US President Donald Trump’s nominee to lead the CFTC, a body tasked with regulating financial derivatives, pledged to uphold the law if presented with thorny issues in the listing of Trump Media’s proposed prediction market site.
Several weeks after Truth Social disclosed plans to launch Truth Predict, a new prediction market platform, a Senate committee grilled Michael Selig on the controversial topic Wednesday. Asked by Senator Elissa Slotkin, D–Michigan, how he will respond if Trump advised him to design a carveout for Truth Predict, Selig indicated that he plans to follow the letter of the law in the applications process.
Selig, who is Trump’s second pick to chair the US Commodity Futures Trading Commission, made the comments at his confirmation hearing before the Senate Committee on Agriculture, Nutrition, and Forestry. Crypto.com, which will partner with Trump Media on the platform, received CFTC approval in September to hold a designated contract market licence.
In response, Selig stated that he will always “uphold and stick to the law”, adding that if President Trump remains in compliance with requisite ethics rules and submits an application, he would go “through the same process as everyone else”.
If confirmed, Selig will become the seventh chairman of the CFTC since 2000. The CFTC was established through the Commodity Exchange Act, a 1936 federal law that regulates commodity and futures trading.
The committee narrowly approved Selig’s nomination on Thursday afternoon. Selig advanced by a 12-11 margin, on a vote along party lines. Brian Quintenz, Trump’s previous nominee, testified before the Senate over the summer, but the nomination did not advance out of committee.
Latest moves by sports betting market leaders
The committee held the confirmation hearing on the heels of announcements by the nation’s two largest sportsbooks that they will roll out sports prediction markets in select states. The impending launches by FanDuel and DraftKings could raise the temperature in a heated battle on states’ rights versus federalism in the regulation of sports event contracts.
Both companies outlined plans to debut prediction markets on recent earnings calls. Following its acquisition of Railbird Exchange, DraftKings said on 8 November that it plans to launch a prediction market offering in the coming months. Days later, Flutter announced that it will offer sports event contracts on its new prediction market site, FanDuel Predicts. The offering will be available through Flutter’s partnership with CME Group.
As traditional sportsbooks prepare for their leap into prediction markets, the operators have cut ties with the nation’s largest lobbying group for the gambling industry. Both companies announced Tuesday that they are leaving the American Gaming Association, a casino trade group that opposes the proliferation of prediction markets.
HoldCrunch founder Tom Johnson discussed the impact of the impending launches this week in a meeting with Truist Securities analyst Barry Jonas. Although the listings in non-sports betting states will put FanDuel and DraftKings on the map, Johnson views the competitive landscape as an “open playing field,” with established companies such as Kalshi.
Also this week, CME Group issued a memo detailing the launch of several sports event contracts. Pending CFTC regulatory review, Chicago Mercantile Exchange, Inc. plans to list contracts on pro football, college football and pro basketball starting 6 December.
CFTC nominee punts to the courts
Selig, who serves as the chief counsel of the SEC’s Crypto Task Force, is in favour of principles-based regulations that will protect consumers from fraud and manipulation. While the committee spent a large portion of the hearing seeking his views on the regulation of crypto spot markets, he fielded several questions on sports event contracts.
The most heated exchange occurred during a line of questioning from Sen. Adam Schiff, D–California. One rule, CFTC Regulation 40.11, prohibits event contracts that violate a so-called public interest test, including those pertaining to war, assassination, terrorism and gaming. However, advocates of sports event contracts have a differing view on the treatment of the contracts.
Josh Sterling, an attorney who has represented Kalshi, has argued that while the activities are enumerated in the act, they are not expressly “illegal”. Speaking at a gambling industry event in July, Sterling stated that the activities are subject to review on whether they are contrary to the public interest.
Schiff criticised the CFTC for its failure to issue guidance on whether sports event contracts violate existing regulations. He also pressed Selig on whether contracts that involve “gaming” are in violation of federal law.
“These are questions for the courts,” Selig replied. “They are really complicated issues of interpretation.”
Further discussion on sports event contracts
Schiff was not the only committee member to address the topic at the hearing. Several others, most notably Democratic Senators Cory Booker of New Jersey and Amy Klobuchar of Minnesota, broached the subject. When asked to expound on the legality of sports event contracts, Selig noted on at least six different occasions that he will defer to the courts on the matter.
Booker, a former football player, spent a portion of his time discussing the sports betting scandals that rocked the industry in the last month. He credited several regulated sportsbooks for detecting suspicious activity that led to a slew of criminal charges. “Given these recent events, it’s all the more concerning that sports event contracts are being offered without the same monitoring,” he said. Kalshi maintains a partnership with integrity monitor IC360.
Klobuchar, the committee’s ranking Democrat, asked Selig if the CFTC has ample resources to regulate the new markets. The nominee replied that if confirmed, he will take a close look at the agency’s resources to ensure that it has enough to fulfill its mission.
Dina Titus, a congresswoman from Nevada who co-chairs the Congressional Gaming Caucus, also weighed in. In a statement posted on X, Titus wrote:
“CFTC regulations clearly prohibit event contracts based on gaming, and as such, the agency must crack down on platforms that improperly offer event contracts on sport outcomes. Failure to enforce these rules not only infringes upon the rights of states and tribes but also undermines market integrity and consumer protection in the games the public enjoys.”
Vote on CFTC nominee Thursday
Truth Social, an alternative social media platform, is owned by Trump Media & Technology Group. Before returning to office for a second term as president, Trump insisted that he would not sell his stake in the company. While Trump initially held a 52% stake estimated to be worth at least $2.3 billion, the company issued new shares that diluted his stake to about 41.5%.
Trump’s refusal to divest his stake has been met with criticism among some leading ethics groups. Citizens For Responsibility & Ethics in Washington urged Trump to divest his shares following his 2024 victory, citing the influence foreign governments could exert through investments in the company. The president disclosed several stock transfers in Trump Media over the summer in a 234-page list of public financial disclosures with the US Office of Government Ethics.
Truth Social is on track to become the first social media platform to launch a predictions market. Trump Media did not respond to a request from iGB for comment.
While crypto regulation dominated discussion at a confirmation hearing, a Senate committee pressed Trump’s pick on sports event contracts