Commodity Futures Trading Commission (CFTC) chair Michael Selig will set out to create definitive regulations for prediction markets platforms and “defend its exclusive jurisdiction over commodity derivatives” in the US courts.
Selig was appointed to the role with the derivatives regulator in December, after being nominated by US President Donald Trump.
In his first address as CFTC chair, Selig revealed he has instructed staff to begin drafting a set of definitive rules pertaining to prediction markets in an attempt to help remove any uncertainty surrounding the vertical.
Selig said: “These markets are not new. They have operated within the CFTC’s regulatory perimeter for more than two decades. But, despite their history, many view them as novel or unsettled.
“That uncertainty has not served our markets well, nor has it served the public interest. It is time for clear rules and a clear understanding that the CFTC supports lawful innovation in these markets.
“Looking ahead, and in the spirit of markets that trade on expectations, I have directed CFTC staff to move forward with drafting an event contracts rulemaking.
“For too long, the CFTC’s existing framework has proven difficult to apply and has failed our market participants.
“That is something I intend to fix by establishing clear standards for event contracts that provide certainty to market participants,” he added.
The prediction markets space has seen tremendous growth in the US, driven by exchanges such as Kalshi, Polymarket, Robinhood and Crypto.com.
Earlier this week, Coinbase announced the launch of its prediction markets platform, while betting exchange Matchbook has set its sights on a US launch later this year.
Several major sports betting operators have also entered the space, with the likes of FanDuel, DraftKings and Fanatics launching prediction markets offerings in the last few months.
Selig attested he will remove any shackles on prediction markets platforms by lifting any restrictions on the offering of political and sports-related event contracts.
He continued: “I have directed CFTC staff to withdraw the 2024 event contracts rule proposal that would prohibit political and sports-related event contracts and the 2025 staff advisory, which cautioned registrants about offering access to sports-related event contracts due to ongoing litigation.
“While the advisory was issued at the staff level with the intent of bringing awareness to the litigation, it has instead contributed to uncertainty in our markets.”
The vertical has also experienced significant pushback from state regulators that see sports event contracts as akin to sports betting products.
Regulators in Tennessee and Connecticut have sent cease-and-desist letters to prediction markets platforms since December, while lawmakers in Maryland, Nevada and Massachusetts have warned operators against offering similar products.
Selig added that he has emboldened the CFTC to defend its regulatory overview of prediction markets more stringently in the courts.
He added: “I have directed CFTC staff to reassess the Commission’s participation in matters currently pending before the federal district and circuit courts.
“Where jurisdictional questions are at issue, the Commission has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives.”
Selig also set out a blueprint for collaboration between the CFTC and the Securities Exchange Commission (SEC) going forward.
Selig said: “I have directed CFTC staff to work with our counterparts at the SEC to develop a joint interpretation on Title VII definitions.
“This effort would draw clearer lines between certain commodity and security options, CFTC-regulated swaps and SEC-regulated security-based swaps.
“Clear, coordinated guidance will allow firms to scale products responsibly and reduce the number of innovations that fall into what chairman Atkins (SEC chair) has aptly described as ‘the no man’s land’ between our two agencies.”
The post CFTC chair vows to create prediction markets framework and allow sports event contracts first appeared on EGR Intel.
Michael Selig sets out to remove “uncertainty” surrounding the growing vertical, while encouraging the body to “defend its exclusive jurisdiction over commodity derivatives” in the courts
The post CFTC chair vows to create prediction markets framework and allow sports event contracts first appeared on EGR Intel.