Sports Boom: Betting with Gary Gensler & Fandom with George Pyne 6/11/26

14:17George Pyne:In the old days, no way retail got anything. An office, a brokerage office will get 100 shares and the biggest producer would give it to his best client.

14:26Gary Gensler:Well, you'll start finding out tonight. And the tell from those of you who have put in orders out there is if you do find that your full allocation request has been filled, that's usually a negative sign. You want to be cut back. You want to make sure that you're not getting your full order because that means there's so much demand that they have to kind of cut everybody back.

14:44George Pyne:You gave you twice as much, bag holder. Here. Enjoy. Yeah. All right. Thank you, sir. May I have another? Thank you. Cheese will be next.

14:54Gary Gensler:Coming up on Squawk Pod, zooming in on prediction markets. Cal Shee has asserted that sports betting's regulator is the CFTC, thanks to the Dodd-Frank Act of 2010. Gary Gensler ran the CFTC when Dodd-Frank was passed. I think at the core of this issue is, did Congress in 2010 say, no, none of the states can regulate this. It's going to this little small agency that I once was proud to run. And the answer is categorically no. So who's in charge of sports betting and who isn't? That's right after this.

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16:58Gary Gensler:Welcome back to Squawk Pod today with Joe Kernan and Kelly Evans. Here's Joe.

17:03George Pyne:Former CFTC Chairman Gary Gensler is filing an amicus brief arguing Congress did not intend to make the CFTC the nationwide regulator. of sports betting when it passed the Dodd-Frank Act in 2010. Gary Gensler served as CFTC chairman under President Obama when Dodd-Frank was passed. And he later served as SEC chair, as you know, and was a frequent guest under President Biden. Good to see you this morning. You're in town. Terrific to be with you, Joe, Kelly. How are those courtside seats you had last night at the game? Is that why you're in town? Ah, boy, that would have been exciting.

17:38Gary Gensler:I mean, can you just imagine with 1.2 seconds left, that little tip in. On his finger. I mean, he barely was able to reach it. Yeah. And when it was 29 points away, I went on Polymarket. I have to admit it. I went on. I said and it right then it was trading at 93 cents to seven cents. It was.

17:57George Pyne:Yeah. And then, you know, it came the other way. But you didn't place a bet.

18:01Gary Gensler:No, I did not. I have no economic interest in in any.

18:06George Pyne:But off camera, where you said you can understand why people like to do this.

18:09Gary Gensler:Look, it's since antiquity. We humans like to wager on sports. I think at the core of this issue is, did Congress in 2010 say, no, none of the states can regulate this. It's going to this little small agency that I once was proud to run. And the answer is categorically no. If we'd asked Senator Harry Reid, who was then the majority leader, who had the Nevada Senator Harry Reid, oh, we're going to take this and move this to the federal government, he would have thrown me out of his office. Right.

18:46George Pyne:It's not staffed. It was never designed. No, it's not.

18:50Gary Gensler:Can't handle it. It's an agency that was set up in the 1970s around corn, wheat, agricultural derivatives, and then energy and interest rate derivatives. Important stuff, really important stuff. But to think that you're going to regulate millions of transactions of whether somebody is going to hit a three-point play. Yeah.

19:15George Pyne:So what is your, you're going to file an amicus brief? Later today in the Sixth Circuit.

19:20Gary Gensler:In the Sixth Circuit. Saying what? Well, in essence, I want to tell the story of why Congress did what they did. Millions of people were out of work. Millions of people had lost their homes. And there was a desire to cover what was called the credit default swap market and the interest swap market, not sports betting. And and tell that in a way courts like to hear it, looking at the text, looking at the words. And and I think that that's what I want to do. And I want to respect Harry Reid, too. I know you and I might differ on Harry.

19:57George Pyne:I told you I was still mad at Harry for. And I'm not not necessarily a Mitt Romney fan, but but to say he'd never paid any taxes. And then after he loses and they prove that he did pay taxes and then Harry Reid says, well, we won, didn't we?

20:11Gary Gensler:He knew the whole time. But to think that under the U.S. Senate at that time, when nobody was talking about sports betting, nobody testified in Congress 54 times. and literally Republicans and Democrats alike. Nobody said, oh, you know what, Gensler, I think we should give your small agency under President Obama authority to regulate sports betting. Even this recent kind of like the rise of all these platforms comes from the CFTC dropping lawsuits against them. I mean, it's not as if that there was some big rule change. So the CFTC now has come out with this big proposal. I'm sure you've seen it, 200 some pages, where they talk about what they think should and shouldn't be permitted.

