The Commodity Futures Trading Commission (CFTC)’s increasingly favorable stance on prediction markets has created fresh tension with state lawmakers and gaming regulators, as CFTC chairman Michael Selig has signalled his intention to support federal oversight over such platforms. With rising legal challenges, the future of prediction platforms will likely be decided in federal court.
The CFTC Is Taking a More Proactive Approach
Selig recently confirmed that the CFTC will enforce its regulatory power over event contracts tied to sports outcomes, even if that stance leads to courtroom battles with individual states. His statements marked a stark shift from the testimony he delivered to the Senate Agriculture Committee in November, when he described the issue as an open legal question working its way through the courts.
At the time, Selig told senators he would respect court decisions while remaining open to collaborating with Congress to implement statutory changes. He now appears ready to take a more definitive stance, describing sports event contracts as instruments that fall squarely within the CFTC’s remit under the Commodity Exchange Act. This shift aligns with the current administration’s rising interest in digital and derivatives markets.
Selig noted that the agency is considering a new regulatory framework for event contracts. While details remain scarce, officials have suggested it would establish clearer standards for platforms offering contracts tied to real-world events. He added that the CFTC aimed to improve market certainty and address rising criticism accusing the commission of inconsistency.
Opposition Remains Stiff
Selig admitted that the expanding scope of prediction platforms has exposed gray areas in existing law and pledged to resolve that uncertainty. However, state officials remain unconvinced. According to a recent report by The Nevada Independent, Senator Catherine Cortez Masto of Nevada accused Selig of contradicting himself and misleading Congress.
Cortez argued that prediction platforms effectively offer unlicensed sports wagering and that the CFTC should enforce existing law rather than inflame tensions with states. Industry groups such as the American Gaming Association support this stance, warning that prediction markets may bypass age verification standards, responsible gaming controls, and integrity monitoring systems.
State regulators and tribal leaders have also united in opposition to prediction markets. They claim that allowing federally regulated exchanges to offer contracts based on game results could undermine existing regulatory systems. Legal clashes are already underway. Massachusetts recently secured a court victory against Kalshi, while regulators in Nevada, Ohio, and New Jersey have also taken an increasingly critical stance over prediction markets.
