Joe Weisenthal has a small opinion piece on why the CFTC allows real-money prediction markets on movie business, and bans those on politics or sports. The problem in the piece is that Joe is 100% wrong.
- Joe says that there can’-t be hedging in politics. Wrong. You can hedge your political ads on InTrade.
- Joe says that there can’-t be hedging in sports. Wrong. Businesses that operate inside a stadium could hedge the risk of the home team losing (which means less business for them).
So. why does the CFTC shy away from hedging on sports and politics? –->- Politics. The CFTC is afraid of the US Congress, who would object to politics and sports “-gambling”-.
The CFTC is a weak institution, in the DC sphere of power. In the recent past, the CFTC lost one important battle against other parts of the US government —-even though it was the CFTC that was on the right side of the issue at the time. With politics and sports betting, the CFTC does not want to lose another battle. It is a question of survival.