovereignty and state
    regulatory interests.
        In Indiana, commercial gaming, including sports wagering, is
    likewise authorized through a comprehensive statutory system overseen
    by the Indiana Gaming Commission (IGC). Indiana law establishes clear
    boundaries for permissible gaming activity, requires licensing and
    regulatory compliance, and entrusts enforcement to a specialized gaming
    regulator. Like in Michigan, Tribal gaming on Indian lands within
    Indiana, including retail sports betting, operates under IGRA and a
    Tribal-state compact that balances the parties' respective interests.
        In both states, gaming outside of Indian lands is lawful only
    because legislatures acted and empowered regulators to oversee and
    license permitted gaming activities within each state, while within
    Indian lands, Tribal gaming operates under the comprehensive framework
    Congress expressly created through IGRA.
    Event Contracts Threaten to Bypass IGRA and State Systems
        The Pokagon Band is increasingly concerned because sports-related
    ``event contracts'' offered by vendors such as Kalshi and Crypto.com
    bypass these regulatory systems, which mandate fair play and consumer
    protection. Although these vendors assert that their products fall
    under the CEA, the products function as sports betting, as they allow
    consumers to wager money on the outcomes of sporting events with no
    connection to bona fide hedging or commercial risk management.
        These products directly compete with lawful Tribal and commercial
    gaming operations in Michigan and Indiana, in a manner that violates
    IGRA, Tribal-state compact obligations, and state laws. Event contracts
    are being marketed and made available to residents of Michigan and
    Indiana--including on Tribal lands--without the required approvals
    mandated by these regulatory requirements.
        This creates an uneven and unfair playing field. Tribal and
    commercial gaming operations remain subject to extensive regulatory
    requirements, enforcement oversight, and public-interest obligations,
    while event-contract vendors claim nationwide authority under the CEA
    to offer gambling-like products (currently, sports wagering) free from
    state and Tribal control.
    The CFTC Is Not a Gaming Regulator and Should Not Supplant State and
            Tribal Authority
        The CFTC's expertise lies in derivatives market oversight, not in
    regulating sports wagering or casino-style gaming. Gaming regulation
    involves distinct public-interest concerns, including consumer
    protections tailored to wagering, integrity monitoring, responsible
    gaming requirements, and respect for state and Tribal sovereignty.
        In Michigan and Indiana, those responsibilities are entrusted to
    specialized gaming regulators and, within Indian lands, to Tribal
    gaming regulators. Allowing gambling-like products to proceed under the
    CEA risks displacing both states' regulatory frameworks and IGRA and
    effectively setting national gambling policy through commodities law--
    without Congressional authorization and without the involvement of
    states or Tribes.
        Such an outcome is contrary to Congress's intent under the CEA and
    IGRA, undermines state and Tribal autonomy, violates state law, erodes
    Tribal-state compacts, and weakens a framework Congress has long
    recognized as essential to Tribal self-determination and economic
    stability.
    Without Clear Limits, Event Contracts Will Evolve Toward Casino-Style
            Gaming
        The Pokagon Band urges the Committee to recognize the strong
    commercial incentives at play. If sports-style event contracts are
    permitted under the CEA, vendors will inevitably design offerings that
    resemble casino-style gaming--short-duration outcomes, rapid repeat
    play, and wagering mechanics indistinguishable from regulated sports
    betting.
        Without clear statutory boundaries, these products will continue to
    proliferate across Michigan and Indiana outside of state and Tribal
    oversight, thereby undermining regulatory authority and threatening
    Tribal and state government revenues that support essential services.
    Requested Congressional Action: Draw a Bright Line in the Commodity
            Exchange Act
        The Pokagon Band respectfully requests that the Committee include
    in any CFTC reauthorization legislation targeted amendments to the CEA
    that:

       Clarify that the CFTC may not approve, permit, or otherwise
            facilitate contracts that constitute sports wagering, including
            contracts whose predominant purpose and practical effect is
            consumer betting rather than bona fide hedging or commercial
            risk management.

       Prohibit event contracts and similar instruments that
            function as casino-style games or otherwise replicate gambling
            mechanics, regardless of how such products are labeled or
            marketed.
    Conclusion
        The Pokagon Band appreciates the Committee's leadership in
    overseeing the nation's derivatives markets. However, modernization
    must not come at the expense of Michigan and Indiana gaming law, IGRA,
    Tribal sovereignty, or the integrity of the Tribal-state compacting
    system. We urge Congress to act now to ensure that the CEA does not
    become a Federal workaround for sports betting and casino-style
    gaming--activities that directly conflict with state law and IGRA and
    undermine the economic foundations of Tribal governments and threaten
    state revenue.
        Thank you for the opportunity to submit this statement for the
    record.
                                  Statement 8
              match-e-be-nash-she-wish band of pottawatomi indians
    Reauthorization of the Commodity Futures Trading Commission
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        On behalf of the Match-E-Be-Nash-She-Wish Band of Pottawatomi
    Indians (Gun Lake Tribe), thank you for the opportunity to submit this
    statement for the record as the Committee considers reauthorization of
    the Commodity Futures Trading Commission (CFTC) and potential
    amendments to the Commodity Exchange Act (CEA).
        The Gun Lake Tribe supports well-regulated derivatives markets that
    serve legitimate commercial, price-discovery, and risk-management
    purposes. However, we are deeply concerned that the CEA is increasingly
    being invoked as a vehicle to facilitate widespread sports wagering and
    potentially casino-style gaming through products marketed as ``event
    contracts''. These developments directly conflict with Tribal gaming
    interests, infringe on Tribal sovereignty, and threaten the time tested
    and balanced framework that governs gaming in Indian Country.
    Impact on Tribal Gaming in Michigan
        The Gun Lake Tribe conducts gaming operations pursuant to a Tribal-
    state compact with the State of Michigan, in full compliance with the
    Indian Gaming Regulatory Act (IGRA). This compact reflects our status
    as a federally recognized Tribe and is the result of extensive, good-
    faith negotiations with the state to balance Tribal sovereignty, state
    regulatory interests, and critical public policy considerations.
        Michigan has established a comprehensive gaming regulatory
    framework, including for sports wagering, that expressly recognizes
    Tribal authority and the central role of Tribal-state compacts. When
    companies market sports-related ``event contracts'' on a nationwide
    basis under the Commodity Exchange Act, they effectively bypass
    Michigan's gaming laws and the Tribal compacting process while
    competing directly with Tribal gaming operations that operate in full
    compliance with those laws. This circumvention undermines Tribal
    sovereignty, erodes IGRA exclusivity, weakens responsible gaming
    safeguards maintained by Tribal operators, and threatens critical
    revenue streams that support Tribal governmental services and
    contribute substantially to local and regional economies.
        Of particular concern are sports-related event contracts offered by
    vendors such as Kalshi, and Polymarket. Although characterized as
    derivatives products regulated by the CFTC, these offerings function as
    sports bets: consumers stake money on the outcome of sporting events
    with no connection to commercial risk management or hedging. These
    products are currently being offered broadly, including to Michigan
    residents and on Tribal lands, without meaningful review for compliance
    with state law or Tribal gaming compact obligations.
    The CFTC Lacks Expertise and Authority To Regulate Gaming
        The Commodity Futures Trading Commission's core mission and
    institutional expertise are centered on overseeing derivatives markets,
    including promoting market integrity, facilitating legitimate risk
    transfer, and preventing fraud and manipulation. The Commission is
    neither designed nor resourced to regulate sports wagering or casino-
    style gaming, which present distinct and well-established public-
    interest concerns beyond the CFTC's traditional role. These concerns
    include the integrity of sporting events, age and geolocation
    verification, wagering--specific consumer protections, and the
    prevention and mitigation of gambling-related harms. Oversight of these
    matters has long and appropriately rested with state gaming regulators
    and Tribal authorities operating under the IGRA and Tribal-state
    compacts.
        Absent clear Congressional direction, the CFTC risks being drawn--
    through self-certification processes and increasingly aggressive
    product design--into regulatory decisions that effectively establish
    national gambling policy under the guise of commodities law. Such an
    outcome would exceed the Commission's statutory mandate and disrupt the
    longstanding Federal-state-Tribal balance governing gaming regulation.
    Event Contracts Headed Toward Casino-Style Gaming
        The Gun Lake Tribe urges the Committee to recognize the strong
    commercial incentives driving the rapid evolution of these products. If
    sports-style event contracts are permitted to scale under the Commodity
    Exchange Act, vendors will be incentivized to push boundaries further--
    aggressively designing increasingly short-term, repetitive, and game-
    like contracts that closely resemble traditional sports wagering and
    casino mechanics.
        Absent clear statutory boundaries, innovation in this space will
    continue to trend toward the nationwide offering of gambling-like
    products outside established state and Tribal gaming oversight. This
    trajectory would place compliant Tribal gaming operations at a
    competitive disadvantage and undermine the integrity of longstanding
    regulatory frameworks.
    Requested Congressional Action
        The Gun Lake Tribe respectfully requests that the Committee include
    targeted amendments in any CFTC reauthorization legislation to:

      1.  Clarify that the CFTC may not approve, permit, or otherwise
                facilitate contracts that constitute sports wagering,
                including contracts whose predominant purpose and practical
                effect is consumer betting rather than bona fide hedging or
                commercial risk management.

      2.  Prohibit (or deem contrary to the public interest) event
                contracts and similar instruments that function as casino-
                style games or otherwise replicate gambling mechanics,
                regardless of the label applied.
    Conclusion
        The Gun Lake Tribe appreciates the Committee's leadership in
    modernizing market oversight. However, modernization must not come at
    the expense of Tribal sovereignty or the integrity of gaming frameworks
    that Congress has long respected and continuously affirmed. We urge
    Congress to act decisively to ensure that the CEA does not become a
    Federal pathway for nationwide sports betting and casino-style gaming,
    activities that directly conflict with the longstanding Federal-state-
    Tribal balance governing gaming regulation.
                                  Statement 9
                    mohegan tribe of indians of connecticut
    Reauthorization of the Commodity Futures Trading Commission
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        On behalf of the Mohegan Tribe of Indians of Connecticut
    (``Mohegan''), thank you for the opportunity to submit this statement
    for the record as the Committee considers reauthorization of the
    Commodity Futures Trading Commission (CFTC) and potential amendments to
    the Commodity Exchange Act (CEA).
        Mohegan supports well-regulated derivatives markets that serve
    legitimate commercial and risk-management purposes. But we are deeply
    concerned that the CEA is increasingly being invoked as a vehicle to
    facilitate widespread sports wagering--and potentially casino-style
    gaming--through products marketed as ``event contracts'' or related
    instruments. These developments are contrary to the clear intent of the
    CEA, the interests of Tribes, and threatens the carefully balanced
    framework that governs gaming in Indian Country.
        In Connecticut and Pennsylvania, we are already seeing companies
    expand gambling-like products that compete directly with Tribal gaming
    operations protected under Tribal-state gaming compacts and Mohegan's
    licensed gaming operations in Connecticut and Pennsylvania. Although
    these vendors claim their products are financial instruments governed
    by the CEA, they operate and are essentially marketed to the public as
    sports bets implicating Tribal, Federal and state law. The scope and
    speed of their actions are unprecedented and of significant concern to
    Tribes and states across the country.
    The CFTC Is Not a Gaming Regulator--and Congress Should Not Let Private
            Entities Exploit the CEA As a Back Door for Betting
        The CFTC's mission and expertise center on derivatives market
    integrity, risk transfer, clearing, and enforcement against fraud and
    manipulation. The Commission is not designed or resourced to regulate
    sports wagering or casino-style gaming, which involve distinct public-
    interest concerns: game integrity, consumer protections tailored to
    wagering, age and location controls, and safeguards against gaming-
    related harms.
        Congress does not hide elephants in mouseholes and did not do so
    here. Absent Congressional reaffirmation, the CFTC risks being pushed--
    through these entities' self-certification dynamics and aggressive
    product design--into decisions that effectively set national gambling
    policy under commodities law. Such an outcome is antithetical to the
    CEA and undermines the policy Congress established through the Indian
    Gaming Regulatory Act (IGRA). Through IGRA, Congress balanced the
    sovereign interests of Tribes and states, and made clear that Indian
    gaming revenues support Tribal self-sufficiency and essential
    governmental services in Indian Country.
    Without Reaffirmation, Vendors Will Predictably Design Contracts That
            Mimic Casino-Style Games
        Mohegan urges the Committee to recognize the strong commercial
    incentives at play. If sports-style event contracts are permitted to
    scale under the CEA, vendors will naturally iterate toward products
    that replicate the look and feel of casino-style gaming--short-duration
    outcomes, repeated play mechanics, and contract structures that
    function as wagering rather than risk management. ``Innovation'' will
    increasingly mean gaming-like offerings, with nationwide reach, outside
    of state and Tribal gaming oversight.
    Requested Congressional Action: Amend the CEA To Draw a Bright Line
        We respectfully request that the Committee include in any CFTC
    reauthorization package targeted reaffirming amendments to the CEA
    that:

      1.  Clarify that the CFTC may not approve, permit, or otherwise
                facilitate contracts that constitute sports wagering,
                including contracts where the predominant purpose and
                practical effect is consumer betting rather than bona fide
                hedging or commercial risk management.

      2.  Prohibit (or deem contrary to the public interest) event
                contracts and similar instruments offered through
                designated contract markets that function as casino-style
                games or otherwise replicate gambling mechanics, regardless
                of the label applied.
    Conclusion
        Mohegan appreciates the Committee's leadership in modernizing
    market oversight. But modernization must not come at the expense of
    Tribal sovereignty or the integrity of gaming frameworks that Congress
    has long respected. We urge Congress to act now to prevent the CEA from
    becoming a new pipeline for sports betting and casino-style gaming--
    activities that directly conflict with the CEA itself, Tribal interests
    and Tribal-state compacts.
                                     ______

     Submitted Letter by Hon. Dusty Johnson, a Representative in Congress
                               from South Dakota
    March 27, 2024

      Hon. Rostin Behnam,
      Chairman,
      Commodity Futures Trading Commission,
      Washington, D.C.

        Dear Chair Behnam:

        Thank you for your leadership as a Commissioner and Chairman of the
    Commodity Futures Trading Commission in promoting a robust dialogue
    about the resilience of derivatives clearinghouses. As a previous
    sponsor of the CFTC Market Risk Advisory Committee (MRAC), you
    encouraged a diverse and broad coalition of stakeholders and market
    participants to develop consensus recommendations for the CFTC to adopt
    to strengthen the financial markets.
        One indispensable tool to strengthen financial derivatives markets
    is the use of margin to manage the risks of price volatility and
    protect derivatives markets. During a hearing before the House
    Committee on Agriculture on March 9, 2023, focused on reviewing
    volatility in global commodity markets, the topic of margin received
    significant attention from members.
        The hearing focused on the importance of futures markets for end-
    users during the recent periods of increased stress in the financial
    system, including the commodity market volatility and disruptions
    caused by the COVID pandemic and the Russian invasion of Ukraine. At
    the hearing, witnesses discussed the role of the futures markets as a
    critical risk management tool for end-users, particularly during
    increased market volatility. Witnesses also discussed that while
    markets functioned well during the turmoil, the experiences serve as an
    important opportunity to examine how to enhance market resilience to
    the benefit of end-users and financial stability.
        We understand that clearinghouse margin requirements should
    naturally rise when markets are volatile and fall when conditions
    normalize. However, some witnesses expressed concern that the magnitude
    and speed with which clearinghouse margin levels increased added stress
    to markets and forced many end-users and investors to source additional
    funding. At a time when funding was scarce and more expensive, meeting
    higher than expected margin calls exacerbated already volatile market
    conditions.
        Last September, a report \1\ published by international regulatory
    authorities examined the impact on markets caused by the rapid and
    significant margin increases at the onset of the pandemic in March
    2020. In May, the report was followed by a more in-depth look \2\ at
    margin practices in commodities markets during the market volatility
    associated with the Russian invasion of Ukraine in February 2022.
    ---------------------------------------------------------------------------
        \1\ The Basel Committee on Banking Supervision (BCBS), Bank for
    International Settlements' Committee on Payments and Market
    Infrastructure (CPMI) and the International Organization of Securities
    Commissions (IOSCO) published a report on margin calls during the high
    market volatility and ``dash for cash'' during the onset of COVID-19 in
    March and April 2020. The report showed that total initial margin
    requirements across clearinghouses increased by roughly $300 billion
    over March 2020, with a further increase in excess collateral of $115
    billion, resulting in an overall increase in collateral prepositioned
    at clearinghouses of $415 billion (a roughly 40% increase relative to
    the average in February 2020). https://www.bis.org/bcbs/publ/d537.htm.
        \2\ https://www.bis.org/bcbs/publ/d550.pdf.
    ---------------------------------------------------------------------------
        This is an important issue that we know the CFTC continuously
    examines, both for the clearinghouses under its own jurisdiction, and
    as a part of the global standard setting bodies responsible for
    fostering consistency across jurisdictions.
        Stakeholders are also making important contributions to this
    discussion. In February 2021, the MRAC endorsed a series of consensus
    recommendations \3\ from a wide range of market participants for the
    CFTC to implement to strengthen and improve clearinghouse margin
    methodology practices. To date, those recommendations have not been
    adopted by the CFTC. In addition, global regulators continue to review
    the issue, publishing \4\ a consultative report with recommendations to
    improve the transparency and responsiveness of initial margin in
    centrally cleared markets on January 16, 2024.
    ---------------------------------------------------------------------------
        \3\ https://www.cftc.gov/media/6206/MRAC_CCPRGS_DPBPCCPMM022321/
    download.
        \4\ https://www.iosco.org/library/pubdocs/pdf/IOSCOPD757.pdf.
    ---------------------------------------------------------------------------
        The events of the last several years demonstrate the importance of
    initial margin to market resilience. It is essential to ensure that
    clearinghouse margin models: (1) are adequately transparent to market
    participants to help clearing members and their clients better prepare
    for market volatility; (2) are appropriately calibrated and stable to
    avoid levels that fall too low during normal conditions, only to
    increase dramatically in stressed markets; and (3) do not threaten the
    affordability and accessibility of the risk management markets for end-
    users.
        Respectfully, we ask that you make this a priority for the CFTC to
    strengthen and improve clearinghouse margin methodology practices and
    better support end-users in their risk management and liquidity
    planning.
                Sincerely,

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Hon. Dusty Johnson                   Hon. Yadira Caraveo
    Chairman,                            Ranking Minority Member,
    Subcommittee on Commodity Markets,   Subcommittee on Commodity Markets,
     Digital Assets, and Rural            Digital Assets, and Rural
     Development,                         Development,

                                     ______

    Submitted Statement by Hon. Dusty Johnson, a Representative in Congress
      from South Dakota; on Behalf of National Grain and Feed Association
    Reauthorization of the Commodity Futures Trading Commission
        The National Grain and Feed Association (NGFA) respectfully
    requests submission of this statement into the written record for the
    House Agriculture Committee's hearing on reauthorization of the
    Commodity Futures Trading Commission (CFTC).
        The NGFA, established in 1896, consists of grain, feed, processing,
    exporting and other grain-related companies that operate facilities
    handling U.S. grains and oilseeds. Its membership includes grain
    elevators; feed and feed ingredient manufacturers; biofuels companies;
    grain and oilseed processors and millers; exporters; livestock and
    poultry integrators; and associated firms that operate over 8,000
    facilities providing goods and services to the nation's grain, feed and
    processing industry. NGFA's membership includes cooperatives and
    private companies employing 175,000 Americans and supporting over 1.16
    million associated jobs nationwide with an annual economic impact of
    $401.7 billion.
        The NGFA strongly supports reauthorization of the CFTC as a
    standalone agency. It performs an important oversight and regulatory
    role benefiting the grain, feed and processing industry--a primary user
    of agricultural products on regulated exchanges. Our association
    maintains a strong and professional working relationship with CFTC and
    believes current regulation helps the United States maintain its
    agricultural and energy leadership in exchange-traded derivatives.
        Our industry, as the first purchaser of grains and oilseeds from
    producers, has traditionally provided both marketing and risk
    management services to farmers through a variety of cash contracts.
    NGFA's membership also represents a substantial portion of the hedge
    business volume on the grain exchanges, so we have strong interest in
    the performance of both futures and cash markets.
        As the undisputed centerpiece of price discovery and price risk
    management in grain-based agriculture, exchange-traded futures
    contracts remain the single most important tool and provide the
    foundation for many other risk management tools. Virtually all cash
    contracts offered to grain farmers are designed to permit hedging the
    risk through exchange instruments. Thus, a high percentage of cash
    contracting activity establishes a price risk to the buyer that is
    ultimately ``laid off'' in futures markets.
        NGFA has a long history of working closely with CFTC in many areas,
    but this statement will focus on several key issues impacting our
    members that were recently brought before the CFTC.
    24/7 Trading
        While other CFTC-regulated industries may request 24/7 trading,
    commercial users oppose 24/7 trading of agricultural commodities
    contracts for the following reasons:

       Trading is heavier at the market opening and settlement and
            provides opportunities to price larger orders. Spreading
            liquidity across a wider trading period creates trade execution
            risk, potentially widens bid/ask spreads, and expands potential
            for market manipulation while the market is diluted.

       The underlying domestic cash market does not trade 24/7,
            thus having futures markets open for more hours while cash
            markets are closed would create additional exposure and risk.

       Global cash markets are accommodated by current trading
            hours. Traders in Geneva and Rotterdam are at the end of their
            workdays when daytime trading settles at 1:20 p.m. CST and
            Beijing traders are beginning their workday when overnight
            trading opens at 7:00 p.m. CST. Thus, the daytime trading hours
            accommodate European trading, and the overnight futures align
            with trading hours in Asia.

       Our members perform their daily reconciliation functions
            when markets are closed. This function is critical in managing
            risk and exposure in cash markets.

       A pause in trading in futures markets is essential for
            physical deliveries. This pause allows those involved in
            physical deliveries to assess what is changing in cash and
            futures markets, along with their delivery economics. NGFA
            believes actions in the delivery market are what lead to
            convergence, and this is a critical function of the
            agricultural futures contracts.

       Staffing costs would unnecessarily increase to add
            monitoring of futures markets during the expanded weekday hours
            and weekends. Extended trading would lead to less time for
            managing other aspects of their businesses.

       Having a large gap between when the market settles and
            closes would create confusion for the industry and its
            customers.

        In short, NGFA members believe expanding trading hours to 24/7
    would increase price risk and costs without offsetting benefits.
    Intermediate Trading
        NGFA members appreciate the intermediary role Futures Commission
    Merchants (FCM) play in futures and other derivative markets by
    handling customer orders, managing client accounts and ensuring margin
    requirements are met. NGFA had concerns that the pool of FCMs would
    shrink further when the Federal Reserve, the Federal Deposit Insurance
    Corporation, and the Office of the Comptroller of the Currency were
    proposing to increase capital requirements through Basel III endgame
    rulemakings. NGFA believes the proposal, if implemented, would have
    disincentivized banks from providing FCM services and led to increased
    hedging costs. Fortunately, the current Federal Reserve leadership has
    indicated plans to ease Basel III endgame requirements.
        In 2022, FTX proposed disintermediate trading for clearing
    cryptocurrency derivatives, which NGFA members feared would creep into
    agricultural and energy futures markets. Under FTX's proposal,
    customers would have directly cleared trades and bypassed traditional
    FCM intermediaries. This proposal was touted as innovation and
    streamlining but caused NGFA members concern about fund custody, the
    lack of traditional checks and balances, and customer protections
    offered by FCMs. FTX collapsed before CFTC could provide a final
    decision on the disintermediate proposal.
        NGFA members escaped two proposals that had the potential to
    disrupt the proven intermediate trading system. We believe a light was
    shown on the important role FCMs play in risk management.
    Commitments of Traders Report
        The Commission provides a valuable service to agricultural markets
    through its weekly publication of Commitments of Traders (COT) reports.
    The COT report is CFTC's most downloaded item, a testament to its
    value. The COT report data is collected on Tuesday and reported on
    Friday. It is a summary of open interest positions held by various
    types of market participants and helps traders make informed decisions
    about the market dynamics and their risk exposure.
        NGFA believes COT report benefits could be improved by reducing the
    3 day lag time between data collection and reporting as well as by
    increasing the frequency of COT reporting. Further, NGFA urges CFTC to
    establish a process to publish current COT reports immediately
    following Federal Government shutdowns. The current process involves
    publishing missed COT reports in chronological order over the course of
    weeks or even months and can result in market participants being in the
    dark for long periods. NGFA members see CFTC's work on COT reports as a
    great benefit to the marketplace and encourage CFTC to further explore
    ways to enhance this offering.
    Conclusion
        NGFA supports CFTC as a standalone agency and appreciates Congress
    and CFTC's understanding of the agricultural industries' needs for
    managing risk. Thank you for your consideration of NGFA's statement.
                                     ______

     Submitted Letter by Hon. Sharice Davids, a Representative in Congress
                                  from Kansas
    October 3, 2025

    Hon. Brian K. Fitzpatrick,           Hon. Lloyd Smucker,
    1st District U.S. House of           11th District U.S. House of
     Representatives,                     Representatives,
    Washington, D.C.                     Washington, D.C.

    Hon. Brendan F. Boyle,               Hon. Summer L. Lee,
    2nd District U.S. House of           12th District U.S. House of
     Representatives,                     Representatives,
    Washington, D.C.                     Washington, D.C.

    Hon. Dwight Evans,                   Hon. John Joyce,
    3rd District U.S. House of           13th District U.S. House of
     Representatives,                     Representatives,
    Washington, D.C.                     Washington, D.C.

    Hon. Madeleine Dean,                 Hon. Guy Reschenthaler,
    4th District U.S. House of           14th District U.S. House of
     Representatives,                     Representatives,
    Washington, D.C.                     Washington, D.C.

    Hon. Mary Gay Scanlon,               Hon. Glenn Thompson,
    5th District U.S. House of           15th District U.S. House of
     Representatives,                     Representatives,
    Washington, D.C.                     Washington, D.C.

    Hon. Chrissy Houlahan,               Hon. Mike Kelly,
    6th District U.S. House of           16th District U.S. House of
     Representatives,                     Representatives,
    Washington, D.C.                     Washington, D.C.

    Hon. Ryan Mackenzie,                 Hon. Christopher R. Deluzio,
    7th District U.S. House of           17th District U.S. House of
     Representatives,                     Representatives,
    Washington, D.C.                     Washington, D.C.

    Hon. Robert P. Bresnahan, Jr.,       Hon. John Fetterman,
    8th District U.S. House of           United States Senate,
     Representatives,                    Washington, D.C.
    Washington, D.C.

    Hon. Daniel Meuser,                  Hon. David McCormick,
    9th District U.S. House of           United States Senate,
     Representatives,                    Washington, D.C.
    Washington, D.C.

    Hon. Scott Perry,
    10th District U.S. House of
     Representatives,
    Washington, D.C.

      RE: Sports Prediction Markets Threat to Pennsylvania Gaming
                Regulatory Framework

        Dear Representatives and Senators,

        I am writing to you today on behalf of the Pennsylvania Gaming
    Control Board (PGCB) to respectfully share our concerns about the
    growing presence of sports prediction markets and the significant
    threat they pose to Pennsylvania's long-established regulatory
    framework for gaming.\1\
    ---------------------------------------------------------------------------
        \1\ To be clear, the PGCB feels prediction markets on non-sports
    related events (e.g., Will there be a civil war in the United States in
    2025? Will Taylor Swift announce her pregnancy in 2025? See
    polymarket.com) are equally--if not more--troubling than sports related
    event contracts; however, given our regulatory role in this area is
    limited to sports wagering, that will be the focus of this letter.
    Notwithstanding that fact, the same basic concerns exist across
    ``current event'' related contracts as well.
    ---------------------------------------------------------------------------
        Following the U.S. Supreme Court's decision in Murphy v. National
    Collegiate Athletic Association, 584 U.S. 453 (2018), which struck down
    the Professional and Amateur Sports Protection Act of 1992 (PASPA) and
    recognized a state's right to authorize and regulate sports wagering
    within its boundaries, Pennsylvania began to authorize intrastate
    sports wagering. A comprehensive framework was developed through
    statute, 4 Pa.C.S. Chapter 13C, and regulation, 58 Pa. Code Part VII,
    Subpart Q, which is administered by the PGCB, an independent state
    agency also tasked with overseeing casino gaming, iGaming, video gaming
    terminals, and fantasy sports contests within the Commonwealth. Our
    system is designed to ensure consumer protections, responsible gaming,
    and the integrity of sporting events.
        However, sports prediction markets operate under the assertion that
    they are financial derivatives, or swaps, and therefore claim to not be
    gambling under state law (or at the very least that state law is pre-
    empted). These markets claim primary regulatory oversight falls under
    the Federal Commodity Futures Trading Commission (CFTC). This assertion
    creates a direct conflict regarding regulatory authority, pitting
    Federal derivatives law against Pennsylvania's established power to
    regulate gambling activities within its borders and criminalize illegal
    gambling. The introduction of these markets operating under purported
    Federal oversight poses a direct threat to the comprehensive regulatory
    system that Pennsylvania, and many other state jurisdictions, have
    meticulously constructed for gaming.
    The Threat to State Sovereignty and Regulatory Integrity
        The regulation of gambling has historically been a matter left to
    individual states, reflecting the principle of state sovereignty. This
    was reaffirmed in Murphy. The framework Pennsylvania enacted was based
    on a long-standing understanding that regulation is crucial to the
    success of gaming. Allowing sports prediction markets to operate under
    the primary jurisdiction of the CFTC, which allows prediction markets
    to be self-certified by the private entities making them available,
    directly undermines this state authority. These markets effectively
    create a backdoor to legalized sports betting, operating parallel to,
    but outside of, the state-regulated system, and without strict
    oversight.
        This strategy employed by prediction market operators appears to be
    one of regulatory arbitrage. State-regulated sports betting operators
    in Pennsylvania face significant requirements, including thorough
    background investigations, licensing fees, state taxation on gross
    gaming revenue for the benefit of the Commonwealth's citizens, and
    mandatory compliance with detailed rules providing consumer
    protections, responsible gaming provisions, and integrity monitoring.
    By seeking classification as financial derivatives, prediction markets
    aim to sidestep these crucial state-level requirements. This creates an
    uneven playing field where prediction markets could gain a competitive
    advantage by exploiting a perceived loophole between Federal financial
    regulation and state gaming law. Perhaps most troubling, the CFTC
    regulates a system that also allows wagers on events that a single
    person can control--something the PGCB would never allow for fear of
    manipulation of the market and a cascading loss of confidence in the
    integrity of the betting system.
        With all due respect to the CFTC, it would take years for them to
    create the regulatory system and oversight that state gaming
    authorities have in place, which would create a redundancy for a system
    that already exists and works exceptionally well. The CFTC is a
    financial market regulator, lacking the specific expertise and
    historical mandate for overseeing consumer gambling activities. State
    bodies like the PGCB possess specialized knowledge and experience in
    this area to protect the public interest.
    Inadequate Consumer Protection and Sports Integrity
        The jurisdictional clash carries a significant risk of resulting in
    inconsistent and inadequate regulation. The CFTC's framework is
    designed for derivatives markets often involving sophisticated
    institutional participants. In contrast, state gaming regulators
    prioritize consumer protection for the public, implementing detailed
    measures for responsible gaming, age verification, and problem gambling
    prevention. Sports prediction markets, despite their financial framing,
    are marketed broadly and attract retail participation, including
    potentially-vulnerable populations, including individuals as young as
    18.\2\ Without state oversight, these markets operate without the
    specific, consumer-focused protections Pennsylvania mandates for its
    licensed gaming operators.
    ---------------------------------------------------------------------------
        \2\ Regulated gaming in the Commonwealth pursuant to the
    Pennsylvania Race Horse Development and Gaming Act requires an
    individual to be at least 21 year of age. 4 Pa.C.S.  1207(8).
    ---------------------------------------------------------------------------
        Pennsylvania law and PGCB regulations require licensed online
    gambling operators to implement specific consumer protection and
    responsible gaming measures. These include:

       The ability to place limits on deposits, wagers, and time
            spent gambling.

