Better Markets urges SEC to reject ETFs holding event contracts
Better Markets urged the U.S. Securities and Exchange Commission (SEC) not to approve novel exchange-traded funds that would hold event contracts on elections and sports. The advocacy group said such products are designed for gambling rather than investment. Separately, Douglas Crescenzi of Adjacent Markets wrote to the SEC arguing that regulators should treat event-contract-linked products like any other financial product. Both letters add to the debate over whether event-contract-based investment vehicles should reach retail investors.
A novel ETF label would open event contracts to retail brokerage accounts at mass scale, not just direct prediction-market platforms. Better Markets frames that as gambling expansion disguised as investment product innovation. Adjacent Markets counters that the wrapper should not matter if the underlying contracts are already CFTC-regulated. The SEC now faces two opposed framings of the same vehicle.
Whichever label wins determines whether fanDuel and Robinhood sportsbook users can flow into event contracts through familiar 401(k) or brokerage interfaces. A gambling classification would force fund sponsors to partner with licensed sportsbooks or skip the market entirely. A standard ETF green light would bring in passive index capital that prediction markets have never accessed. The first approval sets the template every subsequent sponsor copies.