CFTC takes control
The US Commodity Futures Trading Commission (CFTC) has come out heavily in support of prediction markets, with the regulator announcing that unlike in the past, the federal body will now use its own discretion to actively weigh in on ongoing legal cases.
bad news for state regulators
The major development shared Thursday on X by sports betting policy research body Fairplaygov is bad news for state regulators who now potentially have the feds against them in their legal battles against likes of Kalshi and Polymarket:
The other major announcement was that the CFTC will be drafting new rules for the exchanges. CFTC Chairman Mike Selig announced this on the commission’s website, stating that he had directed his employees “to move forward with drafting an event contracts rulemaking.”
The chairman said the rules status quo had lasted “too long” and that he intends to fix it “by establishing clear standards for event contracts that provide certainty to market participants.”
Deferring no more
CFTC’s sudden hands-on approach, however, signals an abrupt U-turn from Chairman Selig’s November nomination speech to the Senate, in which he stated the body would defer to federal courts for guidance.
Selig told senators that he didn’t think it was appropriate to suggest an opinion on whether sports prediction markets should be federal or state regulated.
“That is a question for the courts,” Selig said, later adding: “I would really want the benefit of understanding what the judges think about the issue.”
Selig is now essentially stating the CFTC believes itself capable and powerful enough to regulate the market and affect legal outcomes without the need to defer.
It’s no surprise the Coalition for Prediction Markets (CPM) applauded the CFTC’s move to defend its “exclusive jurisdiction” over prediction markets. The CPM also fired a warning shot at state regulators by thanking the CFTC for potential legal aid “in matters where that jurisdiction is under attack.”
Selig’s stance is also a warning for tribes who have been opposed to prediction markets.
Echoes of dissent
Sportico Assistant Editor Dan Bernstein took to X Thursday to share a statement from Chairman of the California Nations Indian Gaming Association, James Siva, that accused Selig of being a corporate “cheerleader” for prediction market firms:
Siva referenced Selig’s unfulfilled assurance to the Senate about allowing federal courts to define what gaming was in the context of prediction markets, as the reason for his criticism.
Highlighting the important role prediction markets play “in the broader financial system” and that the CFTC will promote the responsible innovation of the vertical going forward, Selig’s comments on Thursday leaves no doubt the body sees the market as a major asset.