       Implementing strict procedures to verify the age and
            identity of players.

       Displaying clear information about the risks of gambling and
            providing easy access to resources like the 1-800-GAMBLER
            helpline and the Council on Compulsive Gambling of
            Pennsylvania.

        Crucially, the PGCB also has the ability to penalize the operators
    should they not live up to the strict and necessary statutory and
    regulatory requirements the operator agreed to upon application for
    licensure--something that an operator who ``self-certifies'' their
    contracts/wagers would never be subjected to. Indeed, the CFTC self-
    certification process, coupled with, to date, laissez-faire oversight
    into products due to a lack of the regulatory infrastructure even seems
    disconcerting to the CFTC which wrote, in a September 30, 2025,
    industry guidance document, the following:

              The Commission has not, to date, been requested to take or
            taken any official action to approve the listing for trading of
            sports-related event contracts . . . All sports-related event
            contracts that are currently listed for trading on DCMs have
            been listed pursuant to self-certifications filed by the
            relevant DCM . . . and the Commission has not, to date, made a
            determination regarding whether any such contracts involve an
            activity enumerated or prohibited under (the) CEA.

        In addition to the above, it is further noteworthy that the PGCB
    and other state regulators are heavily involved in monitoring the
    integrity of sporting events. Sports prediction markets operating
    outside established state regulatory frameworks raise significant
    integrity concerns due to their vulnerability to manipulation. Our
    frameworks involve mandatory data sharing between licensed operators
    and sports leagues, sophisticated monitoring systems to detect
    suspicious betting patterns, and strict rules prohibiting participation
    by athletes, officials, and other insiders. If prediction markets
    successfully carve themselves out of the ``gaming'' definition, they
    risk creating a parallel wagering ecosystem where bets on sports
    outcomes occur with significantly less oversight regarding potential
    match-fixing or the exploitation of insider information. Even worse,
    the parallel tracks risk confusing patrons who engage in these markets
    by utilizing the veneer of a highly-regulated market when, in reality,
    their markets are more akin to the ``wild west''.
        For decades, Pennsylvania has demonstrated its capability to
    oversee a successful and safe gaming environment. We urge you to
    recognize and support the state's role in this area. Maintaining the
    integrity of our established regulatory framework is paramount to
    protecting the public interest, ensuring consumer safety, and
    safeguarding vital state revenue streams.
        Thank you for your attention to this critical matter. Of course, I
    and my staff are more than willing to meet and discuss this very
    important issue should you have any questions.
                Sincerely,

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Kevin O'Toole,
    Executive Director,
    Pennsylvania Gaming Control Board.
                                     ______

    Submitted Opinion by Hon. Sharice Davids, a Representative in Congress
                                  from Kansas
    Opinion No. 2025-073
    October 23, 2025

      Hon. Bryan B. King,
      State Senator,
      Green Forest, AR

        Dear Senator King:

        You have requested an opinion from this Office concerning
    prediction markets and event contracts. In making your request, you
    note that Kalshi, ``one of the largest exchange platforms for
    predictive markets,'' allows people to ``bet on future events'' like
    ``election outcomes, the occurrence of natural disasters, sports
    outcomes, and who will win the Nobel Peace Prize this year.''
        In that light, you ask the following four questions:

      1.  Would a company like Kalshi be operating in violation of Arkansas
                law if it was not licensed to engage in gaming operations?

            Brief response: Yes, based on the information provided in the
                opinion request, a business model like you have described
                constitutes gambling or gaming and requires licensure.

      2.  Under Arkansas law, would sports related event contracts be
                subject to Arkansas's tax on fantasy sports games?

            Brief response: No, unless the contracts meet the definition of
                a ``paid fantasy sports game'' under A.C.A.  23-116-102,
                they are not subject to such a tax. Only games that meet
                this definition pay the tax and benefit from the exemption
                under A.C.A.  23-116-101.

      3.  If companies like Kalshi are not required to possess gaming
                licenses, would they be subject to any other Arkansas
                regulatory body as a financial exchange?

            Brief response: My response to Question 1 renders this question
                moot.

      4.  If companies like Kalshi can operate under Arkansas law without a
                gaming license, is there any type of event contract that
                could not be exchanged under Arkansas law, such as election
                contracts or contracts related to future tragedies?

            Brief response: My response to Question 1 renders this question
                moot.
    Discussion
    Question 1: Would a company like Kalshi be operating in violation of
            Arkansas law if it was not licensed to engage in gaming
            operations?
        To answer your question, one must first determine whether a company
    like Kalshi facilitates or offers ``gambling'' or ``gaming.'' Although
    neither word is defined by statute, the Arkansas Supreme Court uses
    these words interchangeably and has defined them as ``the risking of
    money between two or more persons, on a contest or chance of any kind,
    where one must be loser and the other gainer.'' \1\
    ---------------------------------------------------------------------------
        \1\ Sharp v. State, 350 Ark. 529, 534, 88 S.W.3d 848, 851-52 (2002)
    (quoting Portis v. State, 27 Ark. 360, 362 (1872)); Ark. Att'y Gen. Op.
    2025-022.
    ---------------------------------------------------------------------------
        Generally, gambling and gaming are prohibited in Arkansas.\2\
    Regulating or prohibiting such activities falls ``within the police
    powers of a state.'' \3\ When interpreting statutes that prohibit
    gambling or gaming, judges will read ``the statutes liberally'' and
    ``in favor of the prohibition,'' to prevent someone ``from evading the
    penalty of the law'' by changing the name or creating a new name or
    device.\4\
    ---------------------------------------------------------------------------
        \2\ E.g., A.C.A.  5-66-101 to -120; Ark. Att'y Gen. Ops. 2025-
    022, 2023-008, 2016-073, 2009-123, 2006-052.
        \3\ See Ah Sin v. Wittman, 198 U.S. 500, 505-07 (1905).
        \4\ A.C.A.  5-66-101; Ark. Att'y Gen. Op. 2009-123.
    ---------------------------------------------------------------------------
        The acts you describe meet the Supreme Court's definition of
    gambling and gaming: a participant is risking money on a chance that
    some future event occurs. The fact that a company has rebranded this
    gambling activity as a ``prediction market'' does not protect it from
    scrutiny. Further, it is unlawful for anyone to ``receive or transmit
    information'' concerning sports or games ``for the purpose of gaming.''
    \5\ Thus, to the extent that a company like Kalshi facilitates wagers
    on sports outcomes or transmits data for gaming purposes (and your
    correspondence suggests that it does), those actions violate the law as
    well.
    ---------------------------------------------------------------------------
        \5\ A.C.A.  5-66-114(a).
    ---------------------------------------------------------------------------
    Question 2: Under Arkansas law, would sports related event contracts be
            subject to Arkansas's tax on fantasy sports games?
        Arkansas law permits the online operation of ``paid fantasy sports
    games,'' which are expressly exempt from the state's gambling and
    gaming prohibitions.\6\ To qualify for this exemption, the operator of
    such games must pay a tax \7\ and meet multiple other requirements.\8\
    For purposes of this opinion, the most relevant requirements are:
    ---------------------------------------------------------------------------
        \6\ Id.  23-116-101, -103.
        \7\ Id.  23-116-104.
        \8\ Id.  23-116-102(5).

       The value of ``all prizes and awards offered to winning game
            participants'' must be ``established and made known'' in
    ---------------------------------------------------------------------------
            advance of the game.

       The winning outcomes must be determined ``predominantly by
            accumulated statistical results of the performance of
            individual athletes.''

       A winning outcome cannot be ``based on the score, point
            spread, or performance or performance of any single team or
            combination of teams on any single performance of an individual
            athlete.'' \9\
    ---------------------------------------------------------------------------
        \9\ Id.

        Because the business model as you have described does not meet the
    above requirements, it would not fall under the statutes governing
    ``paid fantasy sports games.'' Consequently, it would not be subject to
    Arkansas's tax on fantasy sports and would not benefit from A.C.A.
    23-116-101(b)'s exemption from certain state gambling laws.
    Question 3: If companies like Kalshi are not required to possess gaming
            licenses, would they be subject to any other Arkansas
            regulatory body as a financial exchange?
        My response to Question 1 renders this question moot.
    Question 4: If companies like Kalshi can operate under Arkansas law
            without a gaming license, is there any type of event contract
            that could not be exchanged under Arkansas law, such as
            election contracts or contracts related to future tragedies?
        My response to Question 1 renders this question moot.
        Assistant Attorney General William R. Olson prepared this opinion,
    which I hereby approve.
                Sincerely,

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Tim Griffin,
    Attorney General.
                                     ______

     Submitted Indian Gaming Association Briefs by Hon. Donald G. Davis, a
                 Representative in Congress from North Carolina
                                    brief 1
    2025 CFTC Timeline
              **9/12/2024--KalshiEx v. CFTC--The U.S. District Court for
            the District of Columbia grants Kalshi's motion for summary
            judgment, finding that the CFTC exceeded its statutory
            authority under the CEA, and that Kalshi's event contracts on
            the outcome of the 2024 elections did not involve illegal
            activity or constitute gaming.**
    January
       1/17--January 17, 2025--D.C. Circuit Court of Appeals hears
            oral arguments in KalshiEX v. CFTC.

       1/17--Kalshi argues in a Federal court case concerning
            election contracts that ``gaming'' involves games and conceded
            that sports contests are games, which would qualify as
            prohibited activities under the Commodity Exchange Act and
            applicable Federal regulations.

       1/22--Kalshi files self-certification to list contracts on
            sports events and certified that ``the contract complies with
            the [Commodity Exchange] Act and Commission regulations
            thereunder.''

       1/25--Kalshi officially announced its entry into sports
            trading, advertising itself as the ``first app for legal sports
            betting in all 50 states''.
    February
       2/5--the Commodities Futures Trading Commission (CFTC)
            issued a statement of their intent to allow ``futures
            contracts'' on sporting events, and other events such as
            political elections and even weather events.

         CFTC did not issue a rulemaking to implement this
                change of policy, and nothing in writing from CFTC
                attorneys or Commissioners explaining the change in policy.

       CFTC states they would host a roundtable in DC with
            interested parties in April.

       2/12--White House announces nomination for Brian Quintenz to
            serve as CFTC Chair

       2/21--Rep. Dina Titus (NV-01) files comments to the CFTC
            expressing concern about the public policy implications of
            certain platforms offering prediction contracts on the outcome
            of political and sports events.
    March
       3/4--Nevada Gaming Control Board issues cease-and-desist to
            [Kalshi]

       3/27--New Jersey Division of Gaming Enforcement issues
            cease-and-desist to Kalshi and Robinhood

       3/29--KalshiEX, LLC v. Flaherty (NJDGE) [No. 1:25-cv-02152],
            response to NJ cease-and-desist

       3/29--KalshiEX, LLC v. Hendrick (Nevada NGCB) [No. 2:25-cv-
            00575], response to NV cease-and-desist

       3/31--Ohio Casino Control Commission issues cease-and-desist
            to Kalshi, Crypto.com, and Robinhood.

       With a large joint effort, CFTC agrees to have a Tribal
            portion of roundtable at the end of April and IGA is confirmed
            as the moderator.
    April
       4/1--Rep. Dina Titus (NV-01) sends petition to the CFTC to
            require changes to the terms and conditions of all event
            contracts that involve the outcome of sports and political
            contests. Additionally requests contracts to be stayed.

       4/12--Maryland Lottery & Gaming issues cease-and-desist to
            Kalshi

       4/21--Derivatives North America (Crypto.com) v. Maryland L&G
            [No. 1:25-cv-01285]

       4/24--CFTC roundtable for 4/30 is canceled with no reasoning
            given to participants nor any indications of a timeline for
            reschedule.

       IGA (Jason Giles), AGA, and CNIGA (Chairman James Siva) met
            with Kalshi CEO, Tarek Monsour, as well as Sporttrade CEO, Alex
            Kane, discuss their justifications about why they consider
            these futures contracts were legal.
    May
       5/1--KalshiEX, LLC v. Martin (Maryland) [No. 1:25-cv-01283],
            response to MD cease-and-desist

       5/5--Department of Justice drops appeal pending before the
            D.C. Circuit Court of Appeals in KalshiEx v. CFTC.

       5/19--Rep. Tom Cole (OK-04) sends letter to CFTC urging
            action to protect Tribes from negative impacts of sports events
            contracts.

       5/21--Arizona Department of Gaming issues cease-and-desist
    June
       6/10--Senate Ag Committee holds nomination hearing for Brian
            Quintenz

       6/17--Tribal joint amicus brief filed in NJ case, 60 Tribes
            and 8 Tribal orgs/entities
    July
       7/10--Derivatives North America (Crypto.com) v. Nevada NGCB
            [No. 2:25-cv-00978]

       7/22--Blue Lake Rancheria; Chicken Ranch; Picayune v. Kalshi
            & Robinhood [No. 3:25-cv-06162]

       7/28--Ohio Gambling Recovery LLC v. Kalshi, et al. [No.
            4:25-cv-01573-BYP]
    August
       8/15--Montana and Minnesota AGs issue cease-and-desist

       8/20--Ho-Chunk Nation v. Kalshi Inc.; KalshiEX LLC;
            Robinhood [No. 3:25-cv-00698]
    September
       9/12--Commonwealth of Massachusetts v. KalshiEX, LLC [No.
            2584CV02525]

       9/15--Tribal joint amicus brief filed for Crypto.com case in
            NV, 24 Tribes and 10 Tribal orgs/entities

       9/19--Illinois Gambling Recovery LLC v. Kalshi, et al. [No.
            1:25-cv-11394]

       9/19--Senator Catherine Cortez Masto (D-NV) sends letter to
            CFTC prompting responses to questions regarding the CFTC claims
            to validity over sports events contracts and explaining the
            lack of exercising enforcement.

       9/22--Massachusetts Gambling Recovery LLC v. Kalshi, et al.
            [No. 1:25-cv-12707]

       9/29--SEC hosts joint roundtable with CFTC

       9/30--CFTC issues staff an advisory clarifying sports event
            contracts not approved;  5c(c)(5)(C) applies.

       9/30--Tribal joint amicus brief filed for Robinhood case in
            NV, 23 Tribes and 8 Tribal orgs/entities
    October
       10/02--Georgia Gambling Recovery LLC v. Kalshi, et al. [No.
            2025-10-02]

       10/07--KalshiEX, LLC v. Schuler (Ohio Casino Control
            Commission) [No. 2:25-cv-01165]

       10/08--South Carolina Gambling Recovery LLC v. Kalshi, et
            al. [No. 8:25-cv-12867]

       10/16--Nevada Gaming Control Board advises licensees re:
            prediction-market partnerships (post-Preliminary Injunction
            denial).

       10/16--Yee v. Kalshi, et al. [No. 1:25-cv-08585-JLR]

       10/16--Tribal joint amicus brief filed for Robinhood case in
            MA, 17 Tribes and 8 Tribal orgs/entities

       10/20--Kentucky Gambling Recovery LLC v. Kalshi, et al. [No.
            2025-10-20]

       10/20--New York State Gaming Commission issues cease-and-
            desist

       10/20--Illinois Gaming Board issues advisory to treat sports
            event contracts as gambling under state law.

       10/24--White House announces Michael Selig as new nominee
            for CFTC Chair

       10/27--KalshiEX LLC v. New York State Gaming Commission [No.
            1:25-cv-08846], response to NY cease-and-desist
    November
       11/11--Senate Ag announces nomination hearing for Michael
            Selig on 11/19
       11/14--Tribal joint amicus brief filed for Kalshi case in
            OH, 22 Tribes and 9 Tribal orgs/entities
                                    brief 2
    Overview of the CFTC and Sports Betting Through Events Contracts
        In 2025, the rapid emergence of online sports betting offered under
    the guise of prediction markets licensed by the Commodity Futures
    Trading Commission (``CFTC'') poses a direct threat to Tribal
    sovereignty and the Indian gaming industry. Despite being ``licensed''
    by the CFTC, online sports betting/prediction markets constitute
    unregulated illegal gambling, lack adequate consumer protections, and
    undermine Tribal, state and Federal laws.
    Prediction Markets and Sports Betting
        A growing number of online and cryptocurrency-related corporations
    have registered with the CFTC to offer sports betting through their
    platforms, claiming that their offerings are ``event contracts'' that
    are subject to the exclusive jurisdiction of the CFTC. With the
    implicit blessing of the CFTC, these corporations offer online sports
    betting in every jurisdiction in the United States, regardless of
    whether Tribal or state governments permit gambling on their lands and
    without regard to existing Tribal or state government laws.
        The emergence of DCMs offering online sports betting stems from
    unwritten policy changes within the Trump Administration's CFTC. Prior
    to 2025, it was understood that Congress sought to prohibit sports
    betting, and the CFTC had consistently enforced its prohibitions on
    event contracts involving gambling. However, unilateral policy changes
    and general inaction by the CFTC have fostered the growth of sports
    betting through prediction markets in 2025.
        By allowing such sports betting contracts, the CFTC is permitting
    these corporations to circumvent legal frameworks designed to protect
    Tribal sovereignty, state rights, and consumer protection--while also
    overriding IGRA, the Wire Act and other Federal laws.
    Threats to Tribal Sovereignty
        The Supreme Court struck down the Federal law prohibiting sports
    betting in 2018. Since then, sports betting has grown slowly on a
    Tribe-by-Tribe and state-by-state basis, building a comprehensive
    regulatory system to protect consumers and the integrity of sports.
    This slow growth has followed the traditional role of local control
    over gaming at the Tribal and state level.
        Tribes offer sports betting as part of their class III operations,
    through compacts that have been negotiated with states pursuant to
    IGRA. These compacts often include revenue sharing provisions, under
    which Tribes share a portion of their revenue with a state in return
    for exclusivity agreements, which limit the expansion of gaming within
    the state. Tribes delivered more than $2 billion in revenue sharing
    payments to states in 2024, and states collected approximately $3
    billion in taxes from sports betting through commercial gaming
    operations.
        Tribes and states have developed comprehensive sports betting
    regulations that include stringent consumer protections, including
    establishing minimum age requirements, identity and location
    verifications, strict responsible gaming standards, extensive
    background checks for operators, and cooperation with amateur and
    professional leagues to detect suspicious activity.
        Prediction market platforms offer none of these safeguards. Self-
    certified and essentially self-regulated corporations--with the
    blessing of the CFTC--offer no consumer protections, permit gambling by
    18 year olds, and offer no location verification requirements or
    responsible gaming rules. These operators aggressively advertise
    without the background checks and disclosures, all while avoiding,
    Federal, Tribal, and state laws, regulations, and taxes.
        The CFTC is not equipped to regulate gambling. The CFTC has an
    annual budget of $365 million with 636 full time employees. Congress
    approved this budget in FY 2024, before the CFTC unilaterally decided
    to add nationwide sports betting to its workload.
        Compare that to Tribal and state government gaming regulation,
    which invest more than $1.3 billion annually, including a workforce of
    8,000+ full time employees that provide immediate oversight, customer
    security, consumer protections, cyber-security and much more.
        In short, the CFTC's inaction to prediction markets from offering
    online sports betting as agency-approved contracts has created a
    regulatory vacuum and represents a disaster waiting to happen.
    Action Items: What You Can Do To Protect Tribal Sovereignty
    Contact Your Members of Congress
        Congress must address the regulatory vacuum created by CFTC-
    approved sports betting prediction markets by pressuring the CFTC to
    enforce its own laws and regulations. In addition, Congress must enact
    an amendment to the CEA to further clarify that sports betting through
    prediction markets are prohibited.
        We urge Member Tribes to consider contacting your local House and
    Senate delegation and the House and Senate Agriculture Committees,
    urging them to question the CFTC about concerns with sports betting on
    CFTC-approved platforms and urging the agency to enforce its own
    regulations. This outreach should also urge Congress to directly amend
    the Commodity Exchange Act to further clarify that the CEA prohibits
    sports betting.
    Engage in a Public Relations Effort
        Despite the significant disruption caused by the rapid growth of
    prediction markets offering online nationwide sports betting, too many
    Members of Congress and the public are unaware of this issue, its
    impacts, and pending consequences. To correct this oversight, we urge
    all Tribes and Tribal organizations to consider submitting op-eds that
    detail the threat of online sports betting through prediction markets,
    and the dangers it poses to Tribal youth and those impacted by problem
    gambling, impacts on Tribal government economies, and the direct threat
    to Tribal sovereignty and the Indian Gaming Regulatory Act, among other
    impacts.
    Build Coalitions
        We urge all Members Tribes and regional Tribal organizations to
    contact your state governor, state attorney general, and state gaming
    commissions, urging them to join both the litigation and legislative
    efforts seeking to put a stop to sports betting through prediction
    markets. We also ask you to consider working with problem gambling
    organizations, religious organizations, and the major and amateur
    sports leagues to join these efforts.
    Litigation to Stop Prediction Markets on Sports Betting
        Tribal and state governments and consumer protection advocates have
    sued companies that offer sports betting through their prediction
    markets in at least 20 ongoing Federal and state court cases.
    Litigation is costly and time-consuming, but necessary to protect
    Tribal sovereignty. We continue to encourage all Member Tribes to work
    with your attorneys general and in-house counsel to consider signing on
    to amicus briefs in ongoing cases that seek to put a stop to prediction
    markets on sports betting.
                                     ______

    Submitted Letter by Hon. Donald G. Davis, a Representative in Congress
      from North Carolina; on Behalf of Bill Miller, President and Chief
                 Executive Officer, American Gaming Association
    December 11, 2025

        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        On behalf of the American Gaming Association (AGA), thank you for
    the opportunity to submit testimony as you begin the important process
    of reauthorizing the Commodity Futures Trading Commission (CFTC), which
    has not seen a formal reauthorization since 2008.
        The AGA is the premier national trade group representing the $329
    billion U.S. casino gaming industry. Our diverse membership includes
    commercial and Tribal casino operators, U.S.-licensed sportsbook
    operators, gaming suppliers, and other stakeholders committed to the
    highest standards of integrity, responsibility, and regulatory
    compliance. Collectively, the legal gaming industry supports 1.8
    million jobs, generates over $104 billion in wages and salaries, and
    contributes more than $52 billion in tax revenue to Federal, state, and
    local governments annually. Gaming has been embraced by communities
    across 46 states and the District of Columbia, where various forms of
    regulated gaming are now permitted.
        While the gaming industry has not historically had significant
    interests before this Committee before we appreciate this opportunity
    to add our voice on an increasingly urgent issue under your
    jurisdiction: the proliferation of so-called ``sports event contracts''
    via CFTC-registered prediction markets and the significant threat they
    pose to state regulatory authority, responsible gaming standards, and
    the economic foundation of legal sports betting in the United States.
    Legal Sports Betting: A Responsible, State-Led Framework
        Since the Supreme Court's 2018 decision in Murphy v. NCAA
    overturned the Professional and Amateur Sports Protection Act (PASPA),
    39 states and the District of Columbia have legalized sports betting.
    These markets are governed by robust state regulatory frameworks
    tailored to reflect local values, public interests, and consumer
    protections.
        This state-led system has generated substantial economic benefits:

       Americans legally wagered nearly $150 billion on sports in
            2024 alone

       Commercial legal sports betting produced $13.8 billion in
            operator revenue and more than $2.8 billion in tax revenue for
            Federal, state, and local governments in 2024--excluding
            revenue and state revenue produced by Tribal sports betting,
            further increasing the industry's impact

       Over 77% of online sports bets now occur in the legal
            market--up from 44% in 2019--as consumers continue to migrate
            from the illegal marketplace

        States have designed these frameworks to ensure strong protections:

       Minimum betting ages (21+ in most jurisdictions)

       Licensing and suitability requirements for operators

       Anti-money laundering (AML) and Know Your Customer (KYC)
            protocols

       Mandatory responsible gaming resources, including self-
            exclusion programs that give individuals the option to self-bar
            from wagering and gaming platforms, as well as wager limits

       Independent integrity monitoring and compliance audits

        The state-run regulatory system ensures that operators utilize the
    best technology for ID verification, geolocation services, and
    determining the source of a patron's funds. The licensing process is
    intentionally intrusive, with extensive background investigations for
    company personnel to ensure the integrity of those working in the
    gaming industry. Gaming operators also rely on extensive academic
    research and proven programs to provide resources to their customers on
    responsible gaming. Importantly, they are all required to participate
    in state-run self-exclusion programs that allow individuals who have a
    problem with gambling to essentially ban themselves from both in person
    and online gaming across the state. Legal sports book operators also
    work with integrity monitors, sports leagues and law enforcement to
    track suspicious wagering patterns and potential manipulation during
    games to root out match fixing and corruption.
        In short, legal sports betting is a tightly regulated activity
    designed to protect consumers, preserve game integrity, and ensure tax
    compliance. It is a far cry from the opaque and unregulated illegal
    market that existed under PASPA and from what the prediction markets
    are offering today.
    Sports Event Contracts: Sports Betting by Another Name
        Despite this progress, certain prediction market platforms have
    introduced retail products based on the outcome of sporting events such
    as ``Will the Yankees win the World Series?'' or ``Will Patrick Mahomes
    throw three touchdowns on Sunday?'' These sports event contracts are
    functionally indistinguishable from traditional sports wagers.
    Platforms have openly marketed \1\ * these products as a way to bet on
    sports in states where it is not permitted, and Americans
    overwhelmingly view \2\ sports event contracts as gambling.
    ---------------------------------------------------------------------------
        \1\ https://nexteventhorizon.substack.com/p/kalshi-is-advertising-
    sports-betting-legal-in-california-texas.
        * Editor's note: references annotated with  are retained in
    Committee file.
        \2\ https://americangaming.org/resources/sports-events-contracts-
    public-opinion-landscape/.
    ---------------------------------------------------------------------------
        The AGA strongly opposes the use of CFTC-registered platforms to
    facilitate sports betting activity, for several reasons:

      1.  Circumvention of State Law: Sports event contracts undermine the
                authority of state legislatures and regulators to govern
                gaming within their borders. In many cases, these contracts
                are offered in states where sports betting remains illegal
                or where Tribal exclusivity agreements are in place.

      2.  Evasion of Regulatory Standards: Unlike licensed sportsbooks,
                prediction markets offering sports event contracts are not
                subject to state-level oversight or consumer protection
                standards that address age verification, AML/KYC
                compliance, responsible gaming protocols, and integrity
                monitoring--all tools that are essential to maintaining
                public trust in the legal gaming industry.

      3.  Public Policy Conflicts: The Commodities Exchange Act (CEA) and
                CFTC's own regulation 17 CFR  40.11, explicitly prohibits
                contracts based on ``gaming'' or events that are unlawful
                under Federal or state law. In addition, the Indian Gaming
                Regulatory Act gives Tribes exclusivity to offer gaming
                products on their land, and the Wire Act makes it illegal
                to offer sports wagers over state lines.

      4.  CFTC Is Not Equipped to Regulate Sports Betting: The CFTC was
                established to oversee complex financial derivatives and
                commodities trading, not to referee athletic contests or
                assess the integrity of player performances. Commercial and
                Tribal gaming is overseen by approximately 8,400 regulators
                with $1.1 billion in budgets, compared to the CFTC's
                roughly 600 staff and $365 million budget, illustrating
                that some states have nearly as many gaming regulators as
                the entire Federal agency. Additionally, unlike state
                gaming commissions, the CFTC lacks expertise in sports
                integrity monitoring, capacity for age or location-based
                access controls, or experience in administrating
                responsible gaming controls.

      5.  Market Confusion and Consumer Risk: Presenting speculative
                contracts on sports outcomes as investment vehicles blurs
                the lines between entertainment-based betting and financial
                trading. This not only risks misleading consumers--
                especially younger participants--but also undermines the
                regulated industry's message that sports betting should be
                treated as entertainment, not a means of wealth generation.

      6.  Loss of Tax Revenue and Economic Harm: Every dollar wagered
                through unregulated, CFTC-sanctioned platforms is a dollar
                diverted from licensed sportsbooks that pay taxes and
                invest in local economies. As of today, we estimate that
                states have lost more than $165 million in state tax
                revenue to prediction markets operating illegally in their
                states, to say nothing of lost licensing fees.

