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CFTC declares market emergency, orders Kalshi to continue to operate in New York

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Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#201

Post by brainwad »

skillina wrote: post #35
pdonis wrote: post #10

Earlier quoted context omitted.

What exactly is the difference between a financial derivatives exchange and a gambling platform? Both involve placing bets on uncertain future outcomes.

Traditional derivatives can be used to trade the risk that would already exist with or without the existence of the derivatives market. Prediction markets create risk out of thin air.

If you consider not just money, but utility, then there is already a lot of pre-existing risk that sports derivatives could hedge. Theoretically, fans should short their team to be utility-neutral whether their team wins or loses. However in practice fans tend to double down by adding monetary risk to their pre-existing emotional risk...

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#202

Post by brainwad »

subtlejellyfish wrote: post #71
xp84 wrote: post #49

Earlier quoted context omitted.

ELI5 why it's better for you to place a $10,000 bet that, say, GOOG falls below $300 by February 2028, than to bet the same that the Pats win the Super Bowl? They're both gambling.

There's a legitimate, non-gambling use case: hedging against your existing position in GOOG. There's no equivalent instrument for sports.

There no requirement to be long the underlying before buying them though. And most people trading options aren't using them this way. Hedging is a legitimacy figleaf for options, everyone knows that most of the volume is in speculation, especially from retail.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#203

Post by mminer237 »

TheCoelacanth wrote: post #186
mminer237 wrote: post #160

Earlier quoted context omitted.

I think the issue is that Kalshi is based in New York, so banning them from operation in New York is effectively shutting them down.

I don't see the relevance. If they don't want to follow New York law, they should move somewhere else.

I don't disagree. People just seemed confused how New York was trying to shut them down nationwide.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#204

Post by zug_zug »

pdonis wrote: post #10
pamcake wrote: post #2

So the CFTC frames Kalshi as a financial derivatives exchange for the financial instrument category of event contracts, dismissing NYs characterization of it as a gambling/betting platform. Interesting.

What exactly is the difference between a financial derivatives exchange and a gambling platform? Both involve placing bets on uncertain future outcomes.

Well my broker (fidelity) requires certain degrees of experience and wealth before allowing certain types of risky trading. Perhaps sports-betting should fall under that category -- e.g. must be an accredited investor.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#205

Post by speedstyle »

DannyBee wrote: post #85
akerl_ wrote: post #63

Earlier quoted context omitted.

Edited my earlier comment to point here. Is your assessment that CFTC is pulling the broader impact fully out of the air, or are likely to try to spin the coverage of events in New York for participants outside of New York as counting as interstate commerce?

Oh worse than that. The "emergency powers" they speak of are 7 U.S.C. § 12a(9), and they are quite specific. It gives them the authority to direct a registered entity to do a few specific things. None of those things are relevant to here. It's stuff like emergency margin requirements, position limits, etc. Not "violate state law". It gives them no power to enable a registered entity to violate a TRO, or anything like…

That says contracts about activities which are unlawful under State law, not contracts which are unlawful. Sports is legal, even if sports betting is regulated

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#206

Post by jambalaya8 »

jordanb wrote: post #162
tsimionescu wrote: post #125

Earlier quoted context omitted.

That claim is coming directly from the CFTC, it is not this user's novel claim. It seems that overall the CFTC and the NYAG are presenting materially different event time lines, so as an outsider it's a bit unclear what is actually happening.

Easy: the CFTC is not credible. The online gambling industry put their guy in charge of the CFTC (Michael Selig). Their main goal is to preempt all state regulation of their gambling platforms. To that end Selig is promoting the novel theory that sports betting is trading of commodities and therefore should be "regulated" solely by his agency.

Selig should leave.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#207

Post by jambalaya8 »

mminer237 wrote: post #157
bhouston wrote: post #93

Earlier quoted context omitted.

Your claim here is wrong: > 2. The State of NY files for a temporary restraining order requiring Kalshi to halt trading nationally, not just in NY. The State of New York did *NOT* file a temporary restraining order, neither in NY or nationally. Please find a citation of that if you want to claim it is true. Rather the State of New York filed suit here to stop operations in New York: https://ag.ny.gov/press-release/20…

New York did file for a TRO: https://storage.courtlistener.com/recap/gov.uscourts.nysd.66...

New York seems to think it has legal authority over things it does not.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#208

Post by jambalaya8 »

aliasxneo wrote: post #30
akerl_ wrote: post #15

EDIT: see DannyBee's comment below ( https://news.ycombinator.com/item?id=49266746 ). It does look like the CFTC has extrapolated the "nationwide" out of either some novel interpretation of the filing or just entirely fabricated it as their justification for their action. I've got no love for Kalshi, but "orders Kalshi to continue operate in New York" doesn't seem to be present anywhere in the actual release. The art…

It seems that New York is asking the court for a temporary restraining order that would prohibit Kalshi from offering all event contracts nationwide. I also have zero love for Kalshi, but I can see why such a request would be concerning, regardless of whether I think Kalshi is a degenerate trash heap.

Agree prediction markets are a degenerate trash heap, however Gov. Hochul and Albany have absolutely no legal rights to police.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#209

Post by xp84 »

triceratops wrote: post #184
subtlejellyfish wrote: post #171

Earlier quoted context omitted.

1. Very few sports teams I can think of have publicly traded parents 2. On field performance has little to do with financial gains/losses outside of gambling.

> Very few sports teams I can think of have publicly traded parents Sure, but those are also the only kind where buying options to hedge losses makes sense. For privately owned teams, only the owner(s) ha(s|ve) any reason to try to hedge losses. They can buy some kind of "missed the playoffs" insurance, if anyone will sell it. Mostly though it's part of the game and they just deal with. > On field performance has lit…

> [Owners] can buy some kind of "missed the playoffs" insurance

I suppose with Kalshi etc. they can today but "insurance" is just another word for 'betting whatever bad thing will happen.' So if an owner bought any kind of insurance that paid them if they performed poorly, I would assume they were going to do things to intentionally degrade their team's performance, and would hope the league would recognize this as extreme moral hazard and kick them out of the league.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#210

Post by triceratops »

xp84 wrote: post #209
triceratops wrote: post #184

Earlier quoted context omitted.

> Very few sports teams I can think of have publicly traded parents Sure, but those are also the only kind where buying options to hedge losses makes sense. For privately owned teams, only the owner(s) ha(s|ve) any reason to try to hedge losses. They can buy some kind of "missed the playoffs" insurance, if anyone will sell it. Mostly though it's part of the game and they just deal with. > On field performance has lit…

> [Owners] can buy some kind of "missed the playoffs" insurance I suppose with Kalshi etc. they can today but "insurance" is just another word for 'betting whatever bad thing will happen.' So if an owner bought any kind of insurance that paid them if they performed poorly, I would assume they were going to do things to intentionally degrade their team's performance, and would hope the league would recognize this as e…

> So if an owner bought any kind of insurance that paid them if they performed poorly

It's the same as the CEO of a public company buying puts on their company's stock. I agree "derivatives" is a feeble excuse for sports betting.

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