Sep. 1, 2026
From: Robert Rutkowski
Subject: Request for Comment on Novel ETFs, File No. S7-2026-24,
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Novel Exchange-Traded Funds and Investor Protection
Dear Commissioners:
I am writing to respectfully urge the Securities and Exchange Commission ("SEC" or "Commission") not to approve exchange-traded funds ("ETFs") designed principally to facilitate gambling on elections or sporting events.
The Commission's responsibility to protect investors and maintain the integrity of the securities markets should remain paramount when considering these proposed products. Although they may be structured and marketed as ETFs, products whose principal purpose is to hold event contracts concerning election or sporting outcomes, or futures contracts based on the performance of professional sports teams, raise fundamental questions about whether they constitute legitimate investment products or instead provide a regulated vehicle for gambling and speculation.
Traditional ETFs serve an important investment function by pooling investors' assets and investing in securities and other permitted investments. The proposed Novel ETFs are materially different. Election and sports event contracts, as well as contracts tied to the performance of professional sports teams, do not provide capital to productive enterprises or otherwise perform the ordinary economic functions associated with investment. Their principal purpose is instead to obtain a financial return from the outcome of an event.
This distinction is important under the Commission's public-interest responsibilities. Where a proposed product serves no meaningful investment, hedging, or other economic function, the Commission should carefully consider whether permitting that product to trade through the securities markets is consistent with the public interest. The potential for manipulation and the resulting harm to confidence in the integrity of the markets further strengthen the case for caution.
There is also a substantial investor-protection concern in placing such products within the familiar ETF structure. The term "ETF"carries an established meaning for investors and is generally associated with regulated investment products used for portfolio diversification, long-term investment, and other legitimate financial objectives. Extending that designation to products whose economic substance is essentially a wager on an election or sporting outcome risks confusing investors about the nature and risks of what they are purchasing.
This concern is particularly serious because the distinction between investing and gambling has already become increasingly blurred in certain areas of the ETF market. The approval of products that encourage highly speculative, short-term trading should not become a basis for taking the additional step of approving ETFs whose underlying purpose is effectively to facilitate wagers on elections or sporting events.
The issue is especially evident with proposed products tied to individual professional sports teams. Such contracts do not represent an investment in ownership of the underlying team or in productive assets. Rather, their economic purpose is closely analogous to wagering on the performance or outcome of a sporting event.
The fact that different regulatory regimes may characterize particular event contracts differently does not eliminate the Commission's responsibility to consider the substance and consequences of the products before it. The SEC should not allow the ETF structure to obscure the speculative or gambling-like nature of these products or cause investors to regard them as comparable to conventional investment ETFs.
The Commission should therefore maintain a clear distinction between legitimate investment products and products whose principal economic function is wagering. The trusted ETF structure should not be used to give gambling products the appearance and credibility of conventional investment vehicles.
For these reasons, I respectfully urge the Commission not to approve Novel ETFs whose principal strategies involve election or sports event contracts or futures contracts based on the performance of professional sports teams.
Such a decision would be consistent with the Commission's responsibility to protect investors, promote fair and orderly markets, and preserve public confidence in the integrity of the nation's securities markets. It would also preserve the meaningful distinction between an investment product and a product whose principal purpose is speculative wagering.
Thank you for your consideration of this important matter.
Respectfully,
Robert E. Rutkowski