        In response to the spread of sports event contracts, a growing
    number of state regulators have begun to take enforcement action.
    Nevada, New Jersey, Arizona, Ohio, Montana, Maryland, New York,
    Connecticut and Illinois have issued cease-and-desist orders to
    platforms attempting to operate outside of their legal gaming
    frameworks, asserting that these activities constitute illegal gambling
    under state law. The platforms have subsequently sued several of these
    states and are currently in litigation. Additionally, there are several
    pending Tribal lawsuits and Massachusetts has sued prediction market
    companies in state court.
        In the pending case in New Jersey, the AGA,\3\ several Tribes,\4\
    and 34 state Attorneys General \5\ all filed briefs in support of state
    regulated gaming. This strong bipartisan statement from the chief law
    enforcement officers from across the country reasserted that states
    have the right to regulate gaming and rejected the claim from
    prediction markets that the CEA says otherwise. From the brief, ``When
    Congress removes the states' historic police powers, it does not
    whisper in the dark of night. Rather, courts expect Congress to speak
    clear as day when it intends a dramatic shift in our country's
    traditional balance of power . . . This federalism canon proves quite
    significant here. Nothing in the Commodity Exchange Act's language
    clearly signals that Congress was trying to strip the states of their
    traditional power to regulate sports gambling. Indeed, several parts of
    the statutory scheme overtly recognize the continued application of
    state law.''
    ---------------------------------------------------------------------------
        \3\ https://docsend.com/view/dusvfqyfsthhs894.
        \4\ https://docsend.com/view/ifd43m6y88cbigei.
        \5\ https://docsend.com/view/krbznv38fw5ijfxn.
    ---------------------------------------------------------------------------
        In addition to state enforcement actions, jurisdictions such as
    Pennsylvania, Tennessee, and Michigan have taken other actions to
    express their concerns regarding sports prediction markets through
    comments to the CFTC and their Congressional delegations, and notices
    to sportsbook operators that their licenses may be in jeopardy if they
    enter this space. Attorneys General in Arkansas and South Carolina have
    stepped up, issuing opinions that these platforms require sports
    betting licenses and sending letters of concern to their U.S. Senators
    respectively.
        These actions reflect the clear intent of state authorities to
    defend their jurisdiction, protect consumers, and uphold the integrity
    of their legal markets. They also underscore the broader industry and
    governmental consensus that such platforms pose unacceptable risks and
    should not be permitted to operate under the guise of financial
    innovation. However, because of complete inaction by the CFTC to reign
    in these sport event contracts, states across the country are being
    forced to litigate the prohibition on gaming contracts.
    Conclusion and Recommendation
        In the CFTC's own staff advisory to prediction market platforms,\6\
    they acknowledged that the Commission has not approved any of these
    sports event contracts, instead relying on the self-certifications by
    registered entities. The CFTC's refusal to prevent platforms from using
    a backdoor to offer nationwide sports betting should concern every
    Member of this Committee and has serious implications for your states'
    ability to effectively regulate gaming within its borders. The CFTC
    reauthorization process offers a timely opportunity to reaffirm
    Congressional intent to prevent gambling through the commodities
    markets. As part of this effort, we respectfully urge the Committee to
    use its oversight powers to press the CFTC to stop sports betting
    contracts, and for the Committee to take appropriate legislative action
    if the agency continues to ignore its own regulations that preclude
    contracts involving gaming and other excluded commodities.
    ---------------------------------------------------------------------------
        \6\ https://docsend.com/view/yfzhixphr3uyaqc3.
    ---------------------------------------------------------------------------
        The American Gaming Association welcomes continued dialogue with
    Congress, the Commission, and stakeholders on this matter. Thank you
    for your leadership and for the opportunity to contribute to this
    important discussion.
                Sincerely,

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Bill Miller,
    President & CEO,
    American Gaming Association.
                                     ______

       Submitted Statements by Hon. Donald G. Davis, a Representative in
                  Congress from North Carolina; on Behalf of:
                                  Statement 1
     jeff miller, executive vice president, communications, public affairs
         and policy, player health and safety, national football league
        There is no greater priority for the National Football League
    (``NFL'') than protecting the integrity of our games. Our fans deserve
    confidence that games are free from improper influences, and our
    players, coaches, and personnel deserve protection from unfair
    allegations relating to sports gambling or manipulation.
        We welcome the opportunity to provide this written testimony to the
    House Agriculture Committee to express concerns regarding the potential
    impact of sports-related events contracts on the integrity of our
    games. Since our August 2024 comment in response to the Commodity
    Futures Trading Commission's (CFTC's) proposed amendments to  40.11
    of the Commodity Exchange Act, these concerns have only intensified
    given recent sports betting scandals affecting professional and college
    sport. As Commissioner Goodell recently discussed at a public forum,
    the league has no plans to participate in prediction markets due to
    several outstanding legal, regulatory, and commercial concerns on how
    these markets operate and the possible impact on the integrity of
    sporting events.
        We are particularly troubled that several sports-related futures
    contracts have been launched nationwide, including in jurisdictions
    where sports betting has not been legalized. These contracts fall
    outside the purview of state regulatory authorities and the safeguards
    they impose upon the industry, including information-sharing
    requirements, integrity monitoring, prohibitions on easily manipulated
    markets, official league data requirements, know-your-customer
    protocols, and problem gambling resources. For example, just this past
    weekend, one prediction market exchange was accepting bets on whether
    or not ``concussion protocol,'' ``late hit,'' or ``roughing the
    passer'' would be mentioned during the broadcast. Congress and the CFTC
    should prohibit these and other types of objectionable bets among the
    many consumer and integrity protective measures needed before sports-
    related events contracts are legalized.
        The amounts potentially wagered through unregulated gaming
    contracts markets could significantly exceed those in regulated sports
    betting markets, creating substantially greater risks to contest
    integrity. Without the comprehensive regulatory framework that now
    exists in 39 states and the District of Columbia, these products could
    be susceptible to manipulation or price distortion. In each of these
    state-regulated markets, regulators and state legislators closely
    monitor betting activity and, with input from professional sports
    leagues, can determine which bets and wager levels are acceptable.
    Those guardrails do not exist in prediction markets.
        We would welcome the opportunity to work with the House Agriculture
    Committee and the CFTC to understand whether the game integrity
    safeguards that exist in regulated sports betting markets can be
    effectively implemented on self-regulated exchanges under the
    regulatory purview of the CFTC. Until such time that professional
    sports leagues and fans can be certain that effective game integrity
    and consumer protection measures can be enforced, sports-related events
    contracts should not be approved by the CFTC and Congress should
    consider clarifying the definition of ``gaming'' contracts in the
    prohibited categories of the Commodity Exchange Act.
        The NFL appreciates the House Agriculture Committee's consideration
    of these critical matters and remains available for further discussion.
                                  Statement 2
                      coalition for prediction markets \1\
    ---------------------------------------------------------------------------
        \1\ Coinbase, Crypto.com, Kalshi, Robinhood, and Underdog.
    ---------------------------------------------------------------------------
        The Coalition for Prediction Markets (CPM) appreciates the
    opportunity to submit this written testimony for the record following
    the House Committee on Agriculture's recent hearing on the
    Reauthorization of the Commodity Futures Trading Commission (CFTC). CPM
    represents a cross-section of the U.S. prediction markets ecosystem,
    including companies such as Coinbase, Crypto.com, Kalshi, Robinhood,
    and Underdog, all of which operate within the Federal regulatory
    framework established under the Commodity Exchange Act (CEA). CPM and
    its members strongly support the timely reauthorization of the CFTC and
    believe that a well-resourced, modern regulator is essential to
    ensuring market integrity, protecting consumers, and maintaining U.S.
    leadership in financial innovation.
        The CFTC plays a central role in preserving confidence in U.S.
    derivatives markets, and its oversight responsibilities have expanded
    significantly as markets have become more technologically sophisticated
    and interconnected. Prediction markets, like other derivatives markets,
    depend on effective supervision, market surveillance, and enforcement
    to function properly. Reauthorization provides an opportunity to ensure
    that the Commission has the staffing, technical expertise, and data
    capabilities necessary to oversee emerging products and trading models
    while continuing to fulfill its core mission under the Commodity
    Exchange Act.
        Prediction markets are regulated financial markets, not gambling
    enterprises. Contracts traded on prediction markets are swaps whose
    underlying value turns on the resolution of a future event, and they
    are listed, traded, cleared, and settled through CFTC-regulated
    entities, including Designated Contract Markets and Designated Clearing
    Organizations. Market participants trade directly on regulated
    exchanges or through registered Futures Commission Merchants and
    Introducing Brokers, and transactions are subject to comprehensive
    Federal oversight. Unlike casinos, sportsbooks, or other wagering
    industries, prediction markets are governed by the CEA and its
    implementing regulations, not state gaming laws. Prices are established
    through transparent market mechanisms, trading activity is surveilled
    for fraud and manipulation, and transactions flow through entities
    subject to the Bank Secrecy Act and applicable anti-money laundering
    and know-your-customer requirements.
        Effective regulation of prediction markets relies on the CFTC's
    ability to conduct ongoing market surveillance and to respond quickly
    to potential misconduct. As event-based contracts increase in volume
    and complexity, the Commission's access to real-time data, analytical
    tools, and specialized personnel becomes increasingly important. A
    reauthorized and well-equipped CFTC is better positioned to detect
    fraud, deter manipulation, and address emerging risks before they
    undermine market confidence or harm participants.
        CPM members believe that the CFTC is the appropriate Federal
    regulator for prediction markets and support clear statutory authority
    and strong enforcement tools to oversee this growing segment of the
    derivatives marketplace. Our members do not seek to evade regulation;
    rather, they seek regulatory certainty, consistent oversight, and a
    framework that evolves alongside innovation. Properly regulated
    prediction markets can contribute to price discovery, information
    aggregation, and risk management, all of which align with the CFTC's
    core mission under the Commodity Exchange Act.
        Regulatory clarity from the CFTC also supports compliance and
    consumer protection by providing market participants with predictable
    expectations regarding product design, disclosures, and operational
    safeguards. Clear and consistent oversight enables firms to invest in
    compliance infrastructure, internal controls, and risk-management
    systems that reinforce market integrity. This clarity benefits not only
    regulated entities, but also consumers and regulators by promoting
    transparency and reducing uncertainty across the marketplace.
        CPM members have strong internal rules governing trading activity,
    including comprehensive prohibitions on insider trading. These rules
    restrict participation by individuals with material non-public
    information, by those who can influence or control the outcome of an
    event, and by certain employees trading on contracts offered by their
    own platforms. CPM members also collaborate with third parties,
    including government agencies, professional sports leagues, and other
    public and private institutions, to enhance screening protocols and
    prevent misuse of insider information.
        In conclusion, CPM and its members strongly support the
    reauthorization of the CFTC and believe that prediction markets, when
    properly regulated, can continue to operate as legitimate financial
    markets that serve the public interest. Clear statutory authority,
    strong enforcement, and modernized oversight will allow the CFTC to
    fulfill its mission while enabling responsible innovation. CPM and its
    members stand ready to work with Congress and the Commission to ensure
    that prediction markets operate with integrity, transparency, and
    robust consumer protections, and to help establish the United States as
    the global standard for well-regulated prediction markets.
        Thank you for the opportunity to provide this testimony.
       Submitted Indian Gaming Association Brief by Hon. Gabe Vasquez, a
                   Representative in Congress from New Mexico
    Overview of the CFTC and Sports Betting Through Events Contracts \1\
    ---------------------------------------------------------------------------
        \1\ Editor's note: there does not appear to be an extant online
    version of this ``brief''. There are differences in the brief submitted
    by Mr. Davis of North Carolina as compared to the brief submitted by
    Mr. Vasquez. As such both are published herein.
    ---------------------------------------------------------------------------
        In 2025, the rapid emergence of online sports betting offered under
    the guise of prediction markets licensed by the Commodity Futures
    Trading Commission (``CFTC'') has posed a direct threat to Tribal
    sovereignty and the Indian gaming industry. Despite being ``licensed''
    by the CFTC, online sports betting/prediction markets constitute
    unregulated illegal gambling, lack adequate consumer protections, and
    violate Tribal, state and Federal laws. This memo outlines the concerns
    posed by prediction markets.
    Prediction Markets and Sports Betting
        A growing number of online and cryptocurrency-related corporations
    have registered as designated contract markets (``DCMs'') with the CFTC
    to offer sports betting through their platforms, claiming that their
    offerings are ``event contracts'' or financial instruments that are
    subject to the exclusive jurisdiction of the CFTC. With the implicit
    blessing of the CFTC, these DCMs and their partnering ``futures
    commission merchants'' (FCMs) have offered online sports betting in
    every jurisdiction in the United States--all 50 states and within the
    lands of every federally recognized Indian Tribe, regardless of whether
    the Tribal or state government permits gambling on their lands.
        DCMs self-certify that they meet or will comply with the CFTC's
    regulations and core principles. As a self-regulatory organization, a
    DCM is responsible for enforcing its own rules, but it must comply with
    CFTC principles and regulations, which cover areas like rule
    compliance, market manipulation prevention, and financial integrity.
        As of November 2025, the most prominent DCMs offering sports
    betting through the CFTC are Kalshi and Crypto.com. Robinhood is an FCM
    partnering with Kalshi to offer its online sports betting contracts.
    The CFTC's inaction on this issue is enabling even more platforms to
    flood the CFTC marketplace. Last week, FanDuel and DraftKings announced
    that they will engage in prediction markets, with more platforms
    expected to enter the market in the coming weeks.
        The emergence of DCMs offering online sports betting stems from the
    CFTC's unwritten policy changes. Prior to 2025, it was understood that
    the Commodity Exchange Act (``CEA'') prohibited sports betting through
    the CFTC. In 2010, through an amendment to the CEA, Congress included a
    special rule for approval of event contracts that authorized the CFTC
    to prohibit ``transactions that involve--activity that is unlawful
    under any Federal or state law, terrorism, assassination, war, gaming,
    other similar activity . . .''
        On July 27, 2011, the CFTC promulgated regulations to implement
    this provision that expressly prohibit swaps and event contracts
    relating to gaming. The rule provides that ``a registered entity shall
    not list for trading [a swap, contract, or transaction] that involves,
    relates to, or references . . . gaming, or an activity that is unlawful
    under any state or Federal law.''
        Prior to 2025, the CFTC had consistently enforced its prohibitions
    on event contracts involving gambling. DCM platforms, fearing legal
    repercussions, did not offer sports-related contracts, which even
    existing DCM/prediction market platforms admitted in Federal court
    filings were prohibited under current law.
        Unilateral policy changes and general inaction by the CFTC have
    fostered the growth of sports betting through prediction markets in
    2025. In February, the CFTC indicated that it would take a more hands
    off regulatory approach to prediction markets, which has been
    interpreted as tacit approval for prediction market expansion.
        Further encouraging this expansion, in May of 2025, the CFTC
    sought--and was granted--a voluntary dismissal of its appeal against
    Kalshi, a self-certified DCM offering event contracts, in a case
    involving betting on the outcome of the 2024 elections. This move ended
    the Federal Government's legal challenge and opened the door for
    enhanced prediction market offerings.
        This extraordinary step takes the Tribes and states out of the
    regulation of sports wagering. By allowing such contracts to exist on
    the market, the CFTC is permitting the conduct of unregulated sports
    betting, circumventing legal frameworks designed to protect Tribal
    sovereignty, state rights, and consumer protection. Ongoing litigation
    to halt these bets and regulatory enforcement actions across multiple
    jurisdictions highlight the urgent need for clear Federal guidance to
    resolve these jurisdictional conflicts and protect consumers and
    established gaming regulatory structures.
        The traditional purpose of event contracts was to aggregate
    information and predict the likelihood of specific events for decision-
    making, planning, or financial tools, usually tied to events with
    clear, defined economic-related outcomes such as corporate earnings or
    quantifiable damage from natural disasters. However, companies offering
    event contracts are expanding the class of tradable instruments to
    include sporting events and elections, among other things.
        The CFTC has yet to prohibit sports-related futures contracts
    outright, but it has expressed concern that such products may blur the
    line between regulated financial instruments and unlawful gambling. On
    September 30th, the CFTC issued a ``Staff Advisory'' to all ``market
    participants'', including DCMs like Kalshi and Crypto.com, and FCMs
    like Robinhood, that they ``should'' provide customers notice of
    potential litigation risks and regulatory enforcement actions that
    could impact ``sports-related event contract positions.'' The Staff
    Advisory clarifies that the CFTC ``has not, to date, been requested to
    take or taken any official action to approve the listing for trading of
    sports-related event contracts . . . All sports-related event contracts
    that are currently listed for trading on DCMs have been listed pursuant
    to self-certifications . . . and the Commission has not, to date, made
    a determination regarding whether any such contracts involve an
    activity enumerated or prohibited under the [CEA or CFTC
    regulations].''
        While this most recent statement by the CFTC undercuts DCM's legal
    arguments that the agency fully backs their offering of sports-related
    event contracts, it falls far short of enforcing existing Federal
    laws--including the CEA and the CFTC's own regulations, the Indian
    Gaming Regulatory Act (``IGRA''), and the Wire Act, and completely
    fails to protect Tribal and state sovereignty, consumers, and the
    integrity of American sports.
    Threats to Tribal Sovereignty
        Gambling laws in the U.S. have traditionally been regulated at the
    local level, allowing each Tribe and state the autonomy to decide which
    forms of gambling are legal and how they should be governed. For state
    governments, this decentralized model has allowed states to tailor
    gambling regulations to their specific needs and concerns, whether it
    be for casinos, lotteries, sports betting, online gambling, or horse
    racing. Additionally, Tribal sovereignty plays a critical role in
    gaming regulation on Tribal lands, where Tribes have the ``exclusive
    right to regulate [and operate] gaming activity'' under IGRA.
        Nationwide online sports betting through the CFTC's platforms
    threatens to preempt Tribal and state laws. These platforms allow for
    interstate gambling, bypassing the regulations, controls, and tax
    revenues relied upon by Tribal and states governments. This undermines
    the federalism that has allowed local governments to maintain control
    over gambling within their territories.
        In the 7 years since the Supreme Court's 2018 Murphy v. NCAA
    decision, sports betting in the United States has grown slowly on a
    Tribe-by-Tribe and state-by-state basis, which have built a
    comprehensive regulatory system to protect consumers and the integrity
    of sports.
        Tribes offer sports betting as part of their class III gaming
    operations, through compacts that have been carefully negotiated with
    state governments pursuant to IGRA. These compacts often include
    revenue sharing provisions, under which Tribes share a portion of their
    revenue with a state in return for exclusivity agreements, which limit
    the expansion of gaming within the state. Tribes delivered more than $2
    billion in revenue sharing payments to states in 2024, and billions
    more in indirect income, sales and other taxes paid by Tribal employees
    and customers. In 2024, states collected approximately $3 billion in
    taxes from sports betting through commercial gaming operations.
        Tribes and states have developed comprehensive sports betting
    regulations that include stringent consumer protections, including
    establishing minimum age requirements, identity and location
    verifications, strict responsible gaming standards, extensive
    background checks for operators, and cooperation with amateur and
    professional leagues to detect suspicious activity.
        Prediction market platforms offer none of these essential
    safeguards. Self-certified and essentially self-regulated DCMs offer no
    consumer protections, permit gambling by 18 year olds, and offer no
    location verification requirements or responsible gaming rules. These
    operators aggressively advertise without the background checks and
    disclosures of licensed gaming operations, all while avoiding, Federal,
    Tribal, and state laws, regulations, and taxes.
        The CFTC is not equipped to regulate gambling. The CFTC has an
    annual budget of approximately $365 million with 636 full time
    employees, a staff that is rapidly shrinking due to recent firings and
    voluntary resignations. Congress approved this budget in FY 2024,
    before the CFTC unilaterally decided to add nationwide sports betting
    to its workload.
        Those numbers pale in comparison to the regulatory systems of
    Tribal and state governments, which invest more than $1.3 billion
    annually gaming regulation, including a workforce of 8,000+ full time
    employees that provide immediate oversight, customer security, consumer
    protections, cyber-security and much more.
        In short, the CFTC's inaction to prediction markets from offering
    online sports betting as agency-approved contracts has created a
    regulatory vacuum and represents a disaster waiting to happen.
        Unless acted upon, the number of sports-based event contracts
    traded on the Derivatives/Futures market is only expected to grow,
    ushering in growing reason for concern for Tribal gaming operators and
    regulators across the United States. It will be crucial moving forward
    for Tribal governments to closely follow this matter as it evolves in
    the CFTC and in the courts.
    Enforce Existing Law and Reinforce the CEA
        On October 24th, President Trump nominated Mike Selig to serve as
    Chairman of the CFTC. Selig currently serves as Chief Counsel of the
    SEC's Crypto Task Force and Senior Advisor to SEC Chairman Paul Atkins.
    Selig was nominated just weeks after the Trump Administration pulled
    the nomination of Brian Quintenz to serve as the CFTC Chair. The Senate
    Agriculture Committee approved his nomination by a vote of 12-11 on
    November 20, 2025.
        During his nomination hearing, Mr. Selig failed to commit to
    enforcing existing laws or regulations that clearly prohibit use of the
    CFTC marketplace for gambling and sports betting. Instead, Selig
    repeatedly stated that he would wait for direction from the Federal
    courts. (Note: there are 20+ cases challenging DCMs offering sports
    betting through CFTC-approved platforms).
        It will take years for the Federal courts to reach a final
    determination in these cases, and even that decision may not fully
    settle the question. In the meantime, DCMs will continue to flood the
    market with products that threaten consumer protections and violate
    Tribal, state, and Federal laws.
        Congress must fill the regulatory vacuum. We urge Congress to
    increase oversight of the CFTC, pressing the agency to enforce the CEA
    and the agency's existing regulations. In addition, we ask Congress to
    amend the CEA to reinforce the existing prohibition against CFTC-
    approved DCM's issuing event contracts relating to sports betting or
    gambling.
                                     ______

      Submitted Letter by Hon. Gabe Vasquez, a Representative in Congress
    from New Mexico; on Behalf of Hon. Leonard Forsman, Chairman, Suquamish

                                  Indian Tribe
    December 17, 2025

      Hon. Glenn Thompson,
      Chairman,
      U.S. House Committee on Agriculture,
      Washington, D.C.;

      Hon. Angie Craig,
      Ranking Minority Member,
      U.S. House Committee on Agriculture,
      Washington, D.C.

      Re: Suquamish Tribe's Comments on CFTC Reauthorization

        Dear Chairman Thompson, Ranking Member Craig, & Members of the
    Committee:

        On behalf of the Suquamish Indian Tribe, a signatory to the 1855
    Treaty of Point Elliott, I write to share our views as the Committee
    considers reauthorization of the Commodity Futures Trading Commission
    (CFTC) and potential amendments to the Commodity Exchange Act (CEA).
    While the Suquamish Tribe supports well-regulated derivatives markets
    that serve legitimate commercial and risk-management purposes, we are
    increasingly concerned that the CEA is being used to circumvent
    Federal, state, and Tribal gaming laws by enabling sports wagering and
    casino-style gaming through so-called ``event contracts.'' These
    developments undermine the carefully negotiated legal framework
    governing gaming in Indian Country.
        Under the Treaty of Point Elliott, the Suquamish people expressly
    reserved the right to self-govern, manage our own affairs, and protect
    the well-being of our community, including through the exercise of
    gaming rights as defined and protected under Federal law. Event
    contracts marketed and traded under CFTC oversight risk encroaching
    upon these rights by creating de facto gambling products outside the
    jurisdiction and safeguards of the Indian Gaming Regulatory Act (IGRA).
        The Tribe's concerns were heightened by recent testimony before the
    Senate during consideration of a nominee for CFTC Chairman. In response
    to questions regarding potential conflicts between the CEA and IGRA,
    the nominee declined to acknowledge those conflicts and stated that his
    primary obligation would be to defend the Commodity Exchange Act above
    all else. This testimony raises serious questions about the future role
    of the CFTC in areas that directly intersect with Tribal gaming and
    signals a troubling disregard for the Federal trust responsibility,
    treaty obligations, and Congress's role in safeguarding Tribal rights.
        As Congress considers CFTC reauthorization, it must carefully
    evaluate the consequences of any expansion of the CFTC's regulatory
    authority into areas that intersect with IGRA and Tribal gaming. Tribal
    gaming is not simply a commercial endeavor. It is a fundamental
    exercise of Tribal sovereignty conducted pursuant to IGRA and carefully
    negotiated Tribal-state gaming compacts approved by the Secretary of
    the Interior. Revenues generated from Tribal gaming provide essential
    government services and programs for our community.
        To everyday consumers, ``event contracts'' or ``prediction
    markets'' are not perceived as federally regulated commodities
    products, but as indistinguishable from traditional forms of gaming,
    including sports wagering. Permitting the nationwide expansion of these
    products without clear Congressional direction risks undermining Tribal
    sovereignty and destabilizing the regulatory balance carefully
    established by IGRA.
        The Suquamish Indian Tribe respectfully urges the Committee to
    address existing regulatory ambiguities and to consider targeted
    amendments to the CEA that prohibit, or deem contrary to the public
    interest, event contracts and similar instruments that function as
    casino-style games. The Tribe further recommends that the Committee
    clarify that CFTC may not approve, permit, or facilitate contracts that
    constitute sports wagering.
        I appreciate the Committee's leadership in modernizing the
    oversight and regulation of commodity futures and derivatives markets.
    Thoughtful and proactive action during CFTC reauthorization will
    preserve the integrity of those markets while honoring Congress's
    commitments to Tribal nations.
        The Suquamish Indian Tribe stands ready to work with the Committee
    as it considers this important reauthorization. Thank you for your
    attention to these comments.
                Respectfully,

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Leonard Forsman,
    Chairman.

    CC:

    The Honorable Emily Randall, U.S. House of Representatives
    The Honorable Patty Murray, U.S. Senate
    The Honorable Maria Cantwell, U.S. Senate
                                     ______

    Submitted Statements by Hon. Gabe Vasquez, a Representative in Congress
                         from New Mexico; on Behalf of:
                                  Statement 1
                david bean, chairman, indian gaming association
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee, on behalf of the Indian Gaming Association (``IGA''), thank
    you for holding this hearing to receive stakeholder perspectives for
    the reauthorization of the Commodities Futures Trading Commission. My
    name is David Bean, and I serve as the Chairman of the Indian Gaming
    Association.
        Founded in 1985, IGA is a national association of federally
    recognized Indian Tribes united behind the mission of protecting Tribal
    sovereignty and preserving the ability of Tribal governments to attain
    economic self-sufficiency through gaming and other forms of economic
    development.
        We appreciate this timely opportunity to provide testimony for your
    hearing to examine the need to reauthorize the Commodity Futures
    Trading Commission (``CFTC''). We share the views expressed by
    witnesses and Committee Members during the hearing that as Congress
    considers the CFTC reauthorization it must also revisit the Commodity
    Exchange Act (``CEA'') itself.
        Inaction by the CFTC has led to the explosion of prediction market
    platforms offering event contracts that are in fact nationwide online
    sports gambling sites. In January of 2025, prediction markets initially
    offered simple ``yes'' or ``no'' bets on the outcomes of a single
    sporting event. However, the CFTC's complete lack of oversight or even
    questioning of swaps or transactions relating to sporting events has
    emboldened prediction markets to offer a wider range of gambling
    options, including parlays, individual player proposition bets, and
    more.
        Just yesterday, KalshiEX LLC, notified the CFTC that it has self-
    certified contracts on whether college athletes will enter the transfer
    portal. The move drew immediate condemnation:

              ``The NCAA vehemently opposes college sports prediction
            markets . . . It is already bad enough that student-athletes
            face harassment and abuse for lost bets on game performance,
            and now Kalshi wants to offer bets on their transfer decisions
            and status. This is absolutely unacceptable and would place
            even greater pressure on student-athletes while threatening
            competition integrity and recruiting processes. Their decisions
            and future should not be gambled with, especially in an
            unregulated marketplace that does not follow any rules of
            legitimate sports betting operators.'' a *
    ---------------------------------------------------------------------------
        \a\ https://www.espn.com/college-football/story/_/id/47341610/
    prediction-market-kalshi-intends-offer-trading-portal.
        * Editor's note: references annotated with  are retained in
    Committee file.

