The chair of the Commodity Futures Trading Commission (CFTC), Michael Selig, has warned that the federal derivatives regulator “will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction” over prediction markets.
Writing in The Wall Street Journal yesterday, 16 February, he said prediction markets faced an “onslaught of state-driven litigation”, with nearly 50 active cases “presenting a range of legal challenges”.
Selig said it “should come as no surprise” that the CFTC is filing a ‘friend-of-the court’ brief supporting Crypto.com in the Ninth US Circuit Court of Appeals.
The filing backs Crypto.com, which has offered prediction markets since December 2024, in its legal battle against Nevada gaming regulators.
Selig, a President Donald Trump nominee who was sworn into office in December 2025 as the 16th chair of the CFTC, said the most common allegation is that event contracts are “a form of gambling and therefore subject to state laws”.
He went on to argue in the op-ed that these contracts “serve legitimate economic functions”, such as allowing businesses and individuals to hedge event-driven risks, enable investors to manage portfolio exposure and provide the public with information about the outcome of future events.
“Farmers can manage risk related to temperature changes that may affect crops, and small-business owners can hedge against tax increases or energy-price spikes, to name two examples,” he wrote.
Despite this, more than a dozen states have launched legal challenges against prediction markets, essentially accusing these platforms of offering unlicensed gambling.
The American Gaming Association (AGA) has said it is “unauthorised sports betting under the guise of event contracts” and that these platforms “bypass proven consumer protections, contribute nothing to local communities and threaten the integrity of competition”.
On its website, the AGA displays a live tally of what it claims is the lost tax dollars since prediction markets began offering sports event contracts. At the time of writing, it stands at around $490m (£360m).
In his op-ed, Selig suggested Americans “like the product and want to participate”, while referencing an industry report that estimates global users of prediction markets has quadrupled to 15 million in the past two years.
Selig claimed “tens of millions of Americans” use CFTC-registered exchanges such as Kalshi, Polymarket, Coinbase and Crypto.com.
He referenced Polymarket despite the New York-based company’s product being only available to select US-based users that are on a launch waitlist right now.
Polymarket, which opened a pop-up free grocery store in New York City’s Greenwich Village at the weekend, exited the US in January 2022 after settling charges with the CFTC that it was operating an unregulated derivatives exchange.
The decentralized platform built on the Polygon blockchain network continues to serve global users. Polymarket is re-entering the US after shelling out $112m for CFTC-licensed derivatives exchange and clearing house QCEX last year.
In summing up his case for why prediction markets are fully legal products, Selig said event contacts “aren’t the Wild West” but are “self-regulatory organisations” supervised by CFTC staff.
“America is home to the most liquid and vibrant financial markets in the world because our regulators take seriously their obligation to police fraud and institute appropriate investor safeguards.
“Any erosion of the CFTC’s ability to regulate transactions in commodity derivatives is a direct threat to the markets and investors [that] Congress intended the agency to oversee.”
Last month, Selig announced his intention to create clearly defined regulations for prediction markets.
Meanwhile, DraftKings CEO and co-founder Jason Robins said during his firm’s earnings call on Friday, 13 February, that the fact the CFTC has confirmed prediction markets fall firmly under its jurisdiction had provided regulatory certainty.
Robins hailed prediction markets as “the most exciting growth opportunity we have seen since PASPA was struck down in 2018”.
US market leader Kalshi reported that trading volume surpassed $1bn on Super Bowl LX earlier this month.
The post CFTC chair: Agency won’t “sit idly by” over event contract legal challenges first appeared on EGR Intel.
Michael Selig issues strongly worded rebuke against “overzealous state governments” and announces ‘friend-of-the court’ brief supporting Crypto.com in the Ninth US Circuit Court of Appeals
The post CFTC chair: Agency won’t “sit idly by” over event contract legal challenges first appeared on EGR Intel.