REGULATION | Prediction Markets Fall Under Our Federal Mandate, Says Chairman, CFTC

Michael Selig, Chair of the U.S. Commodity Futures Trading Commission (CFTC), is pushing for the agency to retain exclusive authority over prediction markets intensifying a growing clash with U.S. states seeking to regulate the sector.

Selig argues that event-based contracts, which allow traders to bet on outcomes such as elections, sports or economic indicators, fall squarely under the CFTC’s mandate as derivatives products, rather than gambling, and should therefore be overseen at the federal level.

The stance comes as several states, including Arizona, Illinois and Nevada, attempt to classify such platforms as illegal betting operations, triggering legal disputes over jurisdiction. Federal courts have increasingly sided with the CFTC in recent cases reinforcing the regulator’s position that state-level enforcement risks undermining a unified national framework.

Prediction markets, offered by platforms such as Polymarket and Kalshi, have surged in popularity, drawing both retail and institutional interest, but also scrutiny over risks such as insider trading and market manipulation.

Selig has emphasized the need for clear federal rules to govern the fast-growing sector warning that regulatory fragmentation could push innovation offshore while weakening oversight.

The dispute is expected to shape the future of prediction markets in the United States with legal battles likely to determine whether federal regulators or state authorities ultimately control the emerging industry.

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