Follow-up on CFTC v. InTrade Op-Ed

December 11th, 2012

A few commenters on Volokh stated that our Op-Ed on the CFTC’s suit against Intrade misstated facts, and that we omitted any discussion of Intrade’s violation of a 2005 settlement with the CFTC. Here is the comment I put up in response:

The CFTC’s complaint is not limited to enforcing the 2005 settlement.  See paragraph 5 for a good summary.

The position they take in this suit, consistent with the position they have taken for nearly 20 years, is that all political markets that involve the purchase of contracts need to be regulated as commodities

See letters they sent to the Iowa Electronic Markets in 1992: (“Our conclusion is based upon the facts that among others, its operation is limited solely to academic and experimental purposes and the Operators receive no compensation.”).

See also

The complaint, which is entirely consistent with the letter, shows that the CFTC is in fact concerned about presidential election markets, in the event that contracts are purchased.

If the CFTC simply brought a suit to enforce their settlement agreement, we would never have bothered to write the Op-Ed. Likewise, we are not too concerned with the fact that InTrade failed to file its “annual certification” with the CFTC (see paragraph 6 of the complaint). The primary issue–and you may disagree on the law–concerns the CFTC’s focus regulating markets that concern political speech.