20:53Gary Gensler:they would permit betting on outcomes, maybe not so much betting on injuries, things that can be more manipulated. Is that a step in the right direction? No, no. What they're trying to do is to, one, say that they have authority over sports betting, which I don't think they do. That will play out all the way to the Supreme Court, of course. And two, they're trying to reverse a rule we voted unanimously back in like 2011, unanimously to prohibit agreements, contracts, or transactions, listen, on assassination, war, terrorism, gaming, or unlawful acts. Those five categories were placed there in Congress.

21:34Gary Gensler:And it was placed there because most members of Congress thought there shouldn't be contracts on assassination, war, and terrorism. And interestingly, Congress said, put gaming in there too. There shouldn't be contracts. Right. And they're now arguing that gaming is a you know, different definition or something. Yeah. And so we unanimously voted on that 14, 15 years ago. And the CFTC is saying, well, let's reverse that. But I don't even think they have authority over sports betting at all. In 70 to 80.

22:06George Pyne:I didn't realize that 70 to 80 percent is sports betting. Yeah.

22:10Gary Gensler:If you look at Calcia and you look at Polymarket, that's that's where this that's where the revenues are. And they're competing with FanDuel and DraftKings. Right. Like if this is regulated at the states where I believe it is, people could still bet on FanDuel and DraftKings or at the casino. Yeah. So would the CFTC try to say to the states that they're not able to do that? There's about 30 lawsuits going on right now in this country, and the CFTC has done something pretty unusual. They've preemptively filed suits against various states, Arizona, New York and other states. But interestingly, 39 states joined together.

22:53Gary Gensler:You might call them red states, purple states and blue states joined together last week and filed together an amicus brief in the same Sixth Circuit case that I'm filing this. I've never done this before. I'm doing it really just out of respect for everybody. And what we did 15 years ago was about it was about these credit default swaps and interest rate swaps. The world, according to how you think it should be ordered, there is a place for sports betting, but regulated by whom? Well, it's how it is ordered. It's regulated by the states. The states have a lot of money. The CFTC doesn't have the resources.

23:30Gary Gensler:That's right. The CFTC has shrunk, but it's maybe 400 people. It's actually just recently, This past week has put out another downsizing. And and then the states have all this revenue. Let the states do it. And by the way, some states prohibited 11 states prohibited completely. Some states say, listen, you can bet if you turn 21, not 18. And here the CFTC is saying anybody can do it in all 50 states and you can do it even if you're 18. And, you know, there are legitimate concerns and debates about addiction. There's legitimate concerns about whether this is good for kids to do, the dopamine rush of it all, so to speak.

24:16Gary Gensler:Let the states sort that out. Do you think we've got a handle on the non-sports? No. Look, Joe, you've raised a really good point. Prediction markets were raised many years ago by the defense research bureau called DARPA inside the Defense Department. And they said, maybe we should have some contracts on terrorism war assassination. And it got shot down in 24 hours. The George W. Bush administration said they disavowed that. And the reason is, is that it's pretty tricky stuff to say, let's have a contract on whether you're going to take out Maduro in Venezuela. Why did DARPA want that in the first place?

25:01Gary Gensler:It was right after 9-11. And DARPA said, well, maybe we could learn something because somebody who knows what the somebody in that in that era, somebody, a bad guy in the Middle East was going to do. Maybe it would leak into the markets. And but here's the thing. I don't think you can really protect the integrity of the underlying market. It's really hard to protect the underlying integrity of sports. But here. But here, can you protect sports and everything else in the world? That's right. Can you do it on what you call political events or geopolitical? Will somebody leak something out of the situation room?

25:44Gary Gensler:So when I was at the CFTC and working on that Dodd-Frank bill, We went to Congress and we said, do you know that movie Trading Places, you know, Eddie Murphy movie where he was he was a trader and he got some information from brothers. That's right. He got some information from the Department of Agriculture on the orange crop report and he traded on frozen orange futures. I asked the staff, I said, is that illegal? They said, well, no, not not really. I said we should ask Congress for a provision. We called it the Eddie Murphy provision. Congress put it in. It's now is illegal to trade on inside information from the government.

