Federal Oversight Asserted