        It is crystal clear that prediction markets will not stop at sports
    gambling. They will continue to push the envelope as long as the CFTC
    continues to turn a blind eye.
        This activity represents a direct threat to Tribal governments,
    state governments, the public, and the very integrity of American
    sports. We respectfully urge Congress to amend the CEA to reinforce
    these existing prohibitions and ask that you conduct thorough oversight
    of the CFTC to ensure that the agency is enforcing its own laws and
    regulations.
    The Importance of Indian Gaming to Tribal Government Economies
        When the United States formed, it acknowledged Indian Tribes as
    sovereign governments, entering into hundreds of treaties with Tribal
    governments to establish commerce and trade agreements, form alliances,
    and preserve the peace. The U.S. Constitution affirmed these treaties
    and the sovereign authority of Indian Tribes as separate governments.
    The Constitution's Commerce Clause expressly provides that ``Congress
    shall have power to . . . regulate commerce with foreign nations, and
    among the several states, and with the Indian Tribes.'' \1\
    ---------------------------------------------------------------------------
        \1\ In addition, the U.S. Constitution refers to Tribal citizens in
    the Apportionment Clause, as ``Indians not taxed'', excluded from
    enumeration for Congressional representation. The 14th Amendment
    repeats the original reference to ``Indians not taxed'' and
    acknowledges that Tribal citizens were not subject to the jurisdiction
    of the United States. The Constitution also acknowledges that treaties
    are the Supreme law of the land.
    ---------------------------------------------------------------------------
        A handful of Tribal governments in the 1970's, tired of waiting on
    the United States to fulfill its treaty and trust obligations to
    Tribes, took measures to rebuild their communities by opening the first
    modern Indian gaming operations. Tribes used the revenue generated from
    Indian gaming to fund essential programs for reservation residents,
    cover the Federal shortfalls, and to meet the basic needs of their
    people. These acts of self-determination were met with legislative and
    legal challenges lodged by states and commercial gaming interests.
        In 1987, after years of contentious litigation, the U.S. Supreme
    Court, in Cabazon Band of Mission Indians v. California, affirmed that
    Tribal governments have full civil regulatory authority to govern
    Tribal gaming activities on Tribal lands, exclusive of state government
    regulation so long as state law did not criminally prohibit all forms
    of gaming. On October 17, 1988, having been enacted by Congress,
    President Reagan signed the Indian Gaming Regulatory Act (IGRA) into
    law. IGRA divided gaming activities into three categories. Class I
    gaming encompasses social and traditional forms of gaming conducted by
    Tribes traditionally, assigning full regulatory oversight to Tribal
    governments. Class II gaming encompasses bingo, lotto, and similar
    games as well as non-house banked card games, assigning regulatory
    oversight to Tribal governments and the newly established National
    Indian Gaming Commission. Class III gaming encompasses all other forms
    of gaming but requires the execution of a Tribal-state gaming compact
    before a Tribal government may conduct Class III gaming. Sports betting
    falls within Class III gaming, thereby requiring a Tribal-state gaming
    compact before a Tribal government may conduct sports betting.
        The NIGC is the first and only Federal agency created and
    explicitly authorized by Congress to provide regulatory oversight in
    relation to gaming activities. In fact, the Justice Department strongly
    opposed IGRA in the years prior to its enactment on the grounds that as
    a matter of policy the Federal Government should not be involved in the
    direct regulation of gaming activities, which DOJ believed comes within
    the province of the states. Like most legislation, IGRA is the product
    of compromise between Federal, state, and Tribal interests. Congress
    made clear that the purposes of IGRA are to: (1) provide a statutory
    basis for the operation of gaming by Indian Tribes as a means of
    promoting Tribal economic development, self-sufficiency, and strong
    Tribal government; (2) provide a statutory basis for the regulation of
    gaming by an Indian Tribe adequate to shield it from organized crime,
    and to ensure that the Indian Tribe is the prime beneficiary of the
    gaming operation; and (3) establish an independent Federal regulatory
    authority for gaming on Indian lands, Federal standards for gaming, and
    the NIGC to meet Congressional concerns regarding gaming and to protect
    such gaming as a means of generating revenue.
        To understand the significance of IGRA and why Congress was willing
    to overlook the longstanding policy of leaving gaming regulation to
    state governments, there are two key historic facts that must be
    understood. The first is the special trust relationship between the
    United States, which entails both moral and legal obligations to Tribal
    governments. The second is that Tribal governments, like state
    governments, are an integral part of the Constitutional framework of
    the United States as reflected in Article I, Section 8 cl. 3 of the
    Constitution itself.
        Except in the few, rare cases where Tribes owned developable
    natural resources, such as oil, gas, and other extractive minerals,
    Tribal governmental revenues were largely insufficient to meet the
    needs of Tribal citizens. Most Tribal governments were largely
    dependent on Federal resources for basic governmental services and even
    these were not sufficient fill the gap for even the most basic
    services. Much of Indian Country lacked adequate education, law
    enforcement, fire protection, water and sewage, doctors, clinics,
    hospitals, schools, roads, bridges, and other basic infrastructure and
    services. Even today, many Tribal citizens have no or limited access to
    clean water and electricity, much less cellular and internet services.
        IGRA reflects Congress' ``outside the box'' approach to addressing
    these terrible conditions. For those Tribal governments that have been
    able to use gaming as a means of generating governmental revenue, the
    difference has been astounding. By any socioeconomic measure,
    improvements have been dramatic from increases in life expectancy to
    community health and public safety, to education to infant mortality
    rates to jobs and employment, and the list goes on. Gaming revenues
    serve as the tax base that Tribal governments previously never had.
        Tribal gaming revenue builds and strengthens Tribal governments and
    improves the quality of life in Indian Country. It does not enrich the
    few; it builds nations. Indian gaming is the economic bloodline for 243
    Tribal governments. Tribal governments use Indian gaming revenue to put
    a new face on their communities, dedicating resources to improving
    basic health, education, and public safety services on Indian lands.
    Tribes use gaming revenue to improve infrastructure, including the
    construction of roads, hospitals, schools, police buildings, water
    projects, communications systems, and so much more.
        In 2024, 243 Tribal governments in 29 states generated $43.9
    billion in direct revenues through Indian gaming operations and $5.7
    billion in ancillary revenues \2\ for a total of $49.6 billion in total
    revenues. Without question, Indian gaming is the most successful tool
    for economic development for many Indian Tribes in over 2 centuries.
    ---------------------------------------------------------------------------
        \2\ Ancillary revenues include hotels, food and beverage,
    entertainment, and other activities related to a Tribal government's
    gaming operation.
    ---------------------------------------------------------------------------
        For many Tribes, Indian gaming is first and foremost about jobs.
    Nationwide, Indian gaming is a proven job creator. In 2024, our
    industry generated more than 274,000 direct jobs. When indirect jobs
    are included, Indian gaming employs more than 672,000 Americans. Indian
    gaming has provided many Native Americans with their first opportunity
    for work at home on the reservation. Because of Indian gaming,
    reservations are again becoming livable homesteads, as promised in
    hundreds of treaties. These American jobs go to both Indians and non-
    Indians alike.
        Tribal governments realize that none of these benefits would be
    possible without a strong regulatory system to protect Tribal gaming
    revenues and preserve the integrity of our operations. Tribes invest
    more than $450 million annually, employing more than 6,000 regulators
    to oversee Indian gaming operations daily.\3\ The regulatory system
    established under IGRA vests local Tribal government regulators with
    the primary day-to-day responsibility for regulating Indian gaming
    operations. No one has a greater interest in protecting the integrity
    of Indian gaming and our assets than Tribal governments. While Tribes
    take on the primary day-to-day role of regulating Indian gaming
    operations, IGRA requires coordination and cooperation with the Federal
    and state governments to make this comprehensive regulatory system
    work. Our comprehensive regulatory system ensures consumer protection,
    fraud prevention, and local decision-making to address social
    implications like problem and underage gaming.
    ---------------------------------------------------------------------------
        \3\ NIGC Budget Justifications and Performance Indication FY2025 at
    NIGC-1; https://www.doi.gov/sites/default/files/documents/2024-03/
    fy2025-508-nigc-greenbook.pdf.
    ---------------------------------------------------------------------------
        At the Federal level, Tribes work with the NIGC, the FBI and U.S.
    Attorneys offices to investigate and prosecute anyone who would cheat,
    embezzle, or defraud an Indian gaming facility--this applies to
    management, employees, and patrons. 18 U.S.C.  1163. Tribal regulators
    also work with the Treasury Department's Internal Revenues Service to
    ensure Federal tax compliance and the Financial Crimes Enforcement
    Network (FinCEN) to prevent money laundering.
        This comprehensive multi-layered system of regulation is costly and
    time consuming, but it has proven its worth year after year. The credit
    for this system goes to the Tribal leaders who make the decisions to
    fund this system and to the thousands of men and women who have devoted
    their lives to protecting Tribal assets and the integrity of our
    operations.
    Gambling through the CFTC Violates Tribal, State, and Federal Laws
        Sports betting that is being conducted through prediction markets--
    Designated Contract Markets (``DCM'') licensed by the CFTC--violates
    Tribal, Federal, and state laws, including the Indian Gaming Regulatory
    Act, which expressly provides Tribal governments with exclusive
    authority to regulate gaming on Indian lands in partnership with states
    and the NIGC.
    Background: Sports Betting in the United States
        Historically, gambling in the United States has been subject to the
    local decision making of Tribal and state governments. Where they chose
    to legalize the activity, states and Tribes establish gaming
    commissions and control boards to oversee the industry and enforce
    local laws and regulations.
        Gambling on the outcomes of sporting events has a more complicated
    and relatively recent history. In 1992, Congress sought to prohibit all
    forms of sports betting in the United States through enactment of the
    Professional and Amateur Sports Protection Act (``PASPA''). While
    several state governments were exempted from the nationwide
    prohibition, gambling on sporting events was generally prohibited at
    the Federal level for more than 25 years.
        In May of 2018, the United States Supreme Court, in Murphy v. NCAA,
    struck down PASPA as violating the Tenth Amendment's anti-commandeering
    doctrine. Murphy returned oversight of sports betting to local Tribal
    and state government policy makers. In the 8 years since the Murphy
    decision, sports betting has grown slowly on a Tribe-by-Tribe and
    state-by-state basis.
        In the more than 7 years since Murphy, a number of states chose to
    continue the prohibition against sports betting for religious, moral,
    and other reasons. Two states, Utah and Hawaii, criminally prohibit
    nearly all forms of gambling within their jurisdictions. Nine other
    states--Alabama, Alaska, California, Georgia, Idaho, Minnesota,
    Oklahoma, South Carolina, and Texas--prohibit sports betting.
        Those jurisdictions that have legalized sports betting set
    parameters that include age restrictions--with the great majority
    restricting sports betting to persons 21 years old and older, problem
    gambling measures, prohibitions against betting on local sports teams,
    prohibitions against betting on high school and college sports,
    prohibitions against player proposition bets, and some also require
    operators to offer mandatory deposit limits and session time limits,
    integrated with local problem gambling helplines and self-exclusion
    systems.
        Tribal and state regulatory systems ensure full transparency, work
    with the leagues to protect the integrity of American sports and
    maintain strict consumer safeguards and responsible gaming practices.
    It's a proven framework that protects players and the public while
    delivering resources to benefit local community.
        Under this system, elected leaders in each Tribe and state decide
    whether to allow sports betting, and in return, economic and tax
    benefits flow directly back to their communities.
        Under IGRA, Tribal governments use 100 percent of all revenue
    generated from gaming, including sports betting, to Tribal programs and
    services as well as contributions to state and local governments.
    Pursuant to some Tribal-state gaming compacts, Tribes also share a
    portion of their sports gambling revenue with state governments.
        In 2024, state governments generated approximately $2.5 billion
    from sports wagering. States use the revenue generated from sports
    gambling to offset costs of regulation, employ problem gambling
    programs, and direct remaining revenue towards local priorities,
    including education and elder programs, property tax relief,
    infrastructure and public services, and other initiatives.
        There is an ongoing debate among Tribes and states that have
    legalized sports gambling about whether to offer the activity on the
    internet. To some, online sports betting poses added risks to underage
    and problem gambling, heightened risks of addiction, mental health
    concerns, and personal financial and other concerns.
        Prediction markets that offer gambling on the outcome of sports
    through event contracts completely sidestep these debates, ignoring the
    consequences, and for nearly 1 year now, have forced their way into the
    homes of every American family in direct subversion of Tribal and state
    policy makers. Sports betting conducted pursuant to prediction markets
    also circumvents the ability of states to generate revenue, offers no
    local benefits, and offers none of the consumer protections or detailed
    gambling regulations required by Tribal and state governments.
        In addition, for Indian Country, prediction markets that offer
    sports gambling directly violate Tribal sovereignty and IGRA.
    Prediction markets offer their online gambling contracts nationwide in
    all 50 states and on every Indian reservation in the nation. These
    operators conduct gaming activities on Indian lands without Tribal
    government consent, licensure, or regulatory oversight. This is a
    direct violation of IGRA, which confers exclusive authority to Tribal
    governments to regulate gaming activities on Indian lands. The
    proponents of sports wagering contend that the activity is an
    innovative use of the prediction market, but their advertising reveals
    the truth. The wagering aspect can hardly be characterized as thinly
    disguised. To grant these proponents a path around true regulatory
    oversight abandons the interests of consumers and constitutes a
    betrayal of Tribal governments to whom the United States holds the
    highest duty of trust.
    The CFTC Lacks the Capacity to Regulate Gambling
        The CFTC was never intended to serve as a regulatory agency over
    gaming activities and has neither the capacity nor the expertise to
    provide regulatory oversight at the level needed to protect consumers,
    prevent fraud and criminal infiltration, or protect against cheating
    and corruption.
        The CFTC is a statutory agency created under the Commodity Futures
    Trading Commission Act of 1974, charged with the responsibility of
    regulating futures and derivatives markets in order to promote market
    integrity, protect market participants, and ensure the proper
    functioning of price discovery and risk management mechanisms. Its
    mission is essential to protect both market participants and the
    broader public from fraud, manipulation, and systemic risk. As Congress
    considers reauthorization of this agency, we urge you to address the
    significant concerns raised by CFTC's recent willingness to allow
    prediction markets to manipulate the authority of the CEA and the
    CFTC's own regulations to offer event contracts that constitute illegal
    sports betting primarily designed to avoid state, Tribal and other
    Federal laws and regulations.
        The CEA, codified at 7 U.S.C.  1 et seq., provides the CFTC with
    jurisdiction over ``contracts of sale of a commodity for future
    delivery'' and related derivatives. Congress has consistently
    reaffirmed that the purpose of this jurisdiction is to regulate markets
    that serve bona fide hedging and price-discovery functions that serve
    an inherent economic interest, not to authorize speculative gambling on
    the outcomes of events unrelated to economic commodities.
        The Commodity Futures Modernization Act of 2000 (``CFMA'')
    significantly deregulated derivatives markets, with an express goal of
    limiting regulation of over-the-counter swaps and energy derivatives.
    That law established a regulatory void that permitted the highly risky
    credit default swap market to flourish, which proved a key factor in
    the 2008 Financial Crisis.
        Congress acted to fill the regulatory voids created by the CFMA
    when it enacted the Dodd-Frank Act of 2010, which significantly
    overhauled the CFTC.
        While Dodd-Frank did not directly restore a broad economic purpose
    test, it did empower regulators, especially the CFTC, to use public
    interest standards, effectively bringing back aspects of the economic
    purpose test for new derivatives, particularly event contracts, by
    requiring evaluation for hedging/commercial uses versus pure gambling.
        Dodd-Frank amended the CEA at 7 U.S.C.  7a-2 (``Common Provisions
    Applicable to Registered Entities''), which included a special rule for
    CFTC review and approval of event contracts and swaps. The special rule
    provides that the CFTC may determine that ``agreement, contracts, or
    transactions are contrary to the public interest if the agreements,
    contracts, or transactions involve--activity that is unlawful under any
    Federal or state law; terrorism, assassination, war, gaming or other
    similar activity determined by the Commission by rule or regulation, to
    be contrary to the public interest.''
        On July 27, 2011, the CFTC published a regulation implementing the
    special rule under  7a-2. The regulation expressly provides that ``[a]
    registered entity shall not list for trading or accept for clearing on
    or through the registered entity any of the following:

              ``(1) An agreement, contract, transaction, or swap based upon
            an excluded commodity, as defined in Section 1a(19)(iv) of the
            Act, that involves, relates to, or references terrorism,
            assassination, war, gaming, or an activity that is unlawful
            under any state or Federal law; or
              ``(2) An agreement, contract, transaction, or swap based upon
            an excluded commodity, as defined in Section 1a(19)(iv) of the
            Act, which involves, relates to, or references an activity that
            is similar to an activity enumerated in  40.11(a)(1) of this
            part, and that the Commission determines, by rule or
            regulation, to be contrary to the public interest.''

        17 CFR  40.11 Review of event contracts based upon certain
    excluded commodities. As a result, the CEA and the CFTC's existing
    regulations prohibit registered entities from listing transactions that
    involve or relate to gaming--commonly defined as gambling. Despite this
    clear prohibition, over the past year, the CFTC has permitted a growing
    number of its registered entities to offer an ever-growing range of
    gambling contracts on the outcomes of sporting events, including
    moneyline bets on individual games, parlays on multiple games,
    proposition bets on individual performance.
        While the law and regulation are clear, prediction markets have
    attempted to blur the lines between gambling and investing.
        The most prolific DCM currently licensed by the CFTC that offers
    gambling on the outcome of sports is KalshiEX LLC (``Kalshi''). Kalshi
    has attempted to exploit the lack of defined terms in the CEA and CFTC
    regulations to further complicate the issue of prediction market-sports
    gambling in its legal filings and its lobbying efforts to oppose the
    enforcement of existing laws and regulations that prohibit gambling
    through financial exchanges.
        Last year, in defense of its event contracts relating to the
    outcomes of the 2024 Federal elections, Kalshi admitted that the CEA
    and CFTC regulations did prohibit event contracts on the outcome of
    sporting events. Below is a list of examples provided by Mr. Daniel
    Wallach, a well-respected sports betting attorney, through a post on
    LinkedIn, where Kalshi admits in court proceedings that event contracts
    relating to the outcome of sports violate the CEA and CFTC regulations:

       ``Congress did not want sports betting to be conducted on
            derivatives markets.''--Kalshi's Initial Brief filed in the
            D.C. Circuit on Nov. 15, 2024, at p. 41

       ``Evidently, Congress sought to prevent exchanges from
            facilitating casino-style or sports gambling.''--Kalshi's
            Initial Brief filed in the D.C. Circuit on Nov. 15, 2024, at p.
            45

       ``[C]ontracts relating to games--again, activities conducted
            for diversion or amusement--are unlikely to serve any
            `commercial or hedging interest.' ''--Kalshi's Initial Brief
            filed in the D.C. Circuit on Nov. 15, 2024, at p. 45

       ``Congress was particularly concerned at the time it enacted
            this statute about sports betting and that was probably what
            they were getting at with the word `gaming.' ''--Kalshi to the
            D.C. Circuit at the January 17, 2025 oral argument (at 49:50-
            50:08)

       ``The `gaming' category reaches contracts contingent on
            games--for example, whether a certain team will win the Super
            Bowl. It thus functions as a check on attempts to launder
            sports gambling through the derivatives markets.''--Kalshi MOL
            in Support of MSJ, Jan. 25, 2024, at 16

       ``Football, horseracing and golf. They're all games . . .
            It's something that has no inherent economic significance.''--
            Kalshi's May 30, 2024 oral argument to the district court on
            its motion for summary judgment, Dkt. # 40, at p. 15

       ``Contracts that involve games are probably not the type of
            contracts that we want to be listed on an exchange, because
            they don't have any real economic value to them.''--Kalshi's 5/
            30/24 oral argument to the district court on its motion for
            summary judgment, Dkt. # 40, at p. 15.b
    ---------------------------------------------------------------------------
        \b\ See Daniel Wallach LinkedIn Post at https://www.linkedin.com/
    posts/amanda-fischer-21877210_the-maryland-federal-court-is-right-to-
    demand-activity-7335376474855661570-uib_.

        In January of 2025, Kalshi completely reversed the positions listed
    above by self-certifying event contracts directly related to the
    outcomes of sporting events.
        Kalshi and other prediction markets recognized enforcement
    weaknesses at the CFTC and have quickly exploited them. The first sport
    event contracts that CFTC inaction enabled were offered by DCMs in
    January 2025. There was approximately $1.3 million in volume related to
    Super Bowl LIX. Ten months later, in October of 2025, prediction
    markets reported more than $4 billion in monthly volume related to
    sport event contracts.
        Because CFTC regulations allow prediction markets to self-certify
    event contracts without pre-clearance from the agency, companies can
    launch gambling products, generate profits, and then litigate in court
    later. This litigation-driven business model has resulted in 26 pending
    lawsuits to date, where states, Tribal governments, and individual
    consumers argue that the prediction markets violate Federal, state and
    Tribal law and exploit consumers.
        While prediction markets argue in court that their contracts on the
    outcomes of sporting events are not gambling, they openly advertise
    that their contracts are ``legal'' gambling. Prediction markets have
    spent millions of dollars to advertise their products as legalized
    sports betting in all 50 states. One advertisement from January by
    prediction market Kalshi stated that it is ``The First Nationwide Legal
    Sports Betting Platform.'' Kalshi also ran advertisements during the
    college basketball tournament in Texas and California--where all sports
    betting is illegal--that said ``Make $ on March Madness'' and ``Legal
    in Texas'' and ``Legal in California''. Another advertisement said
    ``Sports betting is officially legal in Texas with Kalshi. The first
    federally regulated exchange where you can bet on real outcomes.''
    Again, all sports betting is illegal under state law in Texas and
    California. Thus, these prediction markets are offering contracts on
    sport event outcomes and intentionally misleading consumers and
    purposefully thwarting state laws.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        As noted above, this amounts to nationwide online gambling that has
    deluged every corner of the United States. For decades, state and
    Tribal governments have debated concerns about the impacts of online
    gambling as it draws teenagers, poses added risks to problem gambling,
    and heightens risks of addiction, mental health concerns, and personal
    financial and other concerns. Prediction markets sidestep these debates
    and ignoring the consequences.
    Conclusion
        It is no coincidence that the prediction market corporations
    selected the CFTC as the financial regulatory agency to push out their
    self-certified self-regulated online gambling platforms. The prediction
    markets recognized regulatory weakness at the CFTC, and they have
    actively exploited the agency's lack of capacity or lack of will to
    enforce its regulations.
        Complete inaction by the CFTC proves this point. Prediction markets
    have offered sports betting for 11 months now. Just weeks ago, the CFTC
    issued a statement that the agency ``has not, to date, made a
    determination regarding whether'' these contracts involve a prohibited
    activity. No legitimate Federal regulatory agency would publicly admit
    that it has failed to even question activity that blatantly violates
    the law and regulations directly under its charge.
        The prediction market platforms are counting on continued inaction
    from the CFTC. They will continue to push the limits of and blur the
    lines between event contracts and gambling. Sports betting is only the
    beginning.
        We respectfully urge this Committee and Congress to put a stop to
    this illegal activity by amending the CEA to reinforce the existing
    prohibition against casino gambling in general and sports betting in
    particular.
                                  Statement 2
              hon. kenneth choke, chairman, nisqually indian tribe
        Chair Thompson, Ranking Member Craig, and Honorable Members of the
    Agriculture Committee, thank you for the opportunity to submit this
    testimony. My name is Ken Choke, and I have the honor of serving as
    Chairman of the Nisqually Indian Tribe (``Tribe''), a signatory to the
    Treaty of Medicine Creek of 1854. The Tribe resides on the Nisqually
    Reservation, which was established by the treaty and represents a mere
    fragment of the Tribe's ancestral lands. On January 20, 1856, an
    executive order enlarged the reservation to 4,717 acres on both sides
    of the Nisqually River.
        The United States promised the Tribe that the Reservation would be
    its forever. Unfortunately, in the winter of 1917 the U.S. Army moved
    onto Nisqually lands and ordered our ancestors from their homes without
    any warning. Later, Pierce County condemned 3,353 acres of Nisqually
    land and transferred it to the Army to expand the Fort Lewis base,
    which would become Joint Base Lewis-McChord (``JBLM'').
        This condemnation deprived the Tribe of 70% of our lands and forced
    our people to crowd on the remaining land on one side of the Nisqually
    River. Today, the Tribe is bounded on one side by the Nisqually River
    and surrounded by JBLM. Overcrowding is a major issue as the Tribe has
    nowhere to expand to meet its growing population.
        Under that treaty, the Nisqually Tribe reserved--not received--the
    right to self-govern. That treaty is supreme law of the land, and it
    carries with it a Federal trust responsibility to uphold promises made
    by the United States to our people, including the protection of our
    inherent rights to govern our lands, our economy, and our future.
        I provide this testimony to share Tribal expertise and perspective,
    and to offer caution as the Committee considers the reauthorization of
    the Commodity Futures Trading Commission (``CFTC'').
        The CFTC is a statutory agency established by Congress under the
    Commodity Futures Trading Commission Act of 1974. Its mission is to
    regulate futures, options, and derivatives markets that serve
    legitimate economic purposes, including price discovery and risk
    management, while protecting market participants and the public from
    fraud, manipulation, and systemic risk. The Nisqually Tribe supports
    the CFTC's core mission and recognizes the importance of clear and
    modern Federal oversight of U.S. derivatives markets.
        As part of the CFTC reauthorization process, the Nisqually Tribe
    respectfully recommends that Congress address a growing issue that
    needs additional statutory clarity. This past year, certain
    ``prediction markets'' have offered event contracts tied to the
    outcomes of sporting events.
        Operating within regulatory gaps, these products raise important
    questions about the appropriate boundary between federally regulated
    derivatives markets and gambling activities regulated under Tribal,
    state, and Federal law.
        These event contracts function in practice like sports betting.
    Their rapid emergence has created uncertainty regarding the scope of
    the Commodity Exchange Act (``CEA''), codified at 7 U.S.C.  1 et seq.,
    the respective roles of Federal, state, and Tribal regulators, and the
    expectations of consumers. Clear guidance from Congress would help
    ensure consistent interpretation of the law and greater regulatory
    certainty for all stakeholders.
        Current CFTC regulations permit self-certification of new
    contracts, a framework that has supported innovation in derivatives
    markets. But at the same time, the introduction of sports-based event
    contracts has highlighted challenges in applying existing regulatory
    tools to novel products. These developments suggest that additional
    direction from Congress would help ensure continued alignment with the
    intent of the CEA.
        Federal law, including the Indian Gaming Regulatory Act (``IGRA''),
    establishes a cooperative framework requiring Tribal nations and states
    to coordinate on certain gaming activities, including sports betting
    where authorized. The Nisqually Tribe operates the Red Wind Casino, a
    cornerstone of our self-sufficiency, which provides jobs, supports
    vital programs, and generates revenue to support Tribal health care,
    education, and housing. The regulatory framework of IGRA and the
    carefully negotiated Tribal-state compacts that implement it, form the
    foundation of that success.
        IGRA ensures there is a comprehensive regulatory structure that
    reflects deliberate policy choices made by Congress, Tribes, and states
    and is designed to protect consumers and ensure accountability. As
    Congress reauthorizes the CFTC, it is important that this process
    reflect a clear commitment to the integrity of IGRA and the rights of
    Tribal governments. Regulatory ambiguity poses a real and imminent
    threat to both the U.S. derivatives market and Tribal economies.
        As part of the CFTC reauthorization process, the Nisqually Tribe
    respectfully encourages Congress to provide statutory clarity
    confirming that the CFTC's jurisdiction is focused on regulating
    contracts that serve legitimate hedging and price-discovery functions,
    to provide express guidance in the Commodity Exchange Act regarding the
    treatment of event contracts tied to sports outcomes, and to direct the
    CFTC to apply enforceable standards that any permitted event contracts
    serve a legitimate economic purpose and maintain public confidence in
    regulated markets. Clarifying the treatment of sports-based event
    contracts would support regulatory certainty, consumer protection, and
    respect for existing Tribal and state governance structures.
        The treaty our ancestors signed requires that our right to self-
    determination be honored not only in law, but in practice. Today, that
    right is being eroded by regulatory ambiguity that Congress has the
    power to clarify and correct. We seek a path forward that protects U.S.
    derivatives markets while honoring the Federal trust responsibility.
        Thank you for the opportunity to share our concerns and for your
    commitment to upholding treaty rights. The Nisqually Tribe looks
    forward to working collaboratively with Congress, regulators, Tribes,
    and stakeholders as these matters are considered.
                                  Statement 3
      hon. glen d. nenema, chairman and chief executive officer, kalispel
                                     tribe
        My name is Glen Nenema, and I serve as Chairman and CEO of the
    Kalispel Tribe located in eastern Washington State. Thank you for the
    opportunity to submit testimony for the record regarding the
    reauthorization of the Commodity Futures Trading Commission (``CFTC'').
        The CFTC is a statutory agency established by Congress under the
    Commodity Futures Trading Commission Act of 1974. Its mandate is clear:
    to regulate futures, options, and derivatives markets that serve
    legitimate economic purposes, including price discovery and risk
    management, while protecting market participants and the public from
    fraud, manipulation, and systemic risk.
        As Congress considers reauthorization of the CFTC, the Kalispel
    Tribe raises an urgent concern. Over the past year, the CFTC has
    permitted so-called ``prediction markets'' to exploit gaps and
    ambiguities in the current regulatory framework to offer event
    contracts that are, in substance and effect, illegal sports betting.
    These products are deliberately structured to evade state, Tribal, and
    other Federal laws governing gambling, and they undermine the integrity
    of the Commodity Exchange Act (``CEA''), Tribal sovereignty, and
    consumer protections.
    The Commodity Exchange Act Does Not Authorize Sports Betting
        The Commodity Exchange Act, codified at 7 U.S.C.  1 et seq.,
    provides the CFTC with jurisdiction over contracts of sale of a
    commodity for future delivery and related derivatives. Congress has
    consistently affirmed that this jurisdiction exists to regulate markets
    serving bona fide hedging and price-discovery functions, not to
    authorize speculative sports wagering. The CFTC has historically
    enforced this limitation and prohibited contracts based on unrelated
    events such as terrorism, assassination, gambling, or other events
    deemed inappropriate for regulated derivative markets. Despite this
    history, over the past year, the CFTC has failed to prevent several
    prediction markets from offering event contracts tied to sporting event
    outcomes. These contracts are indistinguishable from sports betting and
    are openly marketed as such.
    Regulatory Loopholes Result in Litigation
        Prediction markets are exploiting a weakness in the CFTC's
    regulatory framework that allows self-certification of event contracts
    without pre-clearance from the agency. Combined with limited agency
    resources, this structure results in slow, reactive oversight, allowing
    prediction markets to launch gambling products, generate substantial
    profits, and force governments to challenge them after the fact through
    litigation.
        To date, this approach has resulted in 26 pending lawsuits brought
    by states, Tribal governments, and individuals. These cases allege
    violations of Federal, state, and Tribal law, as well as consumer
    protection violations that disproportionally affect vulnerable
    populations. While the Kalispel Tribe is not involved in litigation, we
    are carefully monitoring all developments that may impact the Federal
    Government's trust obligations to Tribes and Federal Indian law.
    Tribal Governments Are Being Undermined
        Federal law, including the Indian Gaming Regulatory Act (``IGRA''),
    requires Tribal nations to coordinate with states regarding certain
    gaming activities, including sports betting. At Kalispel, we held
    sovereign-to-sovereign negotiations for our Tribal-state gaming compact
    and implemented strong regulatory frameworks that include age
    verification, responsible gaming programs, consumer protections, and
    enforcement. Prediction markets offering sports event contracts do none
    of this, reduce the value of these agreements, and threaten critical
    services funded by gaming revenue.
    Impacts to Tribal Economies
        The Kalispel Tribe wholly-owns Northern Quest Resort & Casino.
    Indian gaming, and Northern Quest Resort & Casino, have been a game
    changer for the Tribe and our members. The Tribe went from being one of
    the poorest communities in the country before Indian gaming to
    utilizing our gaming revenue to support our government infrastructure,
    housing, education, healthcare, and essential community services. Our
    Tribal gaming operations are rigorously regulated by our Tribal
    regulators, the National Indian Gaming Commission, and state partners.
    These systems exist to protect consumers and address problem gambling.
    Prediction markets lack comparable regulatory oversight and pull
    revenue away from Tribal nations providing essential government
    services to residents in our community. Any infringement into Tribal
    sovereignty and Indian gaming is a direct threat on the Tribe's
    infrastructure and future.
    Recommendations for Congressional Action
        The Kalispel Tribe strongly urges Congress to act decisively and
    prevent prediction markets from further expanding illegal sports
    betting and other forms of traditional gambling under the name of
    ``event contracts.'' To restore the integrity of the CEA and the CFTC's
    mission, the Kalispel Tribe makes the following recommendations:

       Clarify and reaffirm that the CFTC's jurisdiction extends
            only to contracts that serve legitimate hedging and price-
            discovery functions, not speculative wagering on sporting
            events;

       Amend the Commodity Exchange Act to expressly prohibit the
            listing, trading, or clearing of event contracts based on
            sports outcomes; and

       Require the CFTC to adopt and enforce rigorous standards
            ensuring that any permissible event contract advances
            legitimate economic purposes and does not erode public trust in
            regulated markets.
    Conclusion
        The CFTC's mission is to promote the integrity, resilience, and
    vibrancy of the U.S. derivatives markets through sound regulation.
    Allowing ambiguous event contracts based on sporting events stretches
    the agency's mandate and entangles the CFTC in areas that belong within
    state and Tribal gaming regulation. CFTC reauthorization presents an
    opportunity for Congress to reinforce the agency's core mission,
    protect consumers, and respect Tribal sovereignty by preventing the
    unchecked expansion of unregulated gambling. The Kalispel Tribe
    appreciates the opportunity to submit this testimony and looks forward
    to working with the Committee.
                                  Statement 4
              thora w. padilla, president, mescalero apache tribe
        Thank you, Chairman Thompson, Ranking Member Craig, and Members of
    the Committee, for the opportunity to submit testimony for the record
    for the Committee's December 11, 2025 hearing on efforts to reauthorize
    the Commodity Futures Trading Commission (``CFTC'').
        My name is Thora Walsh Padilla, and I am honored to serve as
    President of the Mescalero Apache Tribe (``Mescalero'' or ``Tribe'').
    The Tribe shares the views expressed by witnesses and Committee Members
    during the hearing that as Congress considers a reauthorization for the
    CFTC it must also revisit the Commodity Exchange Act (``CEA'') itself.
    Inaction by the CFTC has led to the explosion of prediction markets
    offering event contracts that are in fact nationwide online sports
    betting sites.
        Just yesterday, KalshiEX LLC, notified the CFTC that it has self-
    certified contracts on whether college athletes will enter the transfer
    portal. The move drew immediate condemnation:

              ``The NCAA vehemently opposes college sports prediction
            markets . . . It is already bad enough that student-athletes
            face harassment and abuse for lost bets on game performance,
            and now Kalshi wants to offer bets on their transfer decisions
            and status. This is absolutely unacceptable and would place
            even greater pressure on student-athletes while threatening
            competition integrity and recruiting processes. Their decisions
            and future should not be gambled with, especially in an
            unregulated marketplace that does not follow any rules of
            legitimate sports betting operators.'' a *
    ---------------------------------------------------------------------------
        \a\ https://www.espn.com/college-football/story/_/id/47341610/
    prediction-market-kalshi-intends-offer-trading-portal.
        * Editor's note: references annotated with  are retained in
    Committee file.

        It is crystal clear that prediction markets will not stop at sports
    gambling. They will continue to push the envelope as long as the CFTC
    continues to turn a blind eye.
        This activity represents a direct threat to Tribal governments,
    state governments, the public, and the very integrity of American
    sports. We respectfully urge Congress to amend the CEA to reinforce
    these existing prohibitions and ask that you conduct thorough oversight
    of the CFTC to ensure that the agency is enforcing its own laws and
    regulations.
    Importance of Indian Gaming to Tribal Government Economies
        Mescalero has strived to achieve economic self-sufficiency. Indian
    gaming has proven to serve as the most reliable tool for Tribal
    governments nationwide to achieve this goal. The Inn of the Mountain
    Gods is the primary economic engine of the Mescalero Apache Tribe. Our
    gaming operation provides hundreds of jobs for our citizens and those
    in nearby communities. It fuels revenue for our Tribe to provide
    essential services to Reservation residents in the form of enhanced
    education, health care, fire suppression, conservation law enforcement,
    and critical infrastructure.
        Fourteen Tribal governments in the State of New Mexico carefully
    negotiated gaming compacts pursuant to the Indian Gaming Regulatory Act
    (``IGRA'') that carefully balance the economic interests of Tribes and
    the state with social and moral concerns raised by gambling. For thirty
    years now, Tribal governments have offered casino gambling at brick-
    and-mortar operations. Tribes share a portion of this revenue with the
    State of New Mexico to offset regulatory costs incurred by the New
    Mexico Gaming Control Board and fund the state's problem gaming
    programs.
        Tribal governments realize that none of these benefits would be
    possible without a strong regulatory system to protect gaming revenues
    and preserve the integrity of our operations. Tribes nationwide invest
    more than $450 million annually, employing more than 6,000 regulators
    to oversee Indian gaming operations daily.\1\ Our regulators work with
    the New Mexico Gaming Control Board, the National Indian Gaming
    Commission, the FBI, the IRS, the Financial Crimes Enforcement Network,
    and other agencies.
    ---------------------------------------------------------------------------
        \1\ NIGC Budget Justifications and Performance Indication FY2025 at
    NIGC-1; https://www.doi.gov/sites/default/files/documents/2024-03/
    fy2025-508-nigc-greenbook.pdf.
    ---------------------------------------------------------------------------
        Since the Supreme Court's 2018 Murphy decision that struck down the
    Federal prohibition against sports betting, several Tribes, including
    Mescalero, began to offer sports wagering at Indian gaming operations.
    To protect the integrity of our sporting events, we ensure that our
    operations comply with our gaming compact, which includes a strict 21
    year age restriction and problem gambling measures.
        Our regulatory system ensures full transparency, working with the
    leagues to protect the integrity of American sports and maintain strict
    consumer safeguards and responsible gaming practices. It's a proven
    framework that protects players and the public while delivering
    resources to benefit local communities.
        The State of New Mexico and Tribes continue to prohibit sports
    betting on the internet. After much debate, we view that online sports
    betting poses added risks to underage gambling and problem gambling,
    heightened risks of addiction, mental health concerns, and personal
    financial and other concerns.