26:23Gary Gensler:I think Congress could maybe go further. But this is about companies now, too. I mean, look at the Google guy who was placing all these bets because he was aware of what was going on inside. So now CalShift is going to require you to sort of say what your company is when you sign up. But I'm not sure if that goes far enough. Yeah, it's very hard to ensure that there's no insider trading in the stock market. But in these markets, it's so much harder. There's so many more contracts. There's not like an issuer, you know, those those fiduciary duties. You're just some political consultant or somebody at Google that was on search.

27:00Gary Gensler:And so I also think Congress would be well advised to say, listen, nobody in the government should trade on these things. You're a congressional staffer. You're an executive branch or White House staffer. They're working on that. I mean, that. Yeah. Let's get it over the line. Yeah.

27:18George Pyne:Dan Aykroyd, Ralph Bellamy, Don Amici, Jamie Lee Curtis. You remember all these people? I remember.

27:25Gary Gensler:Remarkably funny movie. I don't know if it would be made today. No. But it was really funny.

27:31George Pyne:And I bet, I placed a bet earlier on a prediction market that you have finally turned on Bitcoin and are a big owner of Bitcoin.

27:40Gary Gensler:You placed that bet, House of Warriors, at trading, Joe.

27:43George Pyne:Now, I did not. I'm kidding. But it's at 63. If you're ever going to do it, it's come all the way down. If you're ever going to do it, this might be the time, Gary. Yeah, I see. Listen, there's a lot of things. So are you saying you're going to do it? Have you done it yet? No. You're still not a whole. No, Joe. What? No, no. People made me ask you that. You know, there's still a pretty rabid following, even though it's down 50 percent. Yeah.

28:10Gary Gensler:Yeah. Look, all financial markets trade on a mixture of fundamentals and sentiment. We know that. Right. And even like this SpaceX offering, you know, how much is that is sentiment versus fundamentals at 100 times revenue? I wanted to ask what you think about what is perpetual futures and all the zero day options. I mean, the explosion of it's not just about sports betting. It feels like everything has now become a leveraged bet. And it's just another way to kind of I don't know. I feel like it's another way for people to lose money. It's those are risk in the system. The risk in the system or how much is the market is one sentiment rather than fundamentals.

28:46Gary Gensler:The risk in the system, the leverage that you said. And thirdly, for individuals, whether there's an understanding and there's that sort of, you know, that rush of of same day option betting, crypto betting, prediction markets. Right. And so it taps into that excitement of picking up your cell phone. Right. But I'll tell you this. I'll tell you this, Joe. In my class at MIT and Simon Johnson, I do this power and consequences podcast where we've talked about prediction markets and so forth. I find that more students today are trading in prediction markets. If I just ask for a show of hands at MIT, then your favorite crypto market.

29:35George Pyne:Then I just talked about it. It's not my favorite. But you and Mnuchin will finally buy probably a million. And it'll be by then. That'll probably be the absolute top.

29:45Gary Gensler:No, no, no. Steve, Steve, he's already in. I have no idea. But you're not. I'll leave it for you. You're not.

29:52George Pyne:There you go. OK, Gary Gensler. Thank you. Thank you. Appreciate it. And a reminder, CNBC and Kalshi have a commercial relationship. Oh, my God. That includes customer acquisition and a minority investment. It is 8 a.m. on the East Coast. You're watching Squawk Box on CNBC. I'm Joe Kernan, along with Kelly Evans, Gary Gensler. No, he's leaving. It was good to have you on. Great to have you.

30:18Gary Gensler:Next on Squawk Pod, the Knicks pulled out a huge comeback in Game 4 of the NBA Finals. And it is not just New York that's buzzing. Bruin Capital founder and CEO George Pine on the universal hunger for entertainment.

30:33George Pyne:Streaming has kind of commoditized entertainment, and sports is benefiting from the commoditization. You know, programming's less special. It's harder to watch. You know, you go on Netflix, there's 100 shows, what do I watch? Look at last night, 29 points. They come back, how about that rebound? I mean, you can't make that stuff up, right?

30:49Gary Gensler:Sounds like it's a really good time for the World Cup to start. We're back right after this.

31:24George Pyne:Oh, that sounds easier than I thought.

31:26Gary Gensler:You got this.

31:27George Pyne:Yeah, I do. Now, where did I put my keys?

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32:10Gary Gensler:That's 1-800-Flowers.com slash SXM. This is Squawk Pod.

32:17George Pyne:You're watching Squawk Box on CNBC. I'm Joe Kernan. Along with Kelly Evans, Becky and Andrew are off today. You only signed up for one day this time, didn't you?

32:26Gary Gensler:One hour. No, yes.

32:27George Pyne:Yeah, just one day. Yeah. I think Melissa's in.

