U.S. Commodity Futures Trading Commission Chairman Mike Selig has escalated a legal dispute over the regulation of prediction markets, directing his agency to file an amicus brief asserting federal jurisdiction over event contract platforms. The move comes as several state governments challenge the legality of certain prediction market offerings, particularly those tied to sports related outcomes.
In a public statement, Selig made clear that the CFTC considers itself the primary regulator of these derivative based products. He emphasized that the agency has overseen similar markets for more than two decades under the Commodity Exchange Act and signaled a willingness to defend that authority in court. According to Selig, prediction markets serve legitimate economic purposes, including allowing participants to hedge commercial risks such as energy price swings or weather related disruptions.
The dispute centers on whether event contracts offered by platforms such as Polymarket and Kalshi fall under federal derivatives regulation or state level gaming and sports betting laws. Several states including Nevada, Massachusetts and New York have taken action against aspects of these platforms, arguing that certain contracts resemble unauthorized sports wagering products. A federal judge in Nevada previously ruled in favor of state authorities, concluding that some of the contracts were not properly regulated by the CFTC, though that decision remains under appeal.
The regulatory landscape has shifted significantly in recent years. The CFTC previously challenged certain political event contracts offered by prediction market platforms, arguing they were contrary to the public interest. However, court setbacks and changes in federal leadership altered the agency’s stance. Under the current administration, the CFTC has adopted a more supportive tone toward regulated event contract markets while emphasizing the need for clearer federal rules.
Selig has indicated that the agency plans to pursue new rulemaking aimed at providing a coherent framework for prediction markets within the boundaries of existing law. He stated that forthcoming policies would seek to balance responsible innovation with statutory obligations under the Commodity Exchange Act.
The debate also intersects with broader participation from financial and crypto firms. Coinbase is currently engaged in legal disputes with several states over efforts to classify certain contracts as gaming activities. Meanwhile, corporate entities linked to political and media interests have explored entry into the prediction market sector, further raising the profile of the regulatory conflict.
At stake is the question of whether prediction markets will be governed primarily as federally regulated derivatives or as state regulated betting products. The outcome of ongoing court proceedings and potential federal rulemaking could define the structure of this emerging sector, influencing how platforms design contracts and how institutional participants engage with event based financial instruments.