        Prediction markets that offer gambling on the outcome of sports
    through event contracts violates this local decision, ignores the
    consequences, and for nearly 1 year now--they have forced their way
    into the homes of every New Mexican family in direct subversion of our
    voters and elected Tribal and state leaders.
    The CFTC Lacks the Capacity and Will to Regulate Online Gambling
        The CFTC was never intended to serve as a gambling regulator and
    has neither the capacity nor the expertise to provide regulatory
    oversight at the level needed to protect consumers, prevent fraud and
    criminal infiltration, or protect against cheating and corruption.
        The CFTC is a statutory agency created under the Commodity Futures
    Trading Commission Act of 1974, charged with the responsibility of
    regulating futures and derivatives markets to promote market integrity,
    protect market participants, and ensure the proper functioning of price
    discovery and risk management mechanisms. Its mission is essential to
    protect both market participants and the broader public from financial
    manipulation and systemic risk.
        The CEA, codified at 7 U.S.C.  1 et seq., provides the CFTC with
    jurisdiction over ``contracts of sale of a commodity for future
    delivery'' and related derivatives. Congress has consistently
    reaffirmed that the purpose of the agency's authority is to regulate
    markets that serve bona fide hedging and price-discovery functions that
    serve an inherent economic interest, not to authorize speculative
    gambling on the outcomes of events unrelated to economic commodities.
        Prediction markets recognized enforcement weaknesses at the CFTC
    and have quickly exploited them. The first sport event contracts that
    CFTC inaction enabled were offered by designated contract markets in
    January 2025. There was approximately $1.3 million in volume related to
    Super Bowl LIX. Ten months later, in October of 2025, prediction
    markets reported more than $4 billion in monthly volume related to
    sport event contracts.
        Because CFTC regulations allow prediction markets to self-certify
    event contracts without pre-clearance from the agency, companies can
    launch gambling products, generate profits, and then litigate in court
    later. This litigation-driven business model has resulted in 26 pending
    lawsuits to date, where states, Tribal governments, and individual
    consumers argue that the prediction markets violate Federal, state and
    Tribal law and exploit consumers.
        While prediction markets argue in Federal court that their
    contracts on the outcomes of sporting events are not gambling, they
    openly advertise that their contracts are ``legal'' gambling
    intentionally misleading consumers and purposefully thwarting Tribal
    and state laws. Prediction markets have spent millions of dollars to
    advertise their products as legalized sports betting in all 50 states.
    One advertisement from January of 2025 by prediction market Kalshi says
    it is ``The First Nationwide Legal Sports Betting Platform.''
        As noted above, this amounts to nationwide online gambling that has
    deluged every corner of the United States. For decades, state and
    Tribal governments have debated concerns about the impacts of online
    gambling as it draws teenagers, and poses added risks to problem
    gambling, heightened risks of addiction, mental health concerns, and
    personal financial and other concerns. Prediction markets sidestep
    these debates and ignore the consequences.
        Unless Congress reaffirms the boundary between legitimate
    derivatives markets and gambling activity, these prediction markets
    will continue to expand their illegal sports betting into other
    traditional gambling activity. Congress must take immediate action to
    reaffirm the integrity of the CEA and CFTC, restore the proper balance
    between Federal and state-Tribal authority, and protect consumers from
    predatory, unregulated online gambling offered by prediction markets.
    Conclusion
        It is no coincidence that the prediction market corporations
    selected the CFTC as the financial regulatory agency to push out their
    self-certified self-regulated online gambling platforms. The prediction
    markets recognized regulatory weakness at the CFTC, and they have
    actively exploited the agency's lack of capacity or lack of will to
    enforce the CEA and its own regulations.
        Complete inaction by the CFTC proves this point. Prediction markets
    have offered sports betting for 11 months now. Just weeks ago, the CFTC
    issued a statement that the agency ``has not, to date, made a
    determination regarding whether'' these contracts involve a prohibited
    activity. No legitimate Federal regulatory agency would publicly admit
    that it has failed to even question activity that blatantly violates
    the law and regulations directly under its charge.
        The prediction market platforms are counting on continued inaction
    from the CFTC. They will continue to push the limits of and blur the
    lines between event contracts and gambling. As evinced by Kalshi's
    recent foray into the college athlete transfer portal, sports betting
    is only the beginning.
        We respectfully urge this Committee and Congress to put a stop to
    this illegal activity by amending the CEA to reinforce the existing
    prohibition against casino gambling in general and sports betting in
    particular.
                                     ______

       Submitted Letter by Hon. Jonathan L. Jackson, a Representative in
        Congress from Illinois; on Behalf of James B. ``JB'' Mackenzie,
       President, Robinhood Derivatives, LLC; Vice President and General
                                   Manager,
               Futures and International, Robinhood Markets, Inc.
        Dear Chairman Thompson, Ranking Member Craig, and Members of the
    Committee,

        Robinhood Derivatives, LLC appreciates the opportunity to provide
    comments on the record for the House Committee on Agriculture's
    December 11th, 2025 hearing on ``CFTC Reauthorization: Stakeholder
    Perspectives.''
        We submit the attached policy paper on prediction markets. At
    Robinhood, we view prediction markets as a powerful mechanism for
    aggregating dispersed information, and a tool that can help decision-
    makers seek the best possible insights to navigate the future.
        Robinhood Derivatives, LLC operates a Prediction Markets Hub where
    customers can trade on real-life events. Our goal is to enable anyone,
    anywhere, to trade, invest or earn any financial asset and conduct any
    financial transaction through Robinhood. With an emerging asset class
    like event contracts, we recognize an opportunity to better serve our
    customers as their interests converge across the markets, news,
    economics, sports, and entertainment.
        We hope that our policy paper can help provide more information on
    our position and our support for this emerging asset class. Please
    contact us if you have any questions or comments. Thank you for this
    opportunity to contribute.
                Sincerely,

    JB Mackenzie,
    President,
    Robinhood Derivatives, LLC;
    Vice President and General Manager, Futures and International,
    Robinhood Markets, Inc.
                                   attachment
    March 2025
    Prediction Markets
        Prediction markets offer a powerful mechanism for aggregating
    dispersed information, allowing participants to hedge and speculate
    based on their beliefs about future events. Because prediction markets
    incorporate diverse perspectives and involve institutional and retail
    participants putting their own capital behind their predictions, these
    markets can produce highly accurate forecasts, often outperforming
    expert analysis and other traditional sources of news and information.
    By allowing individuals to buy and sell contracts tied to specific
    outcomes--known as ``event contracts''--prediction markets help reduce
    uncertainty by providing real-time probabilities that reflect the
    collective wisdom of participants. In other words, prediction markets
    can enhance the economic value of information itself, allowing
    businesses and individuals to make better decisions which, in turn,
    creates a variety of benefits.\1\ Prediction markets can be
    particularly valuable in fields such as finance, politics, and
    technology, among others, where decision-makers seek the best possible
    insights to navigate an unpredictable future.
    ---------------------------------------------------------------------------
        \1\ Consider, for example, a manufacturing business that is able to
    commit substantial capital toward building a new plant and hiring
    thousands of workers in the U.S. because it has access to more accurate
    information about expected macro- or micro-economic and political
    conditions generated by prediction markets.
    ---------------------------------------------------------------------------
        Another key advantage of prediction markets is their ability to
    serve as a risk management tool. Businesses and investors can use these
    markets to hedge against uncertain events and associated risks, such as
    election outcomes, regulatory changes, or economic shifts. By taking
    positions in these markets, they can offset potential losses elsewhere
    in their portfolios. On the other side of the trade are the speculators
    who provide important liquidity in these markets by attempting to
    profit from price changes in futures contracts. This is no different
    than those speculators and retail participants who buy or sell futures
    contracts in agricultural products such as corn or wheat.
        Additionally, prediction markets have educational value, as they
    encourage critical thinking and data analysis skills. Participants must
    assess probabilities, interpret trends, and understand how new
    information affects market prices, fostering a deeper understanding of
    decision-making under uncertainty.
        The combination of risk mitigation, information aggregation,
    speculation, and learning potential makes prediction markets a valuable
    economic and informational tool for businesses and individuals alike.
    Background on Event Contracts
        ``Event contracts'' are the most common tool in prediction markets,
    allowing participants to trade on the likelihood of specific outcomes.
    These contracts function as simple binary (or ``yes-or-no'')
    predictions on events including, but not limited to, elections,
    economic indicators, commodity price movements, weather, and sports.
    Prices can fluctuate based on market sentiment and new information,
    reflecting the collective probability assigned to each outcome. Event
    contracts are straightforward and adaptable, and therefore, widely used
    for forecasting, risk management, and speculation across various
    industries and products. Event contracts are traded directly in
    orderly, transparent, two-sided markets on federally regulated
    platforms. Types of event contracts include, among other things:

       Political events, like elections;

       Economic events, such as corporate earnings releases and
            macroeconomic data releases;

       Commodity price movements;

       Weather events; and

       Sports and entertainment events.
    General Benefits of Prediction Markets
        Prediction markets can provide many benefits to market
    participants, including:

       Hedging: Prediction markets allow businesses and individuals
            to hedge risks associated with various events. For example, a
            small manufacturing business might use political event
            contracts to hedge risks related to elections. Event contracts
            can also be used to hedge risks in financial portfolios.
            Moreover, because they are smaller in size than futures
            contracts, event contracts can allow for a more accurate hedge
            to be created. Larger futures contracts can lead to investors
            being over-hedged which can be just as risky and harmful as
            being under-hedged. By providing liquidity to the markets,
            retail trading generally facilitates the ability of market
            participants to effectively hedge risk.

       Customer Protection: Prediction markets and event contracts
            are regulated at the Federal level by the Commodity Futures
            Trading Commission under the Commodity Exchange Act. Federal
            regulation provides a number of customer safeguards and market
            integrity measures. For example, the exchanges that provide
            prediction markets via event contracts, as well as the firms
            that provide customers access to those markets, are required to
            safeguard customer funds by segregating them from the firms'
            own proprietary business activities. These firms also are
            required to prevent manipulative trading activity to help
            ensure the integrity of predictions markets, instilling greater
            confidence in the usefulness and predictive value of the event
            contracts.

       Information Aggregation: Prediction markets are a powerful
            predictive tool that can aggregate diverse opinions and sets of
            information into accurate forecasts. Prediction markets often
            exhibit lower statistical errors than professional forecasters
            and polls, and can be more reliable than other traditional
            sources of news and information. As a result, prediction
            markets can enhance the economic value of all types of
            information.

       Reduce Uncertainty: The prediction markets generally reflect
            the ``best estimate'' of the probability of an event occurring.
            Prediction markets can reduce uncertainty about the likelihood
            of future events and can be an effective tool in predicting the
            outcome of those events. For example, prediction market event
            contracts can generate information that is useful for
            businesses when planning their future operations, as well as
            information that is useful for an individual's portfolio and
            how the outcome of events can impact the pricing of financial
            instruments.

       Speculation: Like traditional securities, options, and
            futures markets (e.g., corn and wheat), prediction markets can
            be used by market participants, including retail investors, to
            profit from price movements. In doing so, speculative investors
            provide important liquidity to prediction markets.

       Educational Value: Prediction markets create a financial
            incentive for market participants to be better informed about
            the likelihood of future events occurring. By making
            information publicly available, prediction markets can
            democratize access to information.
    Types of Prediction Markets and Event Contracts
        As noted above, there are several types of prediction markets and
    event contracts including, but not limited to:

       Politics. Political prediction markets and event contracts
            allow businesses to hedge risks associated with political and
            electoral factors. Companies and individuals can hedge against
            risks stemming from or speculate on the partisan composition of
            government, or from the uncertainty of which political party
            will control Congress, which can impact the probability of
            legislation impacting a company or individual. Moreover, by
            providing an unbiased and market-based mechanism for viewing
            and understanding complex issues, political event contracts can
            strengthen the democratic process and improve public analysis.

       Economics. Economic prediction markets and event contracts
            enable market participants to hedge risks related to
            macroeconomic announcements, such as unemployment rates,
            payroll data, and the Federal funds rate. These contracts allow
            participants to hedge exposure to specific events without
            sacrificing the upside of their instruments and can
            revolutionize the hedging process. For example, event contracts
            can augment the utility of hedging by allowing participants to
            directly hedge macroeconomic risks before the data is released.

       Weather. Prediction markets and event contracts for weather-
            related events and patterns allow market participants to hedge
            risks related to future weather events, associated government
            policies, and related activities carried out by market
            participants (for example, insurers). They can protect an
            investor from risks related to the degree to which weather
            events impact the economy and particular industries. These
            contracts can also be created around specific weather-related
            events such as drought, sea level rise, polar ice volumes, and
            agricultural yields, providing a more refined hedge. Weather
            event contracts can also provide information that will be
            valuable to policymakers. For example, an event contract based
            on the rise of sea level would provide policymakers with
            valuable information on the potential future costs of the
            government programs like the National Flood Insurance Program.

       Sports. Sports prediction markets and event contracts are
            one subset of the broader predication markets that have
            recently gained popularity. Unlike sports gambling, in which
            there is a ``House'' and oddsmakers, sports event contracts are
            binary products traded directly between buyers and sellers in
            open, transparent, two-sided markets on federally regulated
            exchanges (known as ``designated contract markets''). Various
            commercial entities, including team sponsors, media outlets,
            and vendors, can use sports event contracts to manage risks
            related to team performance. For example, team sponsors could
            hedge their risk of a team having a losing season. Consumer-
            focused businesses near a sports stadium may want to hedge the
            possibility of cancellation or lower attendance that would
            impact their revenue for the day. Similarly, the price
            discovery provided by these prediction markets can result in
            more accurate and valuable information which would, for
            example, enable consumer-focused businesses to better predict
            the labor and material resources they might need to
            successfully serve customers.
    The Path Forward
        Policymakers should adopt policies that continue to recognize that
    the prediction markets, including event contracts related to economic
    events, commodities, weather events, sporting events, and political
    events, have economic value and are generally in the public interest,
    as they can provide legitimate hedging, risk-management, speculative
    and informational benefits for individuals and businesses of all sizes.
    Moreover, policymakers should avoid rules that prohibit retail
    customers from taking advantage of the same opportunities available to
    institutional investors.
                                     ______

    Submitted Letter by Hon. Chellie Pingree, a Representative in Congress
                                   from Maine
    December 19, 2025

    Hon. John Boozman,       Hon. Tim Scott,          Hon. Glenn Thompson,
    Chairman,                Chairman,                Chairman,
    Hon. Amy Klo[b]uchar,    Hon. Elizabeth Warren,   Hon. Angie Craig,
    Ranking Minority         Ranking Minority         Ranking Minority
     Member,                  Member,                  Member,
    Senate Committee on      Senate Committee on      House Committee on
     Agriculture,             Banking, Housing, and    Agriculture,
     Nutrition, and           Urban Affairs,          Washington, D.C.
     Forestry,
    Washington, D.C.;        Washington, D.C.;

      RE: Stop Illegal and Unregulated Gambling Occurring on Prediction
                Markets from Encroaching on Tribal Nations' Sovereign
                Rights

        Dear Chairs Boozman, Scott and Thompson and Ranking Members
    Klobuchar, Warren, and Craig:

        On behalf of the United South and Eastern Tribes Sovereign
    Protection Fund (USET SPF), we write to express urgent concern about
    sports event contracts and the illegal and unregulated gambling
    occurring on prediction markets, including by entities such as Kalshi,
    Crypto.com, and Robinhood. These entities are being unlawfully
    permitted by the Commodity Futures Trading Commission (CFTC) to engage
    in online sports gambling under the guise of ``event contracts''
    pursuant to the Commodity Exchange Act (CEA). These entities are
    encroaching on Tribal Nations' exclusive rights as sovereign
    governments to regulate and conduct gaming occurring on our Indian
    lands-gaming we rely upon to generate revenue to fund our governments.
        USET SPF is a nonprofit, inter-Tribal organization advocating on
    behalf of thirty-three (33) federally recognized Tribal Nations from
    the Northeastern Woodlands to the Everglades and across the Gulf of
    Mexico.\1\ USET SPF is dedicated to promoting, protecting, and
    advancing the inherent sovereign rights and authorities of Tribal
    Nations and in assisting its membership in dealing effectively with
    public policy issues. Tribal Nations are inherently sovereign
    governments that predate the arrival of Europeans, which the United
    States acknowledged early on. U.S. Const. art. I,  8, cl. 3; Worcester
    v. Georgia, 31 U.S. 515 (1832). The United States has also recognized
    Tribal Nations' inherent and exclusive sovereign rights to regulate
    gaming activities occurring on our Indian lands. California v. Cabazon
    Band of Mission Indians, 480 U.S. 202 (1987).
    ---------------------------------------------------------------------------
        \1\ USET SPF member Tribal Nations include: Alabama-Coushatta Tribe
    of Texas (TX), Catawba Indian Nation (SC), Cayuga Nation (NY),
    Chickahominy Indian Tribe (VA), Chickahominy Indian Tribe-Eastern
    Division (VA), Chitimacha Tribe of Louisiana (LA), Coushatta Tribe of
    Louisiana (LA), Eastern Band of Cherokee Indians (NC), Houlton Band of
    Maliseet Indians (ME), Jena Band of Choctaw Indians (LA), Mashantucket
    Pequot Indian Tribe (CT), Mashpee Wampanoag Tribe (MA), Miccosukee
    Tribe of Indians of Florida (FL), Mi'kmaq Nation (ME), Mississippi Band
    of Choctaw Indians (MS), Mohegan Tribe of Indians of Connecticut (CT),
    Monacan Indian Nation (VA), Nansemond Indian Nation (VA), Narragansett
    Indian Tribe (RI), Oneida Indian Nation (NY), Pamunkey Indian Tribe
    (VA), Passamaquoddy Tribe at Indian Township (ME), Passamaquoddy Tribe
    at Pleasant Point (ME), Penobscot Indian Nation (ME), Poarch Band of
    Creek Indians (AL), Rappahannock Tribe (VA), Saint Regis Mohawk Tribe
    (NY), Seminole Tribe of Florida (FL), Seneca Nation of Indians (NY),
    Shinnecock Indian Nation (NY), Tunica-Biloxi Tribe of Louisiana (LA),
    Upper Mattaponi Tribe (VA), and Wampanoag Tribe of Gay Head (Aquinnah)
    (MA).
    ---------------------------------------------------------------------------
        Congress enacted the Indian Gaming Regulatory Act (IGRA) to provide
    a comprehensive Federal regulatory framework for such gaming. Pub. L.
    100-497, 102 Stat. 2467 (Oct. 17, 1988) (codified at 25 U.S.C.  2701-
    2721). IGRA mandates that Tribal Nations ``have the exclusive right to
    regulate gaming activity on Indian lands.'' 25 U.S.C.  2701(5); see
    also 24 U.S.C.  2710. IGRA controls all gaming activity occurring on
    Indian lands, including placement of wagers that are then received off
    Indian lands. W. Flagler Assocs., Ltd. v. Haaland, 71 F.4th 1059, 1061
    (D.C. Cir. 2023), cert. denied, 144 S. Ct. 2671, 219 L. Ed. 2d 1292
    (2024).
        Tribal Nations' gaming activities, among other economic development
    activities, have been integral to generating funding for our government
    coffers so that we may provide essential government services for our
    communities. The United States took the lands and resources with which
    we traditionally cared for our communities without ever fully funding
    its resulting trust and treaty obligations. We now face convoluted
    legal precedent that siphons revenue away from Tribal lands and
    prevents us from collecting taxes like other governmental entities do,
    all while the Federal Government strictly regulates the development
    activities we attempt to undertake on our lands.
        Congress recognized these realities when it enacted IGRA,
    acknowledging many Tribal Nations already engaged in gaming ``as a
    means of generating Tribal governmental revenue,'' 25 U.S.C.  2701(1),
    and that one purpose of IGRA was ``to provide a statutory basis for the
    operation of gaming by Indian Tribes as a means of promoting Tribal
    economic development, self-sufficiency, and strong Tribal
    governments,'' 25 U.S.C.  2702(1). For this reason, Congress made
    clear in IGRA that Tribal Nations must ``have the sole proprietary
    interest'' in gaming occurring on our lands. 25 U.S.C.  2710(b)(2)(A).
    And Tribal Nations and states have negotiated through IGRA compacts for
    revenue sharing payments from Tribal Nations to states in exchange for
    Tribal Nations' rights to exclusively offer certain types of gaming
    throughout those states without competition--benefiting Tribal Nations
    and states alike. 25 U.S.C.  2710(d); Rincon Band of Luiseno Mission
    Indians of Rincon Rsrv. v. Schwarzenegger, 602 F.3d 1019 (9th Cir.
    2010). Tribal gaming has succeeded as a tool for allowing Tribal
    Nations to build our governance structures and care for our people.
    Michigan v. Bay Mills Indian Cmty., 572 U.S. 782, 810 (2014)
    (Sotomayor, J., concurring) (explaining that ``Tribal gaming operations
    cannot be understood as mere profit-making ventures that are wholly
    separate from the Tribes' core governmental functions'').
        Despite the clear mandates of IGRA and Tribal Nations' inherent
    sovereignty, entities engaged in sports event contracts and illegal and
    unregulated gambling occurring on prediction markets argue their
    activities are lawful because they fall outside the scope of IGRA and
    Tribal jurisdiction. USET SPF believes this impingement on Tribal
    sovereignty and economic development must be stopped. It is for this
    reason we have joined amicus briefs in litigation attempting to rein in
    these bad actors. See, e.g., Amicus Brief of Indian Gaming Association,
    et al., Kalshiex LLC v. Flaherty, et al., No. 1:25-cv-2152 (June 17,
    2025) (first of multiple amicus briefs we have joined). We now request
    legislative affirmation and clarification that their actions are
    unlawful.

        Your committees are in the process of reviewing and revising the
    authorities of the CFTC. We ask that you amend the CEA to reinforce
    existing law and regulations prohibiting prediction markets from
    offering event contracts on sport events or casino-style gambling
    activities.

                Sincerely,

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chief Kirk Francis,                  Kitcki A. Carroll,
    President                            Executive Director

                                     ______

    Submitted Letters by Hon. Chellie Pingree, a Representative in Congress
                           from Maine; on Behalf of:
                                    Letter 1
                hon. kirk francis, sr., chief, penobscot nation
        Chairman Thompson, Ranking Member Craig and Members of the
    Committee:

        On behalf of the Penobscot Nation, located in what is now the State
    of Maine, thank you for providing an opportunity to submit testimony on
    the reauthorization of the Commodity Futures Trading Commission (CFTC).
    We are very concerned about the failure of the CFTC over the past year
    to prohibit prediction markets from offering event contracts based on
    the outcome of sporting events. These contracts, which some prediction
    markets are now calling swaps, are merely illegal online sports
    wagering intended to thwart state and Tribal government laws and
    regulations.
        These illegal gambling activities have skyrocketed over the past 11
    months with news reports indicating that the two leading prediction
    markets--Kalshi and Polymarket--posted a combined trading volume of
    almost $10 billion for November 2025.\1\ * This was a 32% month-over-
    month increase for [Kalshi] and a 23.8% increase for Polymarket.\2\ The
    vast majority of these increases are due to the companies expanding
    their offerings of sports betting. There are now at least 26 lawsuits
    between states and these prediction markets because they violate state
    gambling laws. Yet, again, the CFTC remains silent on whether these
    contracts based on outcomes of sporting events are illegal and the
    incoming Chair of the CFTC says that he will defer to the courts. That
    is exactly what these prediction markets want: a long drawn-out court
    fight that will go on for at least 5 years so they can normalize this
    illegal sports betting industry and get the CFTC to provide a Federal
    mechanism that allows them to avoid state and Tribal government laws.
    Congress needs to take immediate action to reaffirm that these
    activities are gambling and should continue to be governed at the local
    government level.
    ---------------------------------------------------------------------------
        \1\ Kalshi and Polymarket Record Nearly $10 Billion in November
    Trading Volume  (https://www.sportsbookreview.com/news/kalshi-
    polymarket-trading-volume-november-2025/).
        * Editor's note: references annotated with  are retained in
    Committee file.
        \2\ Id.
    ---------------------------------------------------------------------------
        These prediction markets' illegal online sports betting products
    directly harm the State of Maine, the Wabanaki Tribal Nations, and the
    consumers located in Maine who cannot easily identify the difference
    between legalized online sports betting and the illegal products
    offered by prediction markets. These prediction markets pay no taxes to
    the state, contribute nothing to problem gambling programs, and offer
    no consumer protection. More, the legalized sports betting system in
    Maine was specifically designed to provide economic development
    opportunities for the Tribal Nations in Maine, who have long struggled
    to meet the basic needs of our communities. Prediction markets offering
    illegal sport event contracts within the state steal away from the
    Tribal Nations monies we use for infrastructure, education, health
    care, housing, law enforcement and other basic governmental services.
        The Tribes in Maine worked with the Governor and state legislature
    to develop a highly regulated system for legalized online sports
    betting. Only the four federally recognized Tribal Nations have
    licenses to conduct online sports betting within the borders of the
    state. We are allowed to partner with companies who can meet the
    suitability requirements set forth in state regulations, and any
    vendors that we or our partners use must get licensed by the state's
    gambling control unit. Licensees, operators and vendors must meet
    extensive disclosure requirements about financial stability, gambling
    history, and business reputation. Annual reporting requirements ensure
    ongoing compliance with state regulations. State law includes robust
    consumer protection measures, such as self-exclusion programs and
    responsible gambling resources. Additionally, Maine law only allows
    people 21 years of age and older to participate in sports betting, and
    operators must employ systems to verify age and identity in order to
    protect minors from gambling activities.
        We and our vendors pay licensing fees to the state along with a 10%
    tax on gross sports betting revenue. This revenue offsets the cost of
    regulation and funds education and addiction prevention programs. Maine
    law also requires operators to provide consumer protection tools, such
    as self-exclusion options and make resources available promoting
    responsible betting.
        Maine law bans certain individuals from sports betting to maintain
    sports integrity. Individuals with influence over sports events, such
    as athletes, coaches, referees, and officials, cannot engage in sports
    betting. Also, individuals with access to non-public information that
    can influence betting outcomes are prohibited from participating in
    sports betting. This includes team executives and medical staff. The
    goal of restricting these individuals from participating in sports
    betting is to prevent unfair advantages from privileged information and
    protect consumers and the integrity of our sports systems.
        Prediction markets that offer illegal contracts on sport events
    follow none of these Maine law requirements. And they contribute
    nothing to the Tribal Nations or local economy. Moreover, they offer no
    meaningful consumer protection and contribute nothing to problem
    gambling programs or resources. Prediction markets' illegal sports
    betting is a scourge on our society, Tribal Nations, and consumers.
    This Committee and Congress need to take quick action to stop this
    harm.
        Prediction markets offering contracts on sport event outcomes argue
    that they are financial instruments and swaps regulated by the
    Commodity Exchange Act. This is nonsense and you only need to look at
    the way they advertise their products to consumers to understand that
    they are marketing themselves as legalized sports betting. The leading
    prediction market, Kalshi, has been aggressively advertising its
    products as legalized sports betting since January. The company has
    taken a national approach and focused on large consumer markets in
    states that have refused to legalize sports betting. One advertisement
    by prediction market Kalshi says it is ``The First Nationwide Legal
    Sports Betting Platform.'' Kalshi also ran advertisements during the
    college basketball tournament in Texas and California--where all sports
    betting is illegal--that said ``Make $ on March Madness'' and ``Legal
    in Texas'' and ``Legal in California.'' Another advertisement said
    ``Sports betting is officially legal in Texas with Kalshi. The first
    federally regulated exchange where you can bet on real outcomes.''
    Again, all sports betting is illegal under state law in Texas and
    California. Thus, these prediction markets are offering contracts on
    sport event outcomes and intentionally misleading consumers and
    purposefully thwarting state laws.
        Congress has long been concerned about consumers wagering on sport
    events. In 1992, Congress sought to prohibit all forms of sports
    betting in the United States through enactment of the Professional and
    Amateur Sports Protection Act (``PASPA''). Only a few states that were
    offering sports betting at the time were exempted from the nationwide
    prohibition. In 2018, the United States Supreme Court, in Murphy v.
    NCAA, struck down PASPA as violating the Tenth Amendment's anti-
    commandeering doctrine. The Supreme Court's Murphy decision returned
    the legalization and oversight of sports betting to state governments.
    In the 8 years since the Murphy decision, sports betting has been
    legalized on a state-by-state basis. Several states continue to
    prohibit sports betting, and two states--Utah and Hawaii--criminally
    prohibit nearly all forms of gambling within their jurisdictions.
    Whether a state chooses to legalize sports betting is a local decision.
    Yet, these prediction markets intentionally and purposefully are using
    the Commodity Exchange Act and CFTC to avoid and bypass local
    governments and citizens.
        The CFTC is responsible for regulating futures and derivatives
    markets in order to promote market integrity, protect market
    participants, and ensure the proper functioning of price discovery and
    risk management mechanisms. Its mission is essential to protect both
    market participants and the broader public from fraud, manipulation,
    and systemic risk. As Congress considers reauthorization of this
    agency, we urge you to address the significant concerns raised by
    CFTC's recent willingness to allow prediction markets to manipulate the
    authority of the CEA and the CFTC's own regulations to offer event
    contracts that constitute illegal sports betting primarily designed to
    avoid state, Tribal and other Federal laws and regulations.
        We ask that the Committee and Congress amend the Commodity Exchange
    Act to reaffirm and clarify that the derivatives market cannot be used
    for illegal sports betting or casino-style gaming. We ask that you take
    the following actions:

       Clarify that the CFTC cannot approve, permit, or otherwise
            facilitate contracts that resemble sports wagering, including
            contracts where the predominant purpose and practical effect is
            consumer betting rather than bona fide hedging or commercial
            risk management; and

       Prohibit (or deem contrary to the public interest) event
            contracts and similar instruments that function as casino-style
            games or otherwise replicate gambling mechanics, regardless of
            the label applied.

