CFTC Commissioner Summer Mersinger resigned from her position on Wednesday. Blockchain Association announced the same day that Mersinger would become the organization’s new CEO.
Mersinger’s final day at the CFTC will be May 30, and her first day as Blockchain Association’s CEO will be June 2. Blockchain Association’s press release read:
“Commissioner Mersinger brings exceptional leadership experience at the intersection of innovation, law, and public service, assuming the role at a critical moment for the industry. With her track record of driving regulatory clarity and building coalitions across government and industry, she will spearhead efforts to advance forward-thinking legislation, foster industry growth, and defend the foundational principles of decentralized technology.”
Before Mersinger’s resignation, Mersinger was one of the CFTC’s two Republican commissioners. However, one of the Democratic commissioners, Christy Romero, has announced that she would resign after Brian Quintenz’s confirmation as CFTC chairman. So, despite Mersinger’s resignation, the CFTC will remain a 2-1 Republican body that will be able to enact Quintenz’s agenda.
That is excellent news for prediction markets that want to offer sports contracts, if history is any indication.
Quintenz views all events as fair game for event contracts
In 2021, another prediction market exchange, ErisX, submitted approval for contracts on the outcomes of NFL games. ErisX pulled its contracts before the CFTC completed its public interest review, so the CFTC never formally found the contracts contrary to the public interest. At the time, Quintenz argued:
“The statutory definition of a commodity includes ‘…an occurrence, extent of an occurrence, or contingency…that is 1) beyond the control of the relevant parties to the contract…and 2) associated with a financial, commercial, or economic consequence.’ … Because of this definition, any contract on the outcome of a future event would be considered a commodity futures contract, and, pursuant to the Commodity Exchange Act (CEA), is required to be traded on a registered Designated Contract Market (DCM).”
As President Trump’s nominee to chair the CFTC, Quintenz could refrain from the public interest review that could prohibit event contracts on sports.
Mersinger’s acknowledgment of congressional intent
In her 2024 dissent from the CFTC’s proposed rule defining gaming, Mersinger noted the rule’s scope expanded beyond what Congress intended. The 2010 colloquy between Blanche Lincoln and Dianne Feinstein included a section in which the two senators intended for the CFTC to prohibit gaming contracts on sports. Mersinger notes that only sports were included in the senators’ discussion about gaming, not the other contests or awards the CFTC’s proposed rule targeted:
“Congress easily could have included elections and awards as enumerated activities, but it did not. Confronted with this Congressional silence, I do not believe the Commission can simply decree that elections and awards are enumerated activities.”
Mersinger’s departure from the CFTC comes on the heels of early victories CFTC-regulated prediction market Kalshi has seen in ongoing battles against state regulators. Kalshi’s sports contracts prompted cease-and-desist letters from state gaming regulators, and two courts have granted Kalshi preliminary injunctions.
If the courts continue viewing the CFTC as the only regulator able to limit Kalshi’s contracts, then court cases may pivot from targeting individual companies to targeting the CFTC – or its rulemaking.
