Opening Statements

WASHINGTON — House Committee on Agriculture Chairman Glenn "GT" Thompson (PA-15) delivered the following opening statement at today's Subcommittee on Commodity Markets, Digital Assets, and Rural Development hearing, "Examining Customer Protections and Market Integrity in Sports Event Prediction Markets."

Remarks as prepared:

Thank you, Chairman Johnson.

And thank you for convening this hearing. It is an important hearing on a complex set of issues.

It is the first hearing, but not the last hearing, that this committee will undertake to examine prediction markets.

As I said this spring, this is a transformative time for the Commission and financial markets.

This is due in no small part to the growth of new types of derivatives instruments offered in U.S. markets, including event contracts.

This hearing provides us with an opportunity to address the confusion and debate around the role and authority of the Commission in these markets.

Over the last 100 years, Congress intentionally constructed a federal framework for offering products and trading within derivatives markets.

As I have said before, the Commodity Exchange Act is clear: The Commission’s authority is broad and deep. 

The definitions of commodity and swap are sweeping, and the Commission’s authority over transactions on registered exchanges is complete and exclusive. 

And it is important that this robust jurisdiction is protected and respected.

But, understanding the Commission’s jurisdiction is not the end of the public policy questions which we must consider.  

Many members have raised important questions about the rules for trading event contracts and the appropriateness of certain contracts to be listed for public trading. Especially around sports-related event contracts.

The Commission has significant tools currently at its disposal to address many of these concerns.

Just last month, the Commission proposed the first of potentially several rulemakings focused on bringing clear rules to prediction markets. 

This one was focused on defining the public interest and implementing the special rule for event contracts.

Most relevant to today, the proposed rule explained how it seeks to determine when a contract involving gaming is contrary to the public interest.

This is an important rulemaking, and I am encouraged by the thought and work which went into the draft. It provides clear standards for the public interest and workable definitions for the key terms which have lingered undefined for so long. 

Where the Commission’s authority is found to be insufficient to meet its mandate to support responsible innovation and protect market participants, we will consider legislation as may be appropriate.

But first, the Committee must understand if such gaps exist.

We must also consider federal pre-emption and any impact to the federal regulatory framework which Congress clearly provided under the CEA and has reaffirmed for a century.

I believe that the markets overseen by the Commission must be fair, safe, and useful.

Today’s hearing is another step in that process. The testimony received today will help our Members to further understand the law and the Commission’s authorities.

Thank you, and I yield back.