        The legalized sports betting system in Maine was carefully
    negotiated to protect consumers and sports, while providing a regulated
    entertainment option that provides revenues to the Tribal Nations
    within the state. Prediction markets offering sport event contracts are
    purposefully violating state law and regulations and harming local
    governments and consumers. We need the Committee and Congress to take
    immediate action to stop this illegal activity.
        Thank you for considering these comments.
                                    Letter 2
         rebecca george, executive director, washington indian gaming
                                  association
      Hon. Glenn Thompson,
      Chairman,
      House Committee on Agriculture,
      Washington, D.C.

      RE: Stop the Proliferation of Unregulated Sports Betting and Gambling
                using Prediction Market Financial Platforms

        Dear Chairman Thompson:

        We write to express deep concern about certain financial platforms
    engaging in unlicensed and unregulated online sports betting and
    gambling under the guise of ``event contracts'' pursuant to the
    Commodity Exchange Act (CEA). These financial platforms argue that they
    are registered through the Commodity Futures Trading Commission (CFTC)
    and the Securities and Exchange Commission (SEC), and thus, their
    activities are outside the scope of state and Tribal government laws
    and regulations. This argument is nonsensical and clearly not what
    Congress intended when it last modernized the CEA.
        We request that your Committee review and revise the authorities of
    the CFTC and SEC, and reaffirm existing law and regulations prohibiting
    these financial platforms from offering event contracts on sport events
    or casino-style gambling activities. Your failure to do so allows these
    companies to continue to ignore and avoid state and Tribal government
    law and regulations, jeopardizing the public, who have unfettered
    access to, and minimal protections from these illegal and aggressive
    companies.
        These companies are attempting to use the Federal courts to create
    ambiguity in the CEA to circumvent state and Tribal law and offer
    illegal gambling with no regulation or oversight. In less than 1 year,
    these prediction market platforms have proliferated online even though
    state and Tribal governments have informed these companies that they
    are operating illegally. The leading company took in more than $1
    billion in volume in October with 90% being from event contracts on
    sports events.
        Although sports betting is explicitly banned in many states, the
    companies are aggressively advertising their products as ``legalized
    sports betting in all 50 states.'' They pay no taxes and contribute
    nothing to problem gambling programs. They ignore state laws that ban
    such activities from being available at schools, colleges and churches
    and refuse to comply with state and Tribal laws intended to prevent
    harm to consumers and regulate gambling activities. Recently, Kalshi, a
    leading Prediction Market, advertised that its platform is ``kind of
    addicting.''
        The proliferation and rapid expansion of these prediction market
    financial platforms into gambling activities such as sports betting is
    a public safety and health crisis. Because these companies can self-
    certify these event contracts under existing CFTC law and regulations,
    they go through no review or approval process at the CFTC or SEC before
    being made widely available to anyone with access to the internet.
    Although there are now 20 lawsuits pending across the country in
    Federal and state courts, these operators have shown no willingness to
    abide by state or Tribal laws and regulations and argue that only
    Congress can provide clarity on the matter.
        We need your committees to engage on this matter now, as it will
    only continue to grow at rapid speed if quick action isn't taken by
    Congress. Gambling activities have long been within the purview of
    state, Tribal and local government authority and regulation, and
    Congress and the Supreme Court have long recognized that. We need your
    committees to reinforce this longstanding position and act now to
    protect consumers and state, local and Tribal governments.
        Thank you for your timely consideration of this matter.
                Sincerely,

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Rebecca George,
    Executive Director,
    Washington Indian Gaming Association (WIGA).

        On behalf of WIGA Member Tribes.\1\
    ---------------------------------------------------------------------------
        \1\ Chairman Dustin Klatush, Chehalis Confederated Tribes; Chairman
    Timothy Greene, Makah Tribe; Chairman Guy Miller, Skokomish Tribe;
    Chairman Jarred Erickson, Colville Confederated Tribes; Chairman Ken
    Choke, Nisqually Tribe; Chairman Kris Peters, Squaxin Island Tribe
    Chairman William Iyall, Cowlitz Indian Tribe; Chairwoman RoseMary
    LaClair, Nooksack Tribe; Chairman Eric White, Stillaguamish Tribe;
    Chairman Leonard Forsman, Suquamish Tribe; Chairman Steve Edwards,
    Swinomish Tribal Community; Chairman Nino Maltos, Sauk-Suiattle Tribe;
    Chairwoman Darlene Hollum, Hoh Tribe; Chairman Guy Capoeman, Quinault
    Nation; Chairman Glen Nenema, Kalispel Tribe; Chairman Anthony
    Hillaire, Lummi Nation; Chairman Doug Woodruff, Quileute Tribe;
    Chairman W. Ron Allen, Jamestown S'Klallam Tribe; Chairwoman Amber
    Caldera, Port Gamble S'Klallam Tribe; Chairwoman Francis Charles, Lower
    Elwha Klallam Tribe; Chairman Quintin Swanson, Shoalwater Bay Tribe;
    Chairwoman Teri Gobin, Tulalip Tribes of Washington; Chairman Gerald
    Lewis, Yakama Nation.
    ---------------------------------------------------------------------------
                                    Letter 3
                     hon. teri gobin, chair, tulalip tribes
        Chairman Thompson, Ranking Member Craig, and Members of the
    Committee:

        On behalf of the Tulalip Tribes, we thank you for the opportunity
    to submit this statement for the record as the Committee considers
    reauthorization of the Commodity Futures Trading Commission (CFTC) and
    possible amendments to the Commodity Exchange Act (CEA).
        The Tulalip Tribes support well-regulated derivatives markets that
    serve legitimate commercial and risk-management purposes. However, we
    are deeply concerned that the Commodity Exchange Act is increasingly
    being used as a vehicle to facilitate widespread sports wagering--and
    potentially casino-style gaming--through products marketed as ``event
    contracts'' or similar instruments. These developments run counter to
    Tribal interests and risk undermining the carefully balanced legal and
    regulatory framework that governs gaming in Indian Country
        In Washington State, we are already seeing companies expand
    gambling-like products that directly compete with Tribal gaming
    operations protected under Tribal-state gaming compacts and raise
    serious and unresolved questions under state law. These developments
    threaten the carefully negotiated balance reflected in those compacts,
    which recognize Tribal exclusivity in certain forms of gaming in
    exchange for robust regulatory oversight and public-safety commitments.
        The Tulalip Tribes also raised concerns about the emergence of
    sports-related ``event contracts'' offered by vendors such as Kalshi
    and Crypto.com. Although these vendors characterize their products as
    financial instruments regulated under the Commodity Exchange Act, in
    practice they function as sports wagers and compete directly with
    tribally regulated sports betting authorized under state-Tribal
    compacts. As such, they not only undermine Tribal gaming exclusivity,
    but also implicate Washington State gaming laws and regulatory
    frameworks that were never designed to accommodate nationwide, unvetted
    betting products.
        Equally troubling is that these products operate outside the robust
    consumer-protection regimes that govern lawful sports wagering,
    including safeguards related to problem gambling, responsible play, and
    age and location verification. Without those protections, unregulated
    sports-style event contracts increase the risk of gambling-related
    harms and make it more difficult to prevent access by minors under the
    age of 18. Allowing these products to proliferate outside established
    regulatory systems creates significant public-safety concerns and
    undermines the protections that states and Tribes have deliberately
    built into their gaming frameworks.
        Our concern is heightened by both the scope and the speed of this
    expansion. As outlined in our comments, these products are already
    being offered across multiple states, with event contracts marketed and
    made available nationwide--including on Tribal lands--without
    meaningful review for compliance with state law, Tribal-state gaming
    compacts, or established regulatory safeguards. This rapid
    proliferation risks eroding compact-based protections, creating uneven
    regulatory treatment, and allowing de facto sports betting to operate
    outside the systems designed to ensure legality, accountability, and
    consumer protection.
    The CFTC Is Not a Gaming Regulator--and Congress Should Not Let the CEA
            Become a Back Door for Betting
        At the hearing, much of the testimony and many of the responses
    focused on challenges related to the CFTC's limited resources and
    capacity to regulate these products. To be clear, however, this is not
    a resource issue. Regardless of funding or staffing levels, the CFTC
    should not be vested with expansive authority to regulate sports
    wagering or casino-style gaming through the Commodity Exchange Act.
        The CFTC's mission and expertise are centered on derivatives market
    integrity, risk transfer, clearing, and enforcement against fraud and
    manipulation. The Commission is not designed--nor intended--to regulate
    sports wagering or casino-style gaming, which raise distinct public-
    interest concerns, including game integrity, consumer protections
    specific to wagering, age and location controls, and safeguards against
    gaming-related harms.
        Without clear direction from Congress, the CFTC risks being
    driven--through self-certification processes and increasingly
    aggressive product design--into decisions that effectively establish
    national gambling policy under the guise of commodities regulation.
    Such an outcome would override state policy choices and erode the
    Tribal-state compacting framework that upholds Tribal sovereignty and
    supports essential governmental services in Indian Country.
    Without Barriers, Vendors Will Predictably Design Contracts that Mimic
            Casino-Style Games
        The Tulalip Tribes urge the Committee to acknowledge the strong
    commercial forces driving these products. If sports-style event
    contracts are allowed to expand under the CEA, vendors will inevitably
    evolve them into offerings that mirror casino-style gaming--featuring
    short-duration outcomes, rapid repeat play, and contract structures
    that operate as wagers rather than tools for risk management. Absent
    clear statutory limits, so-called ``innovation'' will predictably lead
    to increasingly gaming-like products with nationwide distribution,
    operating outside established state and Tribal gaming oversight
    Requested Congressional Action: Amend the CEA Establishing a Bright
            Line Rule
        We respectfully urge the Committee to incorporate targeted
    amendments to the Commodity Exchange Act in any CFTC reauthorization
    package that would:

      1.  Clarify that the CFTC may not approve, permit, or otherwise
                facilitate contracts that constitute sports wagering,
                including contracts where the predominant purpose and
                practical effect is consumer betting rather than bona fide
                hedging or commercial risk management.

      2.  Prohibit (or deem contrary to the public interest) event
                contracts and similar instruments that function as casino-
                style games or otherwise replicate gambling mechanics,
                regardless of the label applied.
    Conclusion
        The Tulalip Tribes recognize and appreciate the Committee's efforts
    to update and strengthen market oversight. At the same time, those
    efforts should not erode Tribal sovereignty or disrupt the long-
    standing gaming frameworks that Congress has consistently acknowledged
    and upheld. We respectfully urge Congress to act to ensure that the
    Commodity Exchange Act is not used as a pathway for sports wagering or
    casino-style gaming--activities that directly conflict with Tribal
    interests, undermine Tribal-state gaming compacts, and pose serious
    risks to consumer protection and public welfare.
        Thank you for the opportunity to submit these comments for the
    record.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Teri Gobin,
    Tulalip Tribes Chair.
                                     ______

                              Submitted Questions
    Response from Hon. Dawn D. Stump, Principal, Stump Strategic LLC;
            former Commissioner, Commodity Futures Trading Commission
    Question Submitted by Hon. Eric A. ``Rick'' Crawford, a Representative
            in Congress from Arkansas
        Question. What is the tax treatment on premiums for puts and calls
    for bona fide hedgers?
        Answer. Assuming you are referring to the up-front premium payment
    to initiate a call or put options contract, I am not familiar with the
    tax treatment of such premiums and would recommend you seek an answer
    from a tax professional.
        If helpful, I am familiar with the tax treatment of the option
    itself and can offer the following: Options on futures and broad based
    indexes (generally non-equity options) are regulated by the Commodity
    Futures Trading Commission and benefit from what is commonly known as
    ``60/40'' tax treatment: 60% of the gains/losses are taxed at the long-
    term capital gains tax rate and 40% at the short-term capital gains tax
    rate, as stipulated by Section 1256 of the U.S. Internal Revenue Code.
    These contracts are marked-to-market each year regardless of how long
    they are held or whether any benefit is realized. However, this mark-
    to-market requirement does not generally apply to ``hedging
    transactions'' so long as (1) the taxpayer properly identifies the
    transactions as a hedging transaction, (2) the transaction occurs in
    the normal course of the taxpayer's trade/business to manage certain
    risks, and (3) the transaction results only in ordinary income/loss.
    Rather all gains/losses from properly identified hedges are treated as
    ordinary income/loss. Note, additional rules apply to straddles and
    capitalized expenses.
        If your question refers to puts and calls on equity options
    regulated by the Securities and Exchange Commission (specifically
    options on individual stocks and certain exchange traded funds), my
    knowledge is limited.
    Question Submitted by Hon. Alma S. Adams, a Representative in Congress
            from North Carolina
        Question. Farmers and ranchers rely on futures markets to manage
    risk and protect their livelihoods, yet these markets can be complex
    and difficult to navigate without specialized knowledge.
        How can the CFTC improve their educational efforts, outreach and
    practical guidance to help farmers and ranchers navigate the futures
    markets, ensuring they fully understand the tools available to manage
    risk effectively?
        Answer. The CFTC has historically hosted a Learning Resources page
    on the agency's website. The range of topics is vast and lately focused
    on identifying scams and fraudulent activity. Perhaps the agency could
    look to the Agricultural Advisory Committee to identify more general
    educational topics of specific interest to agricultural markets.
    Thereafter, resources would need to be dedicated to developing such
    materials to supplement the Learning Resources page.
    Questions Submitted by Hon. Sharice Davids, a Representative in
            Congress from Kansas
        Question 1. During your tenure as Commissioner, how did the
    Commodity Futures Trading Commission (CFTC) interpret its authority to
    disallow ``gaming'' or public-interest-contrary contracts, and would
    you view sports or contest-based event contracts as falling into those
    prohibited categories?
        Answer. As a Commissioner, I thoroughly examined Section
    5c(c)(5)(C)--the relevant authority contained within the Commodity
    Exchange Act (CEA), as enacted by Congress in the Dodd-Frank Act. I
    concluded that this section of the CEA does not ban ``gaming''
    contracts. Rather, my reading is that Congress expected the CFTC to
    make a determination as to whether these contracts are contrary to the
    public interest as a prerequisite to disallowing such. My
    interpretation stems from use of the words ``may'' and ``if'' as
    follows: By using the words ``the Commission may determine'' that these
    types of contracts are contrary to public interest ``if the agreements,
    contracts, or transactions involve . . . gaming''. Only if found to be
    contrary to the public interest, may a contract then be prohibited. As
    you know, the use of these words in legislative construction is
    considered very intentional. There must be a reason Congress did not
    use the word ``shall'' but rather chose ``may'' and conditioned it with
    ``if''.
        As a Commissioner, it was my position that the CFTC was required to
    apply a two-part process to (1) make an initial determination as to
    whether the contract involved gaming and (2) subsequently apply a
    public interest test before imposing the prohibition called for by the
    Act. Unfortunately, in 2011, under then-Chairman Gensler, the CFTC
    promulgated Rule 40.11 to implement this provision without developing a
    process explaining how the CFTC would assess whether such contracts are
    contrary to the public interest. As a Commissioner I repeatedly
    recommended that we address this by revisiting the rule as I feared the
    rule's application was vulnerable to legal challenge. Now, we have seen
    how the lack of such a process may render the rule arbitrary and
    capricious. At this point, the courts are heavily engaged in deciding
    these questions.

        Question 2. Would you agree that if the CFTC authorizes sports
    event contracts with mass retail access, it risks creating a parallel,
    competing sports betting regime that Congress never intended when it
    carefully designed a structure for Tribal and commercial sports
    wagering through the Indian Gaming Regulatory Act (IGRA) and state law?
        Answer. I am unaware of any attempt by Congress to harmonize intent
    between the Indian Gaming Regulatory Act (IGRA) of 1988 and the
    subsequent changes to the Commodity Exchange Act (CEA), which the CFTC
    must apply independently to event contracts. There is no specific
    reference to the IGRA in the CEA, and a public interest determination
    would only be triggered where explicit unlawful activity is proposed.

        Question 3. Are you concerned or aware that when a platform uses
    CFTC registration to offer sports-betting-like products nationwide, it
    is effectively sidestepping the Tribal State Compact system that
    Congress established for Class III gaming, including sports wagering?
        Answer. My expertise is in regulating futures and swaps (including
    event contracts) under the Commodity Exchange Act. I am unable to
    compare such to the Tribal State Compact system of which my familiarity
    is limited.
    Questions Submitted by Hon. Jonathan L. Jackson, a Representative in
            Congress from Illinois
        Question 1. Securing U.S. critical mineral supply chains remains a
    bipartisan priority for Congress and a key focus of the Trump
    Administration. In May of this year the Energy and Environmental
    Markets Advisory Committee of the CFTC released a report titled
    ``Considerations on the Evolution and Development of Critical Minerals
    Markets'' * in which the authors recommend the CFTC continue to acquire
    more knowledge of the critical minerals industry.
    ---------------------------------------------------------------------------
        * The report referred to is located on p. 138; and is available at
    https://www.cftc.gov/media/12436/EEMAC_CriticalMineralsMarkets0625/
    download.
    ---------------------------------------------------------------------------
        What steps should this Committee take to ensure CFTC staff have the
    knowledge and experience necessary to oversee, police, and regulate the
    growing but small critical minerals markets, as called for in the
    report?
        Answer. As you note, this is a developing market. As such it seems
    the CFTC would benefit from evaluating fragmentation, liquidity, and
    volatility factors. This is the type of analysis conducted by the
    CFTC's Office of the Chief Economist (OCE). The Committee should
    therefore ensure that OCE remains a significant component of the
    agency's multi-functional system.

        Question 2. Are any of you aware of what steps, if any, the
    President's Acting CFTC Chair has taken to respond to this report.
        Answer. I am unaware of any such actions.

        Question 3. How can this Committee use the CFTC reauthorization
    process to foster the development of critical minerals derivatives
    markets that can enable critical minerals trading and risk management,
    which could promote growth in this industry?
        Answer. As stated in the report, ``the CFTC is poised to do the
    most good by doing no harm''. The recommendations section of the report
    suggests no new authority is needed at this time and in fact, cautions
    against singling out the critical minerals market by asserting that
    ``the price discovery function of derivatives in mineral markets could
    be significantly impaired if the CFTC took any action toward critical
    mineral derivatives that was different from its oversight relating to
    other underlying commodities . . . The temptation is strong to push the
    boundaries of what one controls, but the CFTC can do the most good by
    continuing to do what it does well within its authority''. Therefore, I
    believe the Committee can best assist the development of this market by
    ensuring existing functions are preserved and validated, such as that
    of the Office of the Chief Economist (mentioned in my answer to
    Question 1) and ensuring the CFTC's advisory committee work conforms to
    best practices and remains sustainable.
    Response from Edward F. Prosser, Senior Vice President, Special
            Projects, Scoular Company; Member, Board of Directors,
            Commodity Markets Council
    Questions Submitted by Hon. Frank D. Lucas, a Representative in
            Congress from Oklahoma
        Question 1. The SEC and CFTC have pending applications for the
    extension of cross-margining programs on Treasury derivatives to client
    transactions. Can you speak to the risk-reducing benefits for firms if
    these applications are approved across Treasury products?
        Answer. Scoular does not directly use Treasuries, so we do not use
    this cross-margining. In general, though, we support any action a
    regulator takes to reduce strains on liquidity and allow market
    participants to efficiently hedge their exposures.

        Question 2. What happens to the broader U.S. food and agriculture
    system if derivatives markets don't function well--if end-users can't
    manage price and supply-chain risk through futures and options?
        Answer. The U.S.-regulated derivative markets are where agriculture
    and energy merchandisers go for price discovery and risk transfer, not
    only here, but around the world. If the efficiency or accuracy of that
    process is effected by thin liquidity, high costs of market access, or
    a lack of confidence in the market, then the market would naturally
    widen the bid/ask spread for transactions to account for the increased
    risk each participant is taking, which will eventually bleed back into
    the physical supply chain. In the agriculture business, this means
    financing becomes more expensive, and it is harder for producers and
    merchants both to make long-term contracts. Ultimately, this means that
    I can pay the farmer less for their commodity and the end consumer at
    the grocery store will pay more.
    Question Submitted by Hon. Eric A. ``Rick'' Crawford, a Representative
            in Congress from Arkansas
        Question. What is the tax treatment on premiums for puts and calls
    for bona fide hedgers?
        Answer. I am not an accountant therefore I cannot give tax advice.
    Speaking from my experience on my farm, these financial instruments are
    hedges against real-world market risk, not speculative investments. The
    Tax Code treats these bona fide hedges as income or expenses, not as
    capital gains, which avoids me being punished for protecting against
    risk.
    Questions Submitted by Hon. Alma S. Adams, a Representative in Congress
            from North Carolina
        Question 1. In her testimony, Ms. Fischer notes that the CFTC
    recently requested comments on issues on perpetual futures and 24/7
    trading but then let exchanges implement these changes before the
    comment period closed.
        Does this inspire confidence that the agency will act in a
    deliberative manner and thoughtfully consider industry perspectives if
    it is greenlighting projects supposedly still under review by the
    agency?
        Answer. I don't know the particulars of the incident you have
    described or the Commission's internal decision-making process. Markets
    and government regulation run at different speeds, and sometimes the
    regulator is put in a position where it must grapple with where markets
    are naturally moving. In the case of 24/7 trading, I also think that
    different markets have different structures and different needs. I
    would hope that, while the Commission may have deemed 24/7 appropriate
    for certain markets, they would be very cautious in considering this
    market structure for the traditional markets I trade. This is not an
    indictment of the Commission's commitment to open, inclusive fact
    finding before making regulatory decisions, but it is important that
    new innovations for novel assets do not impede on traditional markets
    that have functioned successfully for a long time.

        Question 2. How does this meet the commitment of transparency,
    public participation, and open debate in regulatory decision making you
    are looking for, according to your testimony?
        Answer. I look to my experience as a member of the Agricultural
    Advisory Committee to the Chair of the CFTC. It has been my experience
    that the Commission is deliberate about bringing all to the table to
    have a say when weighing decisions. I fully expect consideration of
    these novel structures will go through this same deliberative process.
    Questions Submitted by Hon. Jonathan L. Jackson, a Representative in
            Congress from Illinois
        Question 1. Securing U.S. critical mineral supply chains remains a
    bipartisan priority for Congress and a key focus of the Trump
    Administration. In May of this year the Energy and Environmental
    Markets Advisory Committee of the CFTC released a report titled
    ``Considerations on the Evolution and Development of Critical Minerals
    Markets'' * in which the authors recommend the CFTC continue to acquire
    more knowledge of the critical minerals industry.
    ---------------------------------------------------------------------------
        * The report referred to is located on p. 138; and is available at
    https://www.cftc.gov/media/12436/EEMAC_CriticalMineralsMarkets0625/
    download.
    ---------------------------------------------------------------------------
        What steps should this Committee take to ensure CFTC staff have the
    knowledge and experience necessary to oversee, police, and regulate the
    growing but small critical minerals markets, as called for in the
    report?
        Answer. While my knowledge of this specific commodity and Advisory
    Committee is limited, I will say that fully funding and staffing the
    CFTC will allow it the resources to hire the critical staff it needs to
    evaluate questions such as this. Historically, each Commissioner at the
    CFTC has sponsored an advisory committee, which is something Congress
    should consider.

        Question 2. Are any of you aware of what steps, if any, the
    President's Acting CFTC Chair has taken to respond to this report.
        Answer. I have no knowledge of this matter.

        Question 3. How can this Committee use the CFTC reauthorization
    process to foster the development of critical minerals derivatives
    markets that can enable critical minerals trading and risk management,
    which could promote growth in this industry?
        Answer. The answer to how to promote a robust derivatives market
    and growth is the same whether a new commodity or one that has been
    around for a long time. We need to give the CFTC the authority and
    resources it requires to foster an open, fair, equally-accessed market.
    This is vital to cultivate an environment where all market
    participants, both buyer and seller, can come together to discover a
    fair and open price. If we cultivate that kind of CFTC, new products
    will enjoy all the benefits that the USA derivatives markets have
    enjoyed for years.
    Response from Alicia Crighton, Global Co-Head of Futures, Head of OTC
            and Prime Clearing, Goldman Sachs & Co. LLC; Chair, Board of
            Directors, Futures Industry Association
    Question Submitted by Hon. Frank D. Lucas, a Representative in Congress
            from Oklahoma
        Question. The SEC and CFTC have pending applications for the
    extension of cross-margining programs on Treasury derivatives to client
    transactions. Can you speak to the risk-reducing benefits for firms if
    these applications are approved across Treasury products?
        Answer. Institutional investors and end-users have access to an
    array of financial products they can use to deliver an investment
    strategy and hedge the risks of those investments. In the Treasury
    markets, an end-user may want to hold a Treasury cash position and
    hedge that risk in the futures market. Although these risks are
    offsetting, investors and end-users cannot recognize those offsetting
    risks without approved rules to do so because the cash and futures
    products are regulated by two different agencies. FIA believes
    expanding the scope of Treasury cross margining arrangements to include
    customer transactions will incentivize prudent risk management and
    hedging activity. Additionally, by providing the appropriate level of
    risk offset, cross margining will enhance market liquidity both in
    times of normal trading and in times of market stress. The CFTC and the
    SEC have the authority to and should establish a coordinated process to
    approve portfolio margining arrangements now, without waiting for
    additional legislation to require them to do so. As discussed at the
    recent CFTC-SEC joint roundtable and in other venues, portfolio
    margining is one of the most critical harmonization initiatives before
    the agencies. It is necessary to reduce barriers to risk management and
    to rationalize a system that today too often fails to recognize the
    offsetting risks of transactions in economically similar products,
    solely because the products are under the jurisdiction of two different
    regulators. As the SEC's Treasury clearing mandate approaches, which
    will broadly impact the financial system, there is an ever-growing
    demand and need for client portfolio margining of Treasury and repo
    transactions with related futures transactions, to facilitate effective
    risk management and improve market liquidity.
    Question Submitted by Hon. Eric A. ``Rick'' Crawford, a Representative
            in Congress from Arkansas
        Question. What is the tax treatment on premiums for puts and calls
    for bona fide hedgers?
        Answer. As FIA Board Chair, I am not best positioned to answer this
    question.
    Questions Submitted by Hon. Alma S. Adams, a Representative in Congress
            from North Carolina
        Question 1. There is a growing debate over the evolution of the
    industry's market's structure. Issues like vertical integration of
    previously separate market infrastructure, disintermediation, and
    direct clearing, are raising new questions about the director of these
    markets.
        Does Congress need to address any of these issues in a
    reauthorization bill?
        Answer. FIA recognizes the growing market structure trend to
    combine regulatory categories of registrants. Vertical integration
    cannot, however, come at the cost of customer protection. Any
    exploration of more vertically integrated business models should be
    conditioned on robust, enforceable safeguards for market participants.
    Vertically integrated firms should be required to, amongst other
    things: (i) segregate customer and affiliate assets; (ii) implement
    robust, principles-based governance and conflicts of interest controls,
    including appropriate information barriers; (iii) meet prudential and
    financial resource requirements that ensure a vested interest such as
    having skin in the game and holding more capital and (iv) maintain
    appropriate reporting, transparency, and auditability.
        In particular, to ensure the integrity of the Commodity Exchange
    Act's (CEA) system of self-regulation and promote confidence in market
    integrity, Congress must preclude a scenario in which a registered
    entity is the designated self-regulatory organization (``DSRO'') for
    itself or an affiliate, or is permitted to grant an affiliated market
    maker preferential exchange access or access to other market
    participants' position or other data. Moreover, a registered entity
    with an affiliate should not be the DSRO or SRO for competitors of that
    affiliate. FIA urges Congress to establish a robust framework for
    addressing the potential conflicts associated with vertically
    integrated structures.
        Similarly, disintermediated clearing models--allowing for retail
    participants to directly access exchanges and clearinghouses--raise
    market integrity and customer protection concerns. Where direct retail
    clearing activity is conducted, CFTC-regulated intermediaries (futures
    commission merchants) are not present to perform critical functions of
    guaranteeing customer performance to the clearinghouse, monitoring for
    money laundering and other risks to market integrity, and safeguarding
    customer assets, among other functions. FIA recommends Congress
    encourage the CFTC to consider how to update its regulatory framework
    to take into account the risk profiles and loss events unique to
    disintermediated clearing services.

        Question 2. In your testimony, you mention that the Futures
    Industry Association recommends that Congress consider authorizing the
    CFTC to issue a rule to require financial resources that would be used
    to manage a default for leveraged retail transactions be segregated or
    separated from other default resources at clearinghouse.
        Can the CFTC do this today or does it need new authority to achieve
    this?
        Answer. FIA believes the CFTC has existing authority to achieve
    this.

        Question 3. If they can do this now, should the Congress require
    the agency to segregate these funds?
        Answer. A unique aspect of the derivatives ecosystem is that in the
    event a clearing member defaults, losses are mutually shared by the
    remaining clearing members in what is known as default fund loss
    mutualization. With the increase in leveraged retail transactions,
    clearing members representing institutional end-users will now
    participate in the same default fund as retail investors.
        FIA recommends that Congress support the CFTC in using its
    authority to issue rules or guidance to require that financial
    resources that would be used to manage the default involving leveraged
    retail transactions be segregated from other default resources in the
    clearinghouse. Such separation could mitigate systemic risk concerns
    and prevent contagion from spreading between retail investors trading
    novel products and end-users and other traditional market participants
    accessing the markets for hedging purposes.
    Questions Submitted by Hon. Jonathan L. Jackson, a Representative in
            Congress from Illinois
        Question 1. Securing U.S. critical mineral supply chains remains a
    bipartisan priority for Congress and a key focus of the Trump
    Administration. In May of this year the Energy and Environmental
    Markets Advisory Committee of the CFTC released a report titled
    ``Considerations on the Evolution and Development of Critical Minerals
    Markets'' * in which the authors recommend the CFTC continue to acquire
    more knowledge of the critical minerals industry.
    ---------------------------------------------------------------------------
        * The report referred to is located on p. 138; and is available at
    https://www.cftc.gov/media/12436/EEMAC_CriticalMineralsMarkets0625/
    download.
    ---------------------------------------------------------------------------
        What steps should this Committee take to ensure CFTC staff have the
    knowledge and experience necessary to oversee, police, and regulate the
    growing but small critical minerals markets, as called for in the
    report?
        Answer. FIA would defer to the Committee on how it can exercise its
    oversight authority to encourage CFTC staff to fulfill the
    recommendations of the report published by the CFTC's Energy and
    Environmental Markets Advisory Committee.

        Question 2. Are any of you aware of what steps, if any, the
    President's Acting CFTC Chair has taken to respond to this report.
        Answer. I am not aware of the former Acting CFTC Chairman's actions
    in regard to this report.

        Question 3. How can this Committee use the CFTC reauthorization
    process to foster the development of critical minerals derivatives
    markets that can enable critical minerals trading and risk management,
    which could promote growth in this industry?
        Answer. FIA supports market demand determining which derivative
    contracts are offered to be bought and sold on regulated Designated
    Contract Markets (DCMs).
    Response from Robert A. Schwartz, J.D., Partner, Morgan, Lewis &
            Bockius; former General Counsel, Commodity Futures Trading
            Commission
    Question Submitted by Hon. Eric A. ``Rick'' Crawford, a Representative
            in Congress from Arkansas
        Question. What is the tax treatment on premiums for puts and calls
    for bona fide hedgers?
        Answer. Unfortunately, I lack the expertise in tax law to answer
    this question.
    Questions Submitted by Hon. Sharice Davids, a Representative in
            Congress from Kansas
        Question 1. Should Congress, in this reauthorization, clarify the
    boundary between permissible event contracts and impermissible wagers
    to reduce litigation risk and avoid placing the CFTC in the middle of
    the national sports betting debate?
        Answer. I believe Congress is better positioned than the courts to
    decide the extent of the CFTC's jurisdiction in this respect.

        Question 2. Should Congress include explicit language in CFTC
    reauthorization stating that the CFTC lacks authority to approve event
    contracts that violate IGRA, Tribal state compacts, or state gaming
    law, even if those contracts might otherwise qualify as derivatives?
        Answer. Your question reflects important policy issues, and I hope
    Congress gives serious consideration to the perspectives of all
    stakeholders.

        Question 3. Should Congress play a more forceful role in
    prohibiting products that function as illegal or unlicensed sports
    betting when measured against existing Tribal State compacts that
    tightly regulate where, how, and by whom sports betting can occur?
        Answer. I believe that Congress is indeed best positioned to
    resolve the conflict over the issues you raise.
    Questions Submitted by Hon. Jonathan L. Jackson, a Representative in
            Congress from Illinois
        Question 1. Securing U.S. critical mineral supply chains remains a
    bipartisan priority for Congress and a key focus of the Trump
    Administration. In May of this year the Energy and Environmental
    Markets Advisory Committee of the CFTC released a report titled
    ``Considerations on the Evolution and Development of Critical Minerals
    Markets'' * in which the authors recommend the CFTC continue to acquire
    more knowledge of the critical minerals industry.
    ---------------------------------------------------------------------------
        * The report referred to is located on p. 138; and is available at
    https://www.cftc.gov/media/12436/EEMAC_CriticalMineralsMarkets0625/
    download.
    ---------------------------------------------------------------------------
        What steps should this Committee take to ensure CFTC staff have the
    knowledge and experience necessary to oversee, police, and regulate the
    growing but small critical minerals markets, as called for in the
    report?
        Answer. The CFTC is badly understaffed. It has reduced enforcement
    staff to a level well below what I believe is required, and either lost
    or forced out some of the most experienced and knowledgeable people at
    the agency, including in the Division of Market Oversight and Office of
    the General Counsel. It has also eliminated the Office of the Chief
    Economist. All of these leave the CFTC in a very difficult position
    when it comes to addressing new and emerging products within its
    jurisdiction. The Committee should advocate forcefully for adequate
    funds and the hiring of experts to address the challenges such as you
    have raised.

        Question 2. Are any of you aware of what steps, if any, the
    President's Acting CFTC Chair has taken to respond to this report.
        Answer. I am unaware of what steps the agency may have taken in
    response to the report.

        Question 3. How can this Committee use the CFTC reauthorization
    process to foster the development of critical minerals derivatives
    markets that can enable critical minerals trading and risk management,
    which could promote growth in this industry?
        Answer. The Committee should consider restoring the Office of the
    Chief Economist and advocate for sufficient staffing across the board.
    Response from Benjamin L. Schiffrin, J.D., Director of Securities
            Policy, Better Markets, Inc.
    Question Submitted by Hon. Eric A. ``Rick'' Crawford, a Representative
            in Congress from Arkansas
        Question. What is the tax treatment on premiums for puts and calls
    for bona fide hedgers?
        Answer. I am not a tax expert and therefore respectfully decline to
    answer this question.
    Questions Submitted by Hon. Alma S. Adams, a Representative in Congress
            from North Carolina
        Question 1. In 2010, the CFTC briefly approved movie box-office
    futures before Congress banned them in Dodd-Frank over concerns about
    insider trading, manipulation, and the view that such receipts weren't
    true commodities.
        Now, after dropping its appeal in the Kalshi case, the agency is
    allowing political-event contracts--markets that let traders bet on
    outcomes like the 2028 presidential nominees and key state races.
    Kalshi has even added Donald Trump, Jr., the President's son, as a
    strategic advisor, raising conflict-of-interest concerns.
        Given this landscape, what tools does the agency have to police and
    prevent insider trading and manipulation in event contracts?
        Answer. CFTC Rule 180.1 prohibits fraud and manipulation, including
    insider trading, in connection with transactions under its
    jurisdiction,\1\ but the provision hasn't yet been applied to event
    contracts.\2\ * However, given event contracts like those referred to
    are under the CFTC jurisdiction, this rule would appear to clearly
    apply, and the CFTC should enforce it. While we do not think it's
    necessary in light of this rule, the CFTC could also write a rule that
    directly addresses insider trading in event contracts. The larger
    problem relates to policing and enforcing Rule 180.1 to event
    contracts. The CFTC simply does not have the budget, personnel,
    technology, experience, or expertise to supervise, regulate and enforce
    the law regarding political event contracts. Moreover, the CFTC appears
    to have no desire to apply the law to event contracts as indicated by
    its baseless capitulation in the Kalshi litigation and continuing
    refusal to regulate event contracts.
    ---------------------------------------------------------------------------
        \1\ https://ecfr.io/Title-17/Section-180.1..
        Editor's note: the hyperlink is to a pdf creator website. The eCFR
    site is at: https://www.ecfr.gov/current/title-17/chapter-I/part-180.
        \2\ Ian McGinley, Andrew Sioson, and Nathan Howell, Prediction
    Markets Must Go All In On Training, Compliance, Bloomberg Law (Oct.
    16, 2025), https://news.bloomberglaw.com/legal-exchange-insights-and-
    commentary/prediction-markets-must-go-all-in-on-training-compliance.
        * Editor's note: references annotated with  are retained in
    Committee file.

        Question 2. Is the CFTC supposed to monitor sporting events and
    elections now and watch for people trying to manipulate event contracts
    related to these things?
        Answer. Yes, given that event contracts on elections and sporting
    events, among a wide range of other things, fall under the CFTC's
    jurisdiction, it is mandated to monitor for fraud and manipulation in
    those contracts just as it is as to other contracts under its
    jurisdiction. Former CFTC Chair Rostin Behnam, when proposing rules
    that would have clarified that event contracts on the outcome of a
    political contest such as an election could not be listed or traded on
    a CFTC-registered exchange, expressed concern that allowing such
    contracts would ``place the CFTC in the position of monitoring such
    markets for fraud and manipulation in elections themselves.'' \3\ Chair
    Behnam had said previously that allowing these contracts ``would
    require the CFTC to exercise its oversight and enforcement authorities
    in the manner of an election cop.'' \4\ As stated above, the CFTC
    simply does not have the budget, personnel, technology, experience, or
    expertise to supervise, regulate and enforce the law regarding these
    types of event contracts.
    ---------------------------------------------------------------------------
        \3\ Statement of Chairman Rostin Behnam Regarding Proposed Event
    Contracts Rulemaking, (May 10, 2024), https://www.cftc.gov/PressRoom/
    SpeechesTestimony/behnamstatement051024.
        \4\ Statement of Chairman Rostin Behnam Regarding CFTC Order to
    Prohibit Kalshi Political Control Derivatives Contracts, (Sept. 22,
    2023), https://www.cftc.gov/PressRoom/SpeechesTestimony/
    behnamstatement092223.

        Question 3. As financial markets evolve--especially with the rise
    of new derivatives like those tied to crypto assets--the challenge for
    regulators is balancing innovation with the core mission of
    safeguarding market participants, their ability to hedge risk and the
    real economy, like agriculture and energy production.
        What steps can ensure that innovation in derivatives, including
    crypto-based products, doesn't come at the expense of consumer
    protection?
        Answer. First, Congress should ensure that any crypto related
    legislation has clear and express consumer protection requirements
    covering investors, traders, and customers involved in any crypto
    related activity. Second, it should amend the Commodity Exchange Act to
    provide the CFTC with an express and clear investor protection mandate
    with a particular focus on retail investors. New Chair Mike Selig
    noted, in the press release announcing his swearing-in, that ``retail
    participation in the commodity markets is at an all-time high.'' \5\
    Yet the CFTC lacks the express investor protection mandate that exists
    for the SEC in the securities markets.\6\ This is because the
    derivatives and commodities markets regulated by the CFTC have
    traditionally been dominated by large institutions. As retail
    participation in those markets increases, Congress should ensure that
    retail investors are protected by including in the CFTC's mandate an
    express responsibility for investor protection that is similar to the
    one the SEC has for investors in securities markets. Third, the CFTC
    has been chronically underfunded for years and doesn't even have the
    budget necessary to fulfill the many duties Congress has already
    mandated. Adding more mandates and duties in the crypto space (as well
    as the prediction markets space) without significant more funding will
    be a fraud on the public, making the public think the CFTC is a cop on
    the crypto beat when it will not be. The CFTC needs a budget that will
    enable it to have the personnel, technology, experience, and expertise
    necessary to properly supervise and regulate crypto so that innovation
    can flourish while consumers, investors, and customers are protected.
    ---------------------------------------------------------------------------
        \5\ Mike Selig Sworn In as 16th CFTC Chairman, (Dec. 22, 2025),
    https://www.cftc.gov/PressRoom/PressReleases/9164-25.
        \6\ Seven Questions on the Pro-Crypto, Anti-SEC Financial
    Innovation and Technology for the 21st Century Act (FIT 21), Better
    Markets (June 11, 2024), https://bettermarkets.org/wp-content/uploads/
    2024/06/Better-Markets-Crypto-FIT-21-Fact-Sheet-6.11.24.pdf; Benjamin
    Schiffrin and Cantrell Dumas, An SEC-CFTC Merger Would Not Save Money
    and Would Endanger Main Street Families, Better Markets (Mar. 11,
    2025), https://bettermarkets.org/wp-content/uploads/2025/03/Better-
    Markets-Fact-Sheet-SEC-CFTC-Merger-3.11.25.pdf.

        Question 4. And how can we continue to protect traditional markets
    and market participants, like farmers and ranchers, as derivatives
    markets expand and new products emerge?
        Answer. As stated above, the most important thing Congress can do
    is ensure that the CFTC is properly funded, which will enable it to be
    properly staffed and have the right technology to fulfill its mandates.
    The agency is already underfunded and understaffed. And it appears that
    it will now be asked to oversee crypto markets and prediction markets.
    The only way it will be able to fulfill those new responsibilities,
    while still protecting traditional markets and market participants like
    farmers and ranchers, is if Congress significantly increases its budget
    and if the agency hires significantly more staff to enable it to
    oversee all of the markets under its purview.

        Question 5. I'm sure you know, section 342 of Dodd-Frank authorizes
    Offices of Minority and Women Inclusion (OMWI) at all other Federal
    financial regulators, including the SEC where you previously worked.
    The only Federal financial regulator without a statutorily authorized
    OMWI is the CFTC.
        Do you think it would make sense for Congress to statutorily
    authorize a CFTC OMWI program as part of any CFTC reauthorization bill
    to ensure that OMWI's good work can continue?
        Answer. Yes. Statutory authorization for the CFTC's OMWI would mean
    that CFTC leadership could not unilaterally determine to disband the
    CFTC's OMWI. A statutorily authorized OMWI similar to that at the other
    Federal financial regulators would also be required to provide an
    annual report to Congress, which would increase accountability and
    transparency in the agency's diversity efforts.
    Questions Submitted by Hon. Jonathan L. Jackson, a Representative in
            Congress from Illinois
        Question 1. Securing U.S. critical mineral supply chains remains a
    bipartisan priority for Congress and a key focus of the Trump
    Administration. In May of this year the Energy and Environmental
    Markets Advisory Committee of the CFTC released a report titled
    ``Considerations on the Evolution and Development of Critical Minerals
    Markets'' * in which the authors recommend the CFTC continue to acquire
    more knowledge of the critical minerals industry.
    ---------------------------------------------------------------------------
        * The report referred to is located on p. 138; and is available at
    https://www.cftc.gov/media/12436/EEMAC_CriticalMineralsMarkets0625/
    download.
    ---------------------------------------------------------------------------
        What steps should this Committee take to ensure CFTC staff have the
    knowledge and experience necessary to oversee, police, and regulate the
    growing but small critical minerals markets, as called for in the
    report?
        Answer. Congress simply must significantly increase the CFTC's
    budget so that the CFTC can hire the staff that it needs to oversee the
    markets that it regulates--large new markets such as crypto and
    prediction markets, large traditional markets such as derivatives and
    commodities futures, and small but growing markets such as mineral
    markets. The CFTC report says that it is ``critical for the CFTC to be
    staffed with employees who have a strong economics and financial
    training related to minerals,'' both to conduct responsible market
    oversight and to be well versed ``in the necessary dialogue with market
    participants in a growing and complex industry.'' \7\ That will be
    impossible unless and until Congress significantly increases the CFTC's
    budget.
    ---------------------------------------------------------------------------
        \7\ Considerations on the Evolution & Development of Critical
    Minerals Markets, CFC Energy andEnvironmental Markets Advisory
    Committee (May 2025), https://www.cftc.gov/media/12436/
    EEMAC_CriticalMineralsMarkets0625/download, at 1.

        Question 2. Are any of you aware of what steps, if any, the
    President's Acting CFTC Chair has taken to respond to this report.
        Answer. The public record does not indicate that the former Acting
    Chair took any steps to respond to this report and I am not aware of
    any steps she took to respond to the report.

        Question 3. How can this Committee use the CFTC reauthorization
    process to foster the development of critical minerals derivatives
    markets that can enable critical minerals trading and risk management,
    which could promote growth in this industry?
        Answer. Congress should require that the CFTC study the rapidly
    growing critical minerals market to understand which factors are
    driving volatility and pricing in these commodities and to guard
    against manipulation or excessive speculation. Congress should also
    require the CFTC to work with exchanges on listing standards related to
    sourcing and location of production.\8\ The CFTC should work to
    increase price transparency and should work with exchanges to address
    the physical challenges of trading these minerals, which could enhance
    market depth and liquidity.\9\ As discussed above, that will require
    the CFTC to have a budget that will enable it to hire and retain
    personnel with the experience and expertise necessary to fulfill these
    functions as well as the technology to back them up and identify
    manipulation and excessive speculation.
    ---------------------------------------------------------------------------
        \8\ See Statement of Commissioner Christy Goldsmith Romero: The
    Role of Copper and Other Metals inthe Electrification of America,
    (June 27, 2023), https://www.cftc.gov/PressRoom/SpeechesTestimony/
    romerostatement062723.
        \9\ Reese Epper, Brad Handler, and Morgan Bazilian, Revitalizing
    the future economy: Critical mineralderivatives could bring stability,
    World Economic Forum (Apr. 29, 2024), https://www.weforum.org/stories/
    2024/04/revitalizing-the-future-economy-a-critical-mineral-derivative-
    market-could-bring-stability/.
    ---------------------------------------------------------------------------
                                   attachment
    Considerations on the Evolution and Development of Critical Minerals
            Markets
    May 2025

    Prepared by: Members of the Role of Metals in Transitional Energy
    Subcommittee of the CFTC Energy and Environmental Markets Advisory
    Committee

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              This report has been approved by the Role of Metals in
            Transitional Energy Subcommittee within the CFTC Energy and
            Environmental Markets Advisory Committee (EEMAC). The views,
            analyses, and conclusions expressed herein reflect the work of
            the Subcommittee, and do not necessarily reflect the views of
            the EEMAC, the Commodity Futures Trading Commission or its
            staff, or the U.S. Government. Reference to any products,
            services, websites, organization, trade, firm, or corporation
            name is for informational purposes only and does not constitute
            endorsement, recommendation, or favoring by the U.S.
            Government.

        Commissioner Summer K. Mersinger, Sponsor
        Christopher Lucas, Chief of Staff, Office of Commissioner Summer K.
        Mersinger, CFTC
        Dr. Ian Lange, Chairman of the Subcommittee on the Role of Metals
        in Transitional Energy
        Lauren Fulks, Secretary of the Committee, Office of Commissioner
        Summer K. Mersinger, CFTC
        JonMarc P. Buffa, Alternate Secretary of the Committee, CFTC
    Table of Contents
    I. Executive Summary
    II. Mineral Markets Overview

        A. Trends and Implications
        B. Evolution of Critical Mineral Production
        C. Mining, Permitting, and Processing Investment Process

    III. Lessons and Linkages from Energy Markets to Consider

        A. Capitalizing on Lessons Learned from the Energy Industry
        B. Encouraging the Natural Expansion of Market Types

    IV. Recognizing that Physical and Financial Commodity Markets are
    Connected
    V. Functional Links between the Energy and the Critical Minerals
    Industries

        A. Link 1: Shift in asset portfolios creates a new reliance on
    critical minerals
        B. Link 2: Energy industry growth segment is reliant on critical
    minerals

    VI. The Role of Traded Markets

        A. The Importance of Benchmarks in Commodity Markets
        B. Lack of Commonality: Fragmentation
        C. Price Discovery and Market Integrity
        D. How Exchanges are Responding to the Current Market

    VII. Key Issues in Mineral Investments and Supply Chain Management

        A. Geopolitics and Mineral Markets
        B. Friendshoring and Onshoring Responses

    VIII. Current U.S. Policy Framework Impacting Critical Mineral Markets

        A. Permitting Reform
        B. Impacts of Tariffs on Critical Minerals
        C. Tax Credits and Incentives
        D. Critical Mineral Lists
        E. Key Takeaways

    IX. Recommendations and Issues to Consider

        A. Recommendations for Regulatory Considerations
        B. Recommendations for Market Participant Considerations

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Members of the Role of Metals in Transitional Energy Subcommittee of the
            CFTC Energy and Environmental Markets Advisory Committee

                  Name                              Affiliation

    Ian Lange (Chairman)              Special Government Employee and
                                       Colorado School of Mines
    Robert Anderson                   Committee of Chief Risk Officers
    Sneha Bagri                       OTC Global Holdings LP
    Greg Broussard                    Cargill Inc
    Jin Chang                         CME Group
    William McCoy                     Morgan Stanley
    John Murphy                       Mizuho Securities USA LLC
    Jamila Piracci                    Life:Powered

    I. Executive Summary
        Mineral markets have seen an increasing role in industrial policy
    over the last 5 years. This is largely due to supply chain, national
    security, and energy policy concerns. In addition, domestic mineral
    sourcing eases the onshoring of the industrial base, to bring jobs and
    economic activity to areas that have fallen behind.
        In a market economy, price discovery and methods of risk management
    are crucial to foster large scale investment. Because of the critical
    role of derivatives in price discovery and risk management, this report
    seeks to inform the Commission of key features of minerals markets and
    related derivatives, as well as provide recommendations for the
    Commission's consideration.
        To assist the Commission, this report reviews the mineral industry,
    as well as the evolution of critical mineral production. Because
    derivatives are best understood when viewed in light of the underlying
    assets to which they relate, this report also describes the mining and
    refining process, supply chain management, mineral investments, as well
    as the stages of development that lead a deposit of minerals to an
    operating mine. The report also shares lessons learned from energy
    markets, including linkages between physical and financial sectors and
    the role of traded markets. Finally, the report discusses the current
    U.S. policy framework impacting critical mineral markets.
        The main recommendation this sub-committee provides is that the
    CFTC is poised to do the most good by doing no harm. Making policy just
    to be able to say that something was done is not suggested. Picking
    winners and losers by expanding the authority given by Congress to the
    CFTC will ultimately hurt consumers and industrial firms. That said,
    these growing but still small mineral markets can be prone to
    manipulation. Given the power of a small group of market participants,
    it is crucial that the CFTC vigorously enforce rules against fraud and
    market manipulation. Moreover, it is critical for the CFTC to be
    staffed with employees who have a strong economics and finance training
    related to minerals, both to conduct responsible market oversight and
    to be astute in the necessary dialogue with market participants in a
    growing and complex industry.
    II. Mineral Markets Overview
    A. Trends and Implications
        Over the past 5 years, industrial policy has increasingly centered
    on minerals markets. This shift is driven by factors such as their
    concentration of production, supply chain concerns, and the anticipated
    rise in clean energy technology installations. As a result, many
    countries have developed critical mineral lists and strategies to
    safeguard their economies and national security.
        Minerals that are now classified as ``critical'' have been used for
    decades or even centuries as inputs to products society has demanded.
    The economic importance of a given mineral changes as technology and
    markets evolve. For example, if critical mineral lists existed 150
    years ago, they would have included iron ore, metallurgical coal, and
    lead--minerals now considered base minerals. The current focus on
    critical minerals reflects changes in economic activities and
    geopolitical priorities rather than the intrinsic importance of these
    minerals.
        The mining process involves separating the suite of minerals in the
    [E]arth from the overburden and from each other to produce a usable
    product. The main product of a mine is typically the mineral with the
    highest profitability or abundance. The main product of most mines is a
    precious or base metal like gold or iron ore. A mine will classify
    specific minerals as a byproduct based on the economic value and tax
    treatment of its production. Critical mineral lists globally feature
    several common minerals, including antimony, cobalt, and gallium, that
    are often classified as byproducts of base metal mining.
        The mineral industry is divided into three sectors:

      1.  Upstream: This sector involves locating mineral deposits, mapping
                their properties, designing mines, and conducting
                preliminary ore separation. It is often what people
                envision when they think of mining--large-scale excavation
                or underground mining.

      2.  Midstream: In this sector, ores and dirt are separated and
                processed into relatively pure products. This may include
                further refinement into the form needed for consumer
                products. Midstream operations resemble manufacturing
                sites, where heat and chemicals are used to process ore-
                rich dirt.

      3.  Downstream: The downstream sector uses refined ores or
                concentrates to manufacture goods. Major companies in this
                sector include household names like General Motors,
                Panasonic, and Lockheed Martin.

        Although mineral markets are becoming increasingly significant,
    they remain relatively small compared to other commodity markets. The
    largest mineral markets, such as those for base metals like iron ore,
    copper, and bauxite (aluminum), are still an order of magnitude smaller
    than the oil and gas markets, with oil and gas market size in trillions
    of dollars compared to tens of billions for most critical minerals.
        Battery minerals that are expected to see substantial growth
    include lithium, cobalt, nickel, manganese, and graphite. Other
    minerals anticipated to rise in demand due to their role in specific
    technologies include neodymium (used in rare earth magnets), gallium
    (for semiconductors), and iridium (for electrolyzers). While these
    minerals are projected to experience significant growth, their current
    market sizes are very small compared to other commodities.
        As mineral markets gain importance, understanding the dynamics of
    these sectors and their growth potential is crucial. For example, wind
    and solar technologies use critical metals like tellurium for
    electrical converters and neodymium for electric motor magnets The
    ongoing development of clean energy technologies and evolving
    industrial policies will continue to shape the demand for various
    minerals. Despite expected growth, the overall market size for minerals
    will remain modest compared to larger commodity markets.
    B. Evolution of Critical Mineral Production
        After World War II, the United States was a leading producer of
    what are now classified as critical minerals. This success was driven
    by efforts from the United States Geological Survey (USGS) and the
    private property rights system, which encouraged investment in domestic
    mineral resources. However, starting in the 1990s and continuing into
    the 2000s, U.S. mining and refining capacities for minor metals, such
    as rare earth elements, gallium and antimony, declined. This reduction
    in minor metal production was due to the closure of low-value-added
    production processes.
        During the same period, China invested heavily in the midstream
    sector--specifically in the refining and processing of minerals. This
    investment was part of a broader strategy to support the rapidly
    expanding manufacturing base that would propel its economy forward. By
    the mid-2010s, China had concentrated much of the global mineral
    production and processing within its borders. Though deposits of
    minerals are well spread throughout the world, the midstream (refining
    and processing) sector is not. China not only has mineral deposits
    within its borders but also has used development mechanisms, such as
    the Belt and Road Initiative (BRI), to increase its firms' decision-
    making authority over upstream production. Currently, most minerals
    that the U.S. and other Western countries define as critical are
    overwhelmingly mined by Chinese firms and processed in China before
    being sold to downstream firms either in China or elsewhere.
        The critical shift in governments' thinking on mineral markets
    emerged following China's rare earth export restrictions to Japan in
    2011. This event caused prices for a subset of those minerals to surge
    by over 1,000%. Given their use in motors from wind turbines to car
    window mechanisms, downstream manufacturers in the Western world
    sounded the alarm about the concentration of mineral production.
        In response to these market dynamics, there has been a renewed
    focus on the mineral industry in the past decade. Most Organization of
    Economic Cooperation and Development (OECD) countries have initiated
    critical mineral lists to identify minerals that need more investment
    and strategic focus. The U.S. has many such lists: the USGS, Department
    of Energy (DOE), and the Department of Defense (DOD). Additionally,
    Canada, the UK, the EU, Australia, and Japan have developed their own
    critical mineral lists and strategies. International efforts, such as
    the Department of State's Mineral Security Partnership, are also
    underway to promote mineral production across OECD countries and other
    allied nations.
    C. Mining, Permitting, and Processing Investment Process
        The stages of development that lead a deposit of minerals to an
    operating mine are many, including considerable effort in government
    permitting. The current process often starts with an exploration
    company using information from state or national geological surveys,
    such as the USGS to determine where high quality deposits are found.
    They raise capital to fund operations that sample the deposit to
    understand the shape of the deposit and expected mineral content
    within, sometimes including information on byproducts that are
    currently critical minerals. Depending on land ownership, permits may
    be needed to explore the deposit.
        Once a good amount of information is available, the company
    exploring the site can sell the deposit to a larger mining firm or try
    to move the deposit forward to becoming a mine. At this stage most
    companies undertake a preliminary economic assessment (PEA) to begin
    the financial process of developing a mine. PEAs have basic information
    on expected capital cost, production, and net present value of a mine
    operation. The goal of the information gathered is to develop a mine
    plan, which would layout the excavation and operation of the mine.
        Next, a feasibility study is undertaken with further delineation of
    the size and scope of the mine. It is at this point that the permitting
    process becomes a larger issue for the company to consider. Most mining
    projects in the United States have a Federal nexus, either through the
    deposit being on Federal land or the need for a Federal water quality
    permit. This starts the National Environmental Policy Act (NEPA)
    permitting process to ensure that the proposed mine minimizes its
    negative impact on the environment and local communities. A mine will
    also have to obtain permits from any relevant state and local
    jurisdiction.
        While the PEAs and feasibility studies are being undertaken, public
    companies are required to share this information with investors as part
    of Securities and Exchange Commission requirements. This requirement
    was updated in 2018, known as S-K 1300, to require more complete
    information be provided on mineral estimates within a deposit.
        The mining company uses the information contained in their
    feasibility studies to acquire funding from investors through a number
    of possible mechanisms. There is traditional bank financing where a
    bank provides a loan to the mining company for capital expenses that
    will be paid back with interest from the sale of mineral concentrate.
    Streaming is a financing mechanism where money is provided up front for
    a percentage of the value of the concentrate that is produced at the
    mine. A number of private equity firms will invest in a mine for a
    share of the equity in the mining company.
        How one values the mines production is more difficult than in many
    of the energy markets. A large percentage of critical minerals do not
    have a standard product traded on an exchange that helps market
    participants learn of future prices. In fact, many critical mineral
    markets have no exchange they are traded on and thus market
    participants require specialized consulting services to provide
    estimates of prices that are occurring in bilateral contracts. The rest
    of this report will detail what we can learn from the experience in
    energy markets, the role that futures markets play, and the current
    policy framework for the mineral industry. The report concludes with
    some recommendations.
    III. Lessons and Linkages from Energy Markets to Consider
        Negative impacts on our energy industry's financial health can
    significantly impact our wider economy. As our energy industry
    continues to transition away from hydrocarbon reliance and increases
    emphasis on renewables and alternative energy sources, risk management
    of exposures to critical minerals becomes increasingly important. As a
    result, access to healthy markets for critical minerals is becoming
    increasingly vital to the energy industry and our economy overall. It's
    true that compared to critical minerals markets today, energy markets
    are much larger in terms of physical market value,\1\ and much more
    liquid in terms of traded market churn rate.\2\
    ---------------------------------------------------------------------------
        \1\ Sources: IEA Gas Market Report, Q12024; EIA.gov Natural Gas
    Statistics; Abbax & CCRO Analysis.
        \2\ Churn Rate is ratio between the derivatives volumes and
    physical market size. Sources: https://www.fastmarkets.com/insights/
    the-rise-of-the-lithium-futures-market/; IEA Gas Markets Report, Q1
    2024; https://www.cmegroup.com/education/articles-and-reports/the-
    global-rise-of-henry-hub-liquidity.html.

              Market Value \1\                  Market Churn Rates \2\
                  2022, $B                    2019 to 2023, range & avg.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    A. Capitalizing on Lessons Learned from the Energy Industry
        Notwithstanding these challenges at hand, looking forward at the
    widely forecasted growth in markets for critical minerals, there are
    several noteworthy parallels with energy markets to consider. These
    parallels highlight opportunities for critical minerals markets to
    benefit greatly from lessons learned in the energy industry over the
    last 2 decades. These lessons learned could be important to the CFTC
    because they address both advancing the industry's opportunities for
    risk management and assuring the integrity of markets.
    B. Encouraging the Natural Expansion of Market Types
        As the energy industry continues to develop new ways to deliver the
    types of energy sources in demand, new products and markets have
    emerged. For each market, we see that a natural expansion of market
    types is needed to support industry progress. In the energy world, we
    have seen that market types will expand from physical only to physical
    and financial across these broad groups:

      1.  ``Bilateral'' markets--where counterparties transact directly
                with each other. Terms are bespoke.

      2.  ``Third-Party Facilitated'' markets--brokers and electronic
                transaction platforms facilitate counterparty discovery and
                more frequent transactions. Some standardizations with
                retention of some of the bilateral transaction
                flexibilities.

      3.  ``Exchange'' markets--highly liquid, highly standardized
                products, with financial clearing. Provides greatest
                transparency into forward prices, within the carefully
                defined products, commodities, and geography.

        It is important to note that in gas and power, the CFTC has played
    an important role in encouraging the developments needed to support the
    growth in bilateral markets and exchange markets. The encouragements
    have ranged from supporting comments directed at constructive industry
    initiatives, to regulatory mandates that make a market development step
    inevitable. The CFTC could consider encouraging companies that are
    minerals market participants to increase their activity in bilateral,
    third-party facilitated, and exchange markets, even as market
    innovators first present them to the industry.
    IV. Recognizing that Physical and Financial Commodity Markets are
            Connected
        In the last 2 decades, experience with dramatic missteps in trader
    behaviors at some energy companies has helped clarify that a linkage
    exists between physical and financial energy markets. Armed with this
    understanding, the CFTC was able to establish jurisdiction and drive,
    via the physical market regulator (the Federal Energy Regulatory
    Commission), new requirements designed to reduce the threat of
    cascading credit risks and the potential for market manipulation. For
    example, consider new requirements for the risk management capabilities
    of market participants in power markets. Similar compliance standards
    might be appropriate given a similar linkage between physical and
    financial markets for critical minerals.

    ------------------------------------------------------------------------

    -------------------------------------------------------------------------
        ISO's have generally converged on a similar set of eight risk mgt.
     principles for market participants, paraphrased:

        1. . . . The risk mgt. framework is documented in a risk
        policy . . .
        2. . . . organization . . . clearly . . . segregates trading and
         risk mgt. functions
        3. . . . authority over the types of transactions (to be
        traded) . . .
        4. . . . traders have adequate training relative to their
        authority . . .
        5. . . . risk limits are in place to control risk exposures
        6. . . . Reporting . . . ensures [risks] and exceptions are
         communicated . . .
        7. . . . qualified independent review of trading activities
        8. . . . periodic valuation or mark-to-market of risk positions
    ------------------------------------------------------------------------

        By reducing the risks of cascading credit risks and the potential
    for market manipulation, confidence in markets can increase, which in-
    turn encourages new market entrants, and strengthens market liquidity.
    V. Functional Links between the Energy and the Critical Minerals
            Industries
    A. Link 1: Shift in asset portfolios creates a new reliance on critical
            minerals
        As energy company asset portfolios become increasingly
    characterized by renewable generation and associated segments of our
    industry, the industry's reliance on critical minerals markets is
    growing. Recent discussions with Committee of Chief Risk Officers
    (CCRO.org) members have found a growing interest among energy companies
    in monitoring and engaging in critical minerals markets for risk
    modeling and management purposes.
    B. Link 2: Energy industry growth segment is reliant on critical
            minerals
        Power market independent system operators have shared that they are
    seeing a significant increase in new market participants coming from
    the rapid-growth renewables industry. Many of these are innovative but
    higher-risk companies that are funded and structured in ways that
    challenge traditional methods for assessment of creditworthiness. In
    addition, their risk management capabilities are often limited. All
    this, given that the nature of their business demands protection from
    potential volatility of critical minerals pricing and power market
    prices is creating a risk concentration challenge for power markets to
    address.
    VI. The Role of Traded Markets
    A. The Importance of Benchmarks in Commodity Markets
        In order for any commodity to form the basis of contracts that are
    traded in a liquid and transparent market, it must have a reliable
    benchmark price to serve as a standard reference point reflecting the
    commodity's current value.\3\ Specifically, ``benchmarks are crucial in
    determining the spot value of crude oil, setting prices for term
    contracts, supporting hedging and risk management, and attracting
    managed money to oil markets.'' \4\
    ---------------------------------------------------------------------------
        \3\ https://www.argusmedia.com/en/methodology/key-prices/argus-
    benchmarks.
        \4\ https://www.ice.com/why-the-world-needs-benchmarks-and-
    characteristics-of-benchmarks.
    ---------------------------------------------------------------------------
        Highly traded commodities often have well-established benchmarks.
    Market participants may use these benchmarks for trading contracts on
    other commodities that share a similar quality and location to that of
    the commodity that is the subject of the benchmark.\5\ For example,
    natural gas contracts in the U.S. typically rely on the Henry Hub as
    the relevant U.S. benchmark indicating natural gas supply and demand,
    because of its strategic location and significant interconnections with
    other U.S. markets.\6\
    ---------------------------------------------------------------------------
        \5\ http://www.mckinseyenergyinsights.com/resources/refinery-
    reference-desk/benchmark-
    price/.
        \6\ https://www.naturalgasintel.com/why-is-the-henry-hub-important-
    in-relation-to-natural-gas-prices/.
    ---------------------------------------------------------------------------
        A market can benefit significantly when transactions reference a
    single transparent price published by a regulated benchmark
    administrator. For example, in the precious metals markets, the
    industry can look to the LBMA Gold and Silver Prices as homogeneous
    products governed by LBMA definitions.\7\
    ---------------------------------------------------------------------------
        \7\ Precious Metals Benchmark Statement, the ICE Benchmark
    Administration, Date of publication, 14 May 2018, last updated, 23
    October 2023, p. 5.
    ---------------------------------------------------------------------------
        In the metals markets, established benchmarks include the London
    Metal Exchange (LME) for non-ferrous metals like aluminum, copper,
    zinc, nickel, lead, and tin, and the Chicago Mercantile Exchange (CME)
    for base metals. The LME and CME publish settlement and futures prices
    for these metals, providing reliable references for pricing and
    trading.
        However, for larger critical metals such as cobalt and molybdenum,
    there is currently no internationally recognized benchmark that firms
    can rely on. While there are published price sources for these critical
    metals, none have yet achieved the status of a global benchmark.
    B. Lack of Commonality: Fragmentation
        Unlike prices for commodities that trade in global, highly liquid
    and transparent markets, such as oil, gold and silver, prices for
    critical metals can be vulnerable to fragmentation. Some of the factors
    that may be the cause of such fragmentation include concentrated
    production, the limited substitutability of both supply and
    consumption, and the vital role some of these critical metals play in
    the technologies for the transition to renewable energy. Fragmentation
    of these markets is heightened as a result of recent geopolitical
    conflicts. During a panel discussion in October 2023 hosted by the
    Atlantic Council, IMF economist Martin Stuermer said that ``in a
    fragmented world, the prices of critical minerals like copper, nickel,
    cobalt and lithium would be 300% higher than in a world with fully
    integrated markets. And those higher costs, he said, would cause
    roughly 30% less investment in renewables and electric vehicles in
    fragmented markets, compared with integrated markets.''\8\
    ---------------------------------------------------------------------------
        \8\ https://www.spglobal.com/commodityinsights/en/market-insights/
    latest-news/oil/100323-fragmented-markets-from-geopolitical-conflict-
    threaten-to-throw-energy-transition-off-track.
    ---------------------------------------------------------------------------
        Strong and stable correlation between spot and futures commodity
    prices is a key factor for the efficiency of hedging strategies. The
    absence of correlation or sudden changes in the level of correlation
    may have detrimental implications for a market participant's ability to
    hedge and conduct effective risk management.\9\ For commodities for
    which there is not a highly liquid and transparent futures market, the
    need to understand correlations between the prices of different
    commodities at different time and place is of greater import.
    ---------------------------------------------------------------------------
        \9\ Nikos Nomikos, Nikos Papapostolou, Panos Pouliasis, Analysis of
    Volatility and Correlation for CME Steel Products, Report
    CME_Steel_Correlations (cmegroup.com)
    ---------------------------------------------------------------------------
        When an existing correlation breaks down, market participants must
    face the problem that any risk protection proffered by portfolio
    diversification is undermined or lost completely.\10\ Gold and silver
    have historically exhibited a positive correlation of close to 0.89.
    The prices of platinum and copper also exhibit a strong positive
    correlation with gold and silver.\11\ Because of the lack of reliable
    benchmarks for most critical metals, however, it is challenging to
    identify any strong correlation among the prices of these metals and
    thus whatever correlation may exist, is vulnerable to breakdown.
    ---------------------------------------------------------------------------
        \10\ Correlation-Breakdowns-Spread-Positions-and-CCP-Margin-Models-
    20210131.pdf (https://www.eachccp.eu/wp-content/uploads/2021/02/
    Correlation-Breakdowns-Spread-Positions-and-CCP-Margin-Models-
    20210131.pdf) (eachccp.eu)
        \11\ https://www.tastylive.com/news-insights/metals-dont-overlook-
    platinum-and-copper.
    ---------------------------------------------------------------------------
    C. Price Discovery and Market Integrity
        Price discovery varies significantly among metal groups. Precious
    metals and many base metals traded on established futures exchanges
    like CME and LME are largely viewed as liquid and transparent. In
    contrast, contracts for other metals that are primarily traded over-
    the-counter (OTC) bilaterally or through the broker market are seen as
    less liquid and less transparent. These OTC markets may be
    significantly smaller and face challenges in the collection of reliable
    and comprehensive price information. The price integrity of these niche
    markets may also be questioned due to the lack of a governing body that
    oversees the collection and publication of such prices.\12\ This lack
    of reliable price discovery due to the size of the market and the
    limited open interest of exchange traded contracts may be evidenced in
    the niche markets of a number of critical metals, including cobalt and
    lithium.
    ---------------------------------------------------------------------------
        \12\ Five Minutes with Marc Dulin D John Lothian News https://
    johnlothiannews.com/marc-dulin-five-minutes/.
    ---------------------------------------------------------------------------
        Even in the case of an LME contract, such as class 1 nickel, there
    can be concerns regarding the reliability of the contract as a pricing
    source. During the year following the LME's suspension of trading in
    nickel following its dramatic price increases, some market participants
    have shifted to alternative pricing mechanisms for the metal. For
    example, there are indications that Chinese producers of nickel are
    increasingly using Chinese renminbi prices linked to nickel sulphate
    prices for nickel produced in Indonesia for the electric vehicle
    industry. This change has been attributed to developments where nickel
    pricing has increasingly been referenced to China's OTC market as
    opposed to the LME and other conventional exchanges and has also
    contributed to greater volatility in LME nickel prices. In addition,
    although nickel and cobalt chemical prices have historically been
    determined by reference to their respective finished metal prices,
    there is evidence that market participants are more frequently
    determining the price of the unfinished chemical metals
    independently.\13\
    ---------------------------------------------------------------------------
        \13\ Are the nickel and cobalt chemical markets shifting away from
    traditional pricing mechanisms? D S&P Global Commodity Insights
    (spglobal.com).
    ---------------------------------------------------------------------------
        The significant increase in nickel contract prices on the LME in
    March 2022 was reportedly due to a large short position held by a large
    stainless steel producer with substantial processing operations in
    Indonesia. One contributing factor to this volatility in nickel was the
    fact that settlement against LME contracts requires delivery of an
    approved brand of the LME, which is mostly Class 1 high-purity nickel
    produced by large western and Russian producers. Much of the nickel
    from Indonesia, which is the form of nickel pig iron, ferronickel,
    nickel matte and mixed hydroxide precipitate (MHP), a common form of
    nickel feedstock used by the battery industry, is not eligible for
    delivery into the LME. While MHP for the battery industry was
    historically priced with reference to LME nickel prices, increasingly
    market participants have priced MHP on the basis of the Chinese nickel
    sulphate price, minus the cost to convert MHP to sulphate.\14\
    ---------------------------------------------------------------------------
        \14\ A year after LME nickel chaos, battery supply chain seeks
    alternative prices D Benchmark Source (benchmarkminerals.com).
    ---------------------------------------------------------------------------
    D. How Exchanges are Responding to the Current Market
        The CME has seen growing activity in the minor metals/battery
    metals space, having launched financially settled contracts on Cobalt
    Metal (2020), Lithium Hydroxide (2021), Molybdenum Oxide (2023), Cobalt
    Hydroxide (2023) and Lithium Carbonate (2023) as well as options on
    Lithium Hydroxide and Cobalt Metal (2023). As of September 25, 2024,
    these contracts have a combined open interest of over 50,000 metric
    tons, demonstrating the adoption of these contracts by the physical
    market as suitable hedging tools.
        In July 2023, the Guangzhou Futures Exchange (GFEX) launched a
    lithium carbonate futures contract. Unlike the CME's lithium hydroxide
    futures contract, which is financially settled against Fastmarkets
    reference spot prices for the North Asian market (China/Japan/South
    Korea), the GFEX's lithium contract is physically settled. However, it
    has also been the subject of significant volatility prompting the GFEX
    to exercise a series of measures such as expanding trading bands,
    capping new positions, raising fees and approving additional
    warehouses.\15\
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        \15\ https://www.bloomberg.com/news/newsletters/2023-12-18/china-s-
    lithium-trading-success-has-been-a-wild-ride.
    ---------------------------------------------------------------------------
        The LME, owned and managed by HKEX, the Hong Kong Exchange, has
    launched several contracts relating to battery production over the
    years. Physically delivered Cobalt and Molybdenum (both launched in
    2010), were the first to be listed, followed by financially settled
    Cobalt (2019), financially settled Molybdenum (2019--replacing the
    physically settled version) and financially settled Lithium Hydroxide
    (2021). As of September 25, 2024, these contracts have a combined open
    interest of 180 metric tons, with the financially settled contracts
    having yet to trade.
        Lithium hydroxide has a limited shelf life, meaning it can only
    remain in storage for a limited period (12 months or less) before its
    quality deteriorates. In addition, high purity (battery-grade) lithium
    hydroxide from a specific supplier needs to be extensively tested
    before being permissioned to be used in the manufacturing of a
    particular lithium-ion battery type. Therefore, battery manufacturers
    are typically not able to switch to an alternative supplier of lithium
    hydroxide prior to testing the material extensively. These challenges
    also apply to lithium carbonate, but to a somewhat smaller extent.
        Since its launch, the GFEX contract has attracted more volume than
    the CME and other established exchanges. Although the CME's lithium
    contract has not attracted as much volume as GFEX the cash settled
    lithium hydroxide contract has drawn increased activity, with 2024 YTD
    volumes at over 66,000 tons traded versus 20,000 tons the year prior.
        It is worth recalling that these two contracts differ in
    substantial ways: GFEX is a domestic Chinese exchange, while CME is a
    U.S. regulated exchange. The GFEX contract allows for physical delivery
    of lithium carbonate (either technical or battery grade) within
    mainland China, while the CME Group is financially settled against an
    import price for lithium hydroxide (battery-grade) in the North Asia
    region (China/Japan/South Korea). For western market participants,
    taking or making physical delivery in mainland China may create
    significant legal, operational, and compliance challenges. Finally, it
    is also worth considering the user base of each contract: Chinese
    futures markets typically attract a high level of retail trader
    participation while trading in the CME lithium hydroxide contract is
    dominated by institutional traders, which includes bank commodity
    desks, merchant traders active in the physical underlying, and
    institutional funds.
        In the cobalt space, CME's contract, which is indexed to
    Fastmarket's assessment for cobalt metal in-warehouse Rotterdam, has
    seen strong acceptance by the industry, with open interest extending
    out to 2028. CME's lithium hydroxide contract has open interest out to
    2026. Open interest in deferred months is typically a sign of a healthy
    futures market, in which future sales or purchases of the underlying
    physical material can be hedged against adverse price movements over a
    long-time horizon.
        As interest in battery and other critical minerals increases,
    exchanges like the CME continue to engage all components of the supply
    chain in determining which metals and specifications are best suited to
    provide the most accurate and relevant hedging tools for the physical
    marketplace.
    VII. Key Issues in Mineral Investments and Supply Chain Management
    A. Geopolitics and Mineral Markets
        Renewable energy goals are expected to increase the demand for
    critical minerals such as copper, lithium, and rare earth elements.
    Because these minerals are essential for technologies driving energy
    transition goals as well as continued technological advancements, they
    have also become tools of geopolitical leverage.
        China's control over the supply of critical minerals and its
    efforts to dominate the market through initiatives like the BRI and new
    futures contracts (e.g., lithium carbonate on the GFEX and nickel
    sulfate on the Shanghai Futures Exchange (SHFE)) are raising concerns
    about supply chain vulnerabilities and political manipulation. The
    introduction of new metals contracts on Chinese futures exchanges
    aligns with China's strategy to assert pricing power and control over
    global metal markets. This expansion reflects China's broader agenda of
    establishing dominance in the critical minerals space. Concerns exist
    over access for foreign players and the impact of China's
    interventionist market policies. China's substantial domestic market
    and ability to influence global prices pose significant challenges for
    international market stability. The LME is planning to launch new
    metals contracts based on prices from the SHFE. This move reflects an
    effort to integrate more closely with China's market but also raises
    concerns about the extent of Chinese regulatory influence over global
    prices.
    B. Friendshoring and Onshoring Responses \16\
    ---------------------------------------------------------------------------
        \16\ See The Economist on Friendshoring (https://www.economist.com/
    the-economist-explains/2023/08/30/what-is-friendshoring); McKinsey on
    Benchmarking Prices (http://www.mckinseyenergyinsights.com/resources/
    refinery-reference-desk/benchmark-price/); S&P Global on Market
    Dynamics (https://www.spglobal.com/commodityinsights/en/market-
    insights/latest-news/oil/100323-fragmented-markets-from-geopolitical-
    conflict-threaten-to-throw-energy-transition-off-track).
    ---------------------------------------------------------------------------
        The interplay between onshoring, friendshoring, and geopolitical
    strategies shapes the current landscape of mineral investments and
    supply chains. While these strategies aim to enhance security and
    reduce dependencies, they also introduce complexities related to cost,
    efficiency, and geopolitical risks. As the global market for critical
    minerals evolves, stakeholders must navigate these challenges while
    adapting to shifting dynamics and maintaining supply chain resilience.
        As described below, the U.S. approach to counter China's hold on
    the supply chain combines both friendshoring and onshoring.
    Friendshoring involves relocating parts of the supply chain or
    manufacturing process to countries that are political or economic
    allies. This strategy aims to reduce dependency on adversarial nations
    and bolster regional economic ties. Onshoring refers to moving business
    operations back to the country from which they were previously
    relocated overseas. This approach aims to revitalize domestic
    industries and reduce reliance on foreign supply chains.
        There are a number of considerations relating to a friendshoring
    strategy, including:

      1.  Efficiency vs. Geopolitics: Friendshoring might lead to less
                efficient production due to geopolitical considerations
                overriding economic efficiency. Balancing geopolitical
                security with cost efficiency is a key challenge.

      2.  Economic Costs: Studies suggest that friendshoring could
                negatively impact real GDP in America and Europe by 0.1-1%
                and have even more severe effects on countries caught
                between opposing economic blocks. The IMF and ECB have
                highlighted significant potential economic costs associated
                with friendshoring.

        Similarly, an onshoring strategy comes with its own considerations
    to weigh:

      1.  Environmental Protections: The U.S. enforces stringent
                environmental regulations that might not be present in
                other countries, potentially impacting the comparative
                advantage of offshore production.

      2.  Transportation Costs and Carbon Footprint: Moving operations back
                to the U.S. involves considering transportation costs and
                associated carbon emissions, which can affect the overall
                cost-benefit analysis.

      3.  Energy Use: The energy used in extraction and processing might
                not be as clean in other countries, which could offset the
                environmental benefits of onshoring.

      4.  Cost Factors: The economic incentive of lower costs in offshore
                locations often outweighs the appeal of ``clean'' or
                ``green'' energy unless there is a significant price
                differential.

      5.  Political Stability: The reliability of political alliances can
                be unpredictable. Onshoring can reduce dependencies on
                countries with questionable environmental or human rights
                practices and enhance geopolitical leverage.
    VIII. Current U.S. Policy Framework Impacting Critical Mineral Markets
    A. Permitting Reform
        As noted above, the permitting process is a major component of the
    mining process. Given the challenges of the permitting process,
    Executive Order 14241: Immediate Measures to Increase American Mineral
    Production attempts to expedite this process. At the time of writing,
    15 mineral projects have been added to the Federal Permitting
    Improvement Steering Council's FAST-41 process.\17\ FAST-41 coverage
    for projects provides transparent timetables and ensures collaborative
    management of the Federal permitting process. Prior to 2025, one mining
    project had been given FAST-41 coverage.
    ---------------------------------------------------------------------------
        \17\ The 2015 Fixing America's Surface Transportation Act created
    Title 41 (FAST-41) which established new coordination and oversight
    procedures for infrastructure projects being reviewed by Federal
    agencies. It has three goals: (1) improve early consultation and
    coordination among government agencies; (2) increase transparency
    through the publication of project-specific timetables with completion
    dates for all Federal authorizations and environmental reviews; and (3)
    increase accountability through consultation and reporting on projects.
    See for more details: https://www.energy.gov/oe/fast-41.
    ---------------------------------------------------------------------------
    B. Impacts of Tariffs on Critical Minerals
        As discussed previously, there are geopolitical concerns in
    critical minerals markets. In an attempt to address Chinese market
    power in minerals markets, the Department of Commerce has launched two
    Section 232 investigations related to critical minerals in 2025.\18\
    Section 232 investigations allow the executive branch to restrict trade
    with countries that abuse their market power. The first, in February
    2025, is for copper and the second, in April 2025, for rare earths and
    critical minerals derivative products. Increasing the price of imported
    minerals and derivative products would make it easier for domestic
    producers to find investors and implement their projects.
    ---------------------------------------------------------------------------
        \18\ Section 232 of the Trade Expansion Act of 1962 provides the
    President with authority to impose trade restrictions, such as tariffs
    or quotas, following an affirmative determination by the Secretary of
    Commerce that certain imports threaten to impair U.S. national
    security. See for more details: bis.gov/press-release/commerce-
    launches-section-232-investigation-imports-processed-critical-minerals-
    derivative-products.
    ---------------------------------------------------------------------------
    C. Tax Credits and Incentives
        In addition to permitting reform and tariffs, governments across
    the globe have placed their thumbs on the scale of mineral markets to
    steer investments in line with current energy transition policy goals.
    In general, subsidies, credits, and tax incentives create scaffolding
    for markets that policy makers wish to see flourish notwithstanding a
    prevailing imbalance between supply and demand. In the U.S., such
    actions have ranged from local and state to Federal legislative
    efforts. While state level actions are significant, this report focuses
    on Federal efforts because of their high relevance to the CFTC's role
    in derivatives market oversight. Within that context, we focus on
    policies creating incentives related to the electrification of
    buildings, vehicles and homes, along with the sourcing and production
    of component minerals.
        The most prominent pieces of recent legislation promoting
    electrification, including the related infrastructure and sourcing of
    battery components, are the Inflation Reduction Act (IRA) \19\ and the
    Infrastructure Investment and Jobs Act (Jobs Act).\20\ With respect to
    vehicles, the IRA provides tax credits to families for new and used
    electric vehicles (EVs), subject to certain criteria, such as
    manufacture of the vehicle and manufacture and assembly of battery
    components in North America. A key component of the IRA is the Advanced
    Manufacturing Production Credit, which supports domestic production of
    solar and wind energy components, inverters, battery components, and
    critical minerals.
    ---------------------------------------------------------------------------
        \19\ https://www.congress.gov/117/plaws/publ169/PLAW-
    117publ169.pdf; see also IRA Guidebook (https://www.whitehouse.gov/
    cleanenergy/inflation-reduction-act-guidebook/).
        \20\ H.R. 3684--117th Congress (2021-2022): Infrastructure
    Investment and Jobs Act D Congress.gov D Library of Congress (https://
    www.congress.gov/bill/117th-congress/house-bill/3684).
    ---------------------------------------------------------------------------
        The tools used to promote the market for EVs began with a program
    of tax credits for light-duty EVs under the Energy Improvement and
    Extension Act.\21\ After some changes in the years since that program
    was initiated, the IRA maintained the tax credits for new vehicles but
    established U.S. sourcing requirements through the advanced
    manufacturing investment tax credit, which supports domestic production
    of solar and wind energy components, inverters, battery components, and
    critical minerals.
    ---------------------------------------------------------------------------
        \21\ H.R. 6049--110th Congress (2007-2008): Energy Improvement and
    Extension Act of 2008 D Congress.gov D Library of Congress (https://
    www.congress.gov/bill/110th-congress/house-bill/6049).
    ---------------------------------------------------------------------------
        By subsidizing EVs containing a threshold percentage of critical
    minerals extracted or processed in the U.S. or in a country with which
    the U.S. has a free trade agreement, the IRA utilizes both onshoring
    and friendshoring strategies to cultivate domestic and allied supply
    chains and reduce reliance on countries such as China. While the credit
    for critical minerals has become permanent, other aspects will phase
    out between 2030 and 2032.
        The most important tools for promoting the production of EVs in the
    U.S. are the Corporate Average Fuel Economy (CAFE) standards and the
    greenhouse gas (GHG) emissions standards for vehicles. Automakers have
    been increasingly incentivized to manufacture EVs by rising CAFE
    standards and a credit system that rewards EVs with 6.67 times as many
    CAFE credits as their rated fuel economy would normally dictate.\22\
    The combination of CAFE and GHG emissions credits are likely worth tens
    thousands of dollars per EV sold.\23\
    ---------------------------------------------------------------------------
        \22\ https://www.federalregister.gov/documents/2024/03/29/2024-
    06101/petroleum-equivalent-fuel-economy-calculation
        \23\ https://www.texaspolicy.com/wp-content/uploads/2023/10/2023-
    10-TrueCostofEVs-BennettIsaac.pdf
    ---------------------------------------------------------------------------
        Given the evolving policy environment, Federal subsidies for EVs
    face an uncertain future. If they are reduced or eliminated, this would
    reduce the incentive for automakers to produce and sell EVs in the
    United States. If this occurs, automakers may respond by raising the
    purchase prices for EVs and so U.S. demand will grow more slowly. With
    production of and demand for EVs being more robust in China and Europe,
    U.S. demand could be a relatively small contributor to global demand
    for critical battery materials over the next several years.
    D. Critical Mineral Lists
        Multiple departments within the Federal Government publish critical
    mineral lists with different frequency of updating and definitions of
    critical. Two common ones are the Department of Energy (DOE) and the
    Department of [the] Interior, undertaken by the United States
    Geological Survey (USGS). These two lists are meant to help guide
    research priorities across the government and define eligibility for
    certain tax credits in the IRA. The lists can differ in the minerals
    deemed critical as they have different time frames, scopes, and
    definitions. For example, the USGS lists look at the current U.S.
    economy while the DOE list is for clean energy technologies likely to
    be utilized in the next 10 years.
        Important to this report, it is enlightening to see changes in the
    lists over time to understand how mineral market behavior may change.
    Something that is deemed important today, and thus might benefit from
    the initiation of a new traded product, can quickly become less
    important as technology evolves. A prime example is that of europium,
    used in compact florescent lighting (CFL). The 2011 DOE Critical
    Materials Strategy listed europium as ``Critical'' for both the 2011-
    2015 and 2015-2025 time frame due to the expected increase in CFL
    technology in lighting.\24\ The 2023 DOE Critical Materials Assessment
    does not consider europium as CFL technology has largely been overtaken
    by light emitting diode (LED) technology.\25\
    ---------------------------------------------------------------------------
        \24\ DOE, Critical Materials Strategy, 2011,https://www.energy.gov/
    sites/prod/files/DOE_CMS2011_FINAL_Full.pdf.
        \25\ DOE, Critical Materials Assessment, 2023, https://
    www.energy.gov/sites/default/files/2023-07/doe-critical-material-
    assessmen_07312023.pdf.
    ---------------------------------------------------------------------------
    E. Key Takeaways
        The costs and risk from future technologies do not disappear
    depending on the type of market--they only move from one party to
    another. Derivatives serve a valuable purpose in allowing risk to be
    reallocated according to risk appetite, thereby lowering costs across
    the board. The government curated drivers of critical mineral markets
    may rewire the risk transfer and cost smoothing attributes of the
    related derivatives.
        The purpose of hedging for critical mineral markets is to protect
    against a movement in value against one's expected risk profile for
    those minerals. In a situation where the fundamentals of a product will
    include the social implications of a curated path for what vehicles
    should be produced, as well as the ultimate environmental outcome of
    that path, hedging could be inordinately expensive until those factors
    can be reliably modeled.
        This leads to a few potential outcomes (not necessarily negative
    but nonetheless foreseeable):

      1.  Because derivatives naturally serve as price discovery
                mechanisms, they are a valuable window into the vibrancy
                (or paucity) of an underlying physical market. If the
                underlying market is weak, the derivatives market will
                confirm it.

      2.  Since the underlying market for minerals is so technology
                dependent, the derivatives market could suffer from shocks
                and unusual volatility when changes occur that are not
                expected.

      3.  To be useful for hedging, the derivatives market for critical
                minerals may need to be quite bespoke, requiring OTC
                derivative structures rather than exchange traded products.
    IX. Recommendations and Issues to Consider
    A. Recommendations for Regulatory Considerations
        Legislation that chooses market winners and losers can have
    unfortunate consequences. But at least the U.S. Congress is an elected
    body authorized to make law, whether well or ill advised. In contrast,
    the CFTC, as an independent agency within the Executive Branch, lacks
    the authority to make law by favoring one market over another. Rather,
    its role is to foster fair and efficient derivatives markets,
    supporting innovation and market integrity. Moreover, although the CFTC
    retains anti-fraud and anti-manipulation enforcement authority over the
    physical commodity markets, the CFTC does not have the authority to
    regulate the underlying physical markets; therefore, it has no more
    right to fix the evolution of critical mineral markets than it has to
    fix the evolution of established markets such as corn, oil, or
    securities.
        It is also not always the case that ``doing something'' is a
    constructive course. Instead, the CFTC is poised to do the most good by
    doing no harm--that is, not pressing the scales in favor of any one
    market. Derivatives trading on critical minerals, whether nascent or
    mature, fits within existing regulatory oversight mechanisms. Moreover,
    given the role that derivatives play in price discovery and liquidity
    enhancement for underlying commodity assets, it is critical that the
    CFTC not choose commodity winners or losers by either lowering or
    raising the bar in related derivatives markets. Importantly, the CFTC
    does not possess discretionary authority to lend Congress an extra hand
    in curating manufacturing incentives and consumer needs.
        The CFTC should recognize the importance of allowing the markets it
    oversees to develop and function properly. As described earlier in this
    report, critical mineral markets are small, lack established benchmarks
    and suffer from fragmentation. This is far from ideal for a mature
    market; however, it is a reasonable start for a market whose importance
    appears likely to grow. Although some would argue that such a set of
    factors must be altered in order to support the aspirations of the
    incentives and standards discussed above, the price discovery function
    of derivatives in mineral markets could be significantly impaired if
    the CFTC took any action toward critical mineral derivatives that was
    different from its oversight relating to other underlying commodities.
        What the CFTC should do in light of current energy policy affecting
    mineral markets is continue to stop fraud and manipulation of the
    derivatives markets it oversees, including as those markets evolve and,
    even if they become the tool of geopolitics. The temptation is strong
    to push the boundaries of what one controls, but the CFTC can do the
    most good by continuing to do what it does well within its authority.
        One recommendation is that the CFTC continue to acquire more
    knowledge about the state of mineral markets and the underlying
    technologies that drive demand for these minerals. As exchanges
    increase their offerings related to minerals, it is important for CFTC
    staff to have a strong economics and finance training related to
    minerals. This will ensure proper functioning of these derivative
    markets through informed regulatory and enforcement actions.
    B. Recommendations for Market Participant Considerations
        As metals continue to be mined, refined, and recycled in response
    to supply and demand, exchanges must continue to adapt as well. This
    ever-changing landscape offers opportunities to introduce new contracts
    for risk management and also requires a continuous assessment of the
    current trading and regulatory environment as well as the
    specifications underlying these exchange traded derivatives. For
    example, the LME nickel event in 2022 demonstrates the importance of
    running an orderly market and aligning exchange deliverable product
    specifications to physical market realities.
        In the last 2 decades, the energy industry experienced dramatic
    financial losses from past missteps, which motivated regulators to
    force today's new requirements. However, before such undesirable
    experiences in minerals markets force the regulator's hand, the CFTC
    may be able to encourage similar requirements for critical minerals
    markets on an industry-developed basis. Today, energy industry groups
    like the Committee of Chief Risk Officers (CCRO.org), International
    Energy Credit Association (IECA.net), National Petroleum Energy Credit
    Association (NPECA.org), and others support the development and
    adoption of new industry standards, and support compliance with
    regulatory requirements. The CFTC might also encourage development of
    critical minerals industry groups that could fill such a standard-
    developer role for critical minerals trading and risk management.
        Technological advances and consumer preferences continually alter
    the needs of the firms to ensure a reliable flow of goods and services
    to the market. Understanding when society is better served with a
    formal trading contract is difficult but the task is best served in the
    hands of private exchanges. The current situation around cobalt is a
    prime example. The battery market at this stage is dominated by two
    main chemistries: Nickel Manganese Cobalt (NMC) and Lithium Iron
    Phosphate (LFP). As their names suggests, LFP batteries do not contain
    cobalt while NMC batteries do contain cobalt. The Cobalt Institute's
    2023 Cobalt Report has EVs accounting for 45% of total demand of cobalt
    and batteries of all kind accounting for 93% of the growth in cobalt
    demand for 2023.\26\ Should LFP batteries become the dominant chemistry
    for batteries in the near future, the demand for cobalt would likely
    subside along with the open interest in a futures contract.
    ---------------------------------------------------------------------------
        \26\ Cobalt Institute, Coblat Market Report 2023. https://
    www.cobaltinstitute.org/wp-content/uploads/2024/05/Cobalt-Market-
    Report-2023_FINAL.pdf.
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