CFTC Chair Firmly Backs Prediction Markets Amid State Lawsuits
Michael Selig, serving as the chair of the US Commodity Futures Trading Commission (CFTC) during President Donald Trump’s administration, announced that the agency plans to counter what he described as an intense wave of litigation initiated by various states targeting prediction market platforms.
In a video shared on X on Tuesday, Selig explained that the CFTC had submitted an amicus brief, commonly referred to as a ‘friend of the court’ filing, aimed at upholding its exclusive regulatory authority over prediction markets. He drew parallels between these markets and traditional derivatives markets. Furthermore, the CFTC chair cautioned that any state entities attempting to undermine the commission’s oversight of such platforms would face legal confrontations in court.
Selig emphasized that prediction markets are far from novel, noting that the CFTC has overseen their operations for more than two decades. He highlighted their valuable societal contributions, such as enabling ordinary Americans to safeguard against commercial uncertainties. Additionally, these markets act as a vital mechanism for verifying the accuracy of news media and information ecosystems.
These statements from Selig came in the wake of multiple legal actions launched by state regulators and officials against prediction platforms that facilitate event contracts. Notable targets include platforms like Coinbase, Crypto.com, Kalshi, and Polymarket. Just last week, Polymarket initiated its own lawsuit against Massachusetts, asserting that solely the CFTC, as the federal regulatory body, possesses the legitimate power to govern these prediction markets.
Selig has consistently reinforced his vocal advocacy for prediction markets in response to these state-driven enforcement efforts. On Monday, the Wall Street Journal featured an op-ed authored by him, where he accused states of improperly infringing upon the CFTC’s jurisdictional boundaries.
Earlier on Friday, a coalition of 23 US senators dispatched a letter to Selig, pressing him to refrain from meddling in ongoing litigation related to event contracts. They also called for the commission to synchronize its initiatives with the relevant statutes and the testimony Selig delivered during his congressional confirmation process. In response, Selig indicated that he would seek judicial direction during a scheduled hearing in November.
The senators critiqued Selig’s recent positions, stating, ‘Your recent comments instead suggest that you view the prohibitions Congress enacted as subject to reinterpretation through regulatory posture or litigation strategy.’ They argued that such an approach transforms clear statutory bans into discretionary policy decisions made on a case-by-case basis. Moreover, it positions the CFTC in opposition to state and tribal governments, whose gambling regulations Congress deliberately refrained from overriding.
Federal Regulators Eye Crypto Market Structure Legislation
For several months, US Senate lawmakers have been deliberating a comprehensive digital asset market structure bill, which originated as the CLARITY Act and gained approval in the House of Representatives back in July. Despite the Senate Agriculture Committee’s decision to propel the bill forward in January, its prospects for securing passage through a full Senate vote remained uncertain as of Tuesday.
Selig was set to address the bill’s development status at an upcoming event hosted by World Liberty Financial, a cryptocurrency platform supported by the Trump family. The gathering was slated to occur at President Trump’s Mar-a-Lago resort in Florida on Wednesday.
This ongoing tension between federal and state authorities underscores broader debates surrounding the appropriate regulatory framework for innovative financial instruments like prediction markets. As these markets gain prominence for their role in risk management and information aggregation, the CFTC’s defense of its mandate could set significant precedents for future oversight. Selig’s firm stance reflects a commitment to maintaining consistent federal regulation, potentially shielding these platforms from a patchwork of conflicting state rules. Meanwhile, the anticipation around crypto market structure legislation adds another layer of complexity, as clearer guidelines could resolve many jurisdictional ambiguities currently plaguing the sector.
