CFTC Chairman Defends Federal Oversight of Prediction Markets Amid State Legal Battles

U.S. Commodity Futures Trading Commission (CFTC) Chairman Mike Selig has forcefully defended federal authority over prediction markets such as Polymarket and Kalshi, pushing back against state-level legal challenges targeting event-contract platforms. In a video statement posted on X, Selig warned that the CFTC would take legal action against states attempting to regulate what he described as federally overseen derivatives markets.

Selig emphasized that the CFTC has regulated derivatives and event contracts for more than 20 years, arguing that prediction markets serve legitimate economic purposes. According to him, these markets help Americans hedge risks tied to temperature changes, energy price volatility and other commercial uncertainties, while also providing alternative information signals alongside traditional media.

However, several states — including Nevada, Massachusetts and New York — have argued that certain prediction market offerings, particularly sports-related contracts, violate state gambling and sports-betting laws. A federal judge in Nevada ruled in November that some contracts fall outside CFTC jurisdiction, though the decision is currently under appeal.

The legal dispute comes as major players expand into the sector. Coinbase is suing Connecticut, Illinois and Michigan over efforts to classify sports-based event contracts as gambling. Meanwhile, President Donald Trump’s administration has reshaped the CFTC’s leadership, signaling a more favorable regulatory stance toward prediction markets. Earlier this year, Selig announced plans for new rulemaking under the Commodity Exchange Act aimed at supporting responsible innovation in derivatives markets.

Political connections have also drawn scrutiny. Don Trump Jr. joined Kalshi as a strategic adviser in early 2025 and later became an adviser to Polymarket. Trump Media & Technology Group has also announced plans to enter the prediction markets business.

Critics remain vocal. Utah Governor Spencer Cox publicly challenged Selig’s claims of exclusive jurisdiction, calling prediction markets “gambling.” Senator Elizabeth Warren warned that federal overreach could weaken state authority to regulate gambling and protect consumers.

As court battles continue, the outcome could reshape the regulatory landscape for prediction markets, sports betting, and crypto-linked derivatives platforms across the United States.