32:30Gary Gensler:Uh-huh. You know, I want our kids to play each other in chess. Well, you do. I do. I think, yeah, face off.

32:38George Pyne:They're going to be tough competition. That's you're thrown down. I will mention that.

32:42Gary Gensler:Well, you might have heard by now, but the New York Knicks are a game away from their first NBA championship since 1973, following a historic home court comeback in Game 4 of the finals last night. The Knicks rallied from 29 points down to beat the Spurs 107 to 106, capped by a tip-in after a missed three-pointer with seconds remaining. Before last night, no team had come back for more than 24 points down in a finals game. Game 5 is Saturday night in San Antonio. And ESPN is saying that Monday night's contest in New York was the most watched NBA Finals game or NBA Finals game three since 1998.

33:19George Pyne:I don't know, Steck. We need the NBA needs more. They need it to go seven. Don't you think?

33:26Gary Gensler:He's like, just wrap it up.

33:28George Pyne:Yeah. Yeah. I don't know. I get to watch one. You know, probably just one.

33:36Gary Gensler:Joining us now is Bruin Capital founder and CEO George Pine. George, it's great to see you.

33:40George Pyne:Great to be here. Thanks for having me.

33:42Gary Gensler:So, big deal for the NBA. Most watched game three, was it? In 30 years. Since 1998.

33:49George Pyne:Unbelievable.

33:49Gary Gensler:So this is not just people here in New York excited. This is clearly attracting a lot of interest.

33:54George Pyne:No question. I mean, sports is really surging right now. The NBA had a great regular season, great playoffs, the finals, fantastic. That game's up 159 % year over year. But it's not just the NBA. You know, the NHL is experiencing a great finals, a great regular season. Baseball off to a strong start. Golf. Sports is surging. You know, streaming has commoditized scripted entertainment. Artificial intelligence is going to enhance sports, not disrupt it. So sports is having a moment.

34:24Gary Gensler:Artificial intelligence is going to enhance. Wait, wait, let me walk back through it again. What are you saying about streaming?

34:29George Pyne:Streaming has kind of commoditized entertainment. And sports is benefiting from the commoditization. You know, programming is less special. It's harder to watch. You know, you go on Netflix, there's 100 shows. What do I watch? It's hard to engage consumers the way you used to engage.

34:43Gary Gensler:It's funny you say that because Netflix shares, as you probably know, have been under pressure. And this is after, you know, they were doing really well a year or so ago. Then there's the WBD thing. That didn't happen. They didn't rebound. They've still struggled a bit. And a lot of people are saying, well, name the last big Netflix show you watched. So you think there's too much content, not enough differentiation, nothing special is standing out in the streaming world. Not great economics over there either. And sports.

35:06George Pyne:Here you come. It's the best unscripted programming there is. There's good guys, bad guys, winners, losers. It's look at last night, 29 points. They come back. How about that rebound? I mean, you can't make that stuff up, right? Don't you want three more games? I do want three more games, but I'm sure if you're a Knicks fan, you'll take it. One's all you need. Netflix is, I mean, I need to talk to them. I mean, the quality is so bad. The writing is bad on the stuff. And it's so woke. Every single show, every possible way you can do something woke is in there. It's like, God, you're ramming this down my throat?

35:44George Pyne:But the worst thing, it just sucks, the stuff that they do. I'm a Celtics fan, and I love the next winning, and I love what I saw last night. Yeah, that's interesting. Right, because it's just great, that rebound, the resiliency. Wemby is just a horrible person. I mean, all the guys around here are telling me that. What do you want to do to him, Zach? Someone needs to. He's a young. He's not the first young player that when the spotlight's on him, he's challenged. He'll come back and be great. You're really mad about this foul the other night, I guess. I know. But he'll have his moments. He's a great player.

36:12George Pyne:He's amazing. He's so graceful. Sometimes you've got to learn how to lose before you win. You know, that's life.

36:18Gary Gensler:And he still made it to the finals earlier. Well, what happened last night?

36:21George Pyne:I didn't get to watch it, obviously. But they were three-pointers instead of running out the clock or something? Yeah, well, also, too, the Knicks had 14 three-pointers, the most in NBA Finals history, right? Pretty special.

36:34Gary Gensler:Wow. Can we talk World Cup? Sure. Now that this is, I mean, it's going to be over soon. It was supposed to be World Cup fever right now. In many ways, it is. But is this overhyped? It's the biggest ever, the most teams ever. You know, tons of people are betting on it. We know all of that. There's been some drama, obviously, around each of the venues, but especially the ones around here.

36:56George Pyne:Well, look, soccer is the biggest sport in the world. They've raised$9 billion for a 39-day tournament. You're going to have 1.5 billion people watch the final and billions more watch all the matches. So this is a big event. It's unlike any other event in the world. And it should be great, very exciting. Yes, there's been some logistical issues, and that's good for stories. But I think the product will speak for itself.

37:20Gary Gensler:So what does Netflix, what does, you know, Paramount, what does Peacock, what do all of these streaming platforms do if the best content out there right now is sports? And by the way, sports rights are really expensive.

37:32George Pyne:Well, they're expensive because they're valuable. Right. And I think when you think about the streamers long term, what's going to entice the streamers about sports is sports will over index in advertising because the engagement New York Knicks fans feel to their team. So I think sports is well positioned. And I'm not saying that as an enthusiast. When you look at the TV numbers, highest masters in 10 years, every single sport right now is having a moment. Wait a second. Pickleball? Well, I'm not going to go that far. I'm talking about the course. They're trying to make that something that. Look, we've got everything going on.

38:05George Pyne:Not everything's going to work. But I'm talking about the major sports. I mean, we had an interview yesterday about people are mad in Congress about the NFL just milking every last dime out of every game. You've got to you need 10 different streaming services to watch a game you might want to watch. Well, that's fair. That's a balancing act, both from the NFL and Congress. And I'm going to leave that to the to them. But that, you know, there's always a balance. If I was Goodell, this is what I would be doing. Every single game is worth so much because of what you're describing. but it used to be over the airwaves.

38:38George Pyne:You know, you just... Yeah, that's a balancing act of growth to how you... And I think the market will work that out. You went in the right business. You're kind of gloating. It's better to be lucky than good, Joe. And I feel right now it's a moment in sports.

38:54Gary Gensler:Listen, I want to leave it on a high note, but the only one that I wonder about a little bit is what's happened to college sports. And I'm just curious. I mean, maybe it doesn't matter. Maybe it does. It just feels so different from what it was 10 or 20 years ago.

39:07George Pyne:Yeah, you know, college sports is going through a change, right? It's an evolution. The product on the field, you know, 30 million people watched the finals, 18 million in the quarterfinals. The product on the field has ever been better. You know, Indiana, the second worst team in the history of college football, won. Now, you know, a lot of the issues college sports is facing are similar to the Olympics. Remember when they went from you can't be, you have to be an amateur, you can't be paid. They went through that transition. A lot of people got up at 8 a.m. to watch the hockey game. I think that college will fare well, but they're going through some growth dynamics.

39:40George Pyne:Now you might actually have to be a man or a woman. I mean, it's crazy what the Olympics are. Every time I say it, he's like, ha, ha, ha, ha. I'm a sports guy. I know. I don't want to weigh in on that. We like to shake it up a little while we're here. We don't mean any harm. Me too.

39:58Gary Gensler:Especially when you're in such a good moment. We don't mean any harm.

40:00George Pyne:Yeah, no, that's okay. That's okay. I'm a big guy. Hey, WNBA, too. Fantastic. Women's sports, again, another example. Women's sports is a traction today that didn't have 10 years ago. How about Nellie Porter? Did you watch that? Did you see that putt? Unbelievable. Unbelievable. Did you see the putt that almost didn't go in? You did. So you're just all over the place. It's my job. Well said. Right. And Shinnecock's coming up. It's going to be fun. It's going to be unbelievable, that course. Remember the last one? It may not have been the last one. Remember Ratif? those greens. He was the only person in the world that seemed like they could even get a par on a hole.

40:36George Pyne:Golf is having a moment too. Everybody's having a moment. Without Tiger. Without Tiger, which is special. All right, George, thank you. Thanks for having me. Great to see you. I love the Bruins too. Oh, you got nothing to do with the Bruins. Brown Bruins, baby. Brown Bruins.

40:55Gary Gensler:that does it for squawk pod today thank you for listening squawk box is hosted by joe kernan becky quick and andrew ross sorkin weekday mornings on cnbc starting at 6 a.m eastern to get the smartest takes and analysis from our tv show right into your ears follow squawk pod wherever you get your podcasts we'll meet you right back here tomorrow have a great day

41:17George Pyne:we are clear thanks guys

41:50George Pyne:Transcription by CastingWords learning to trade brilliantly. Learn more at swap.com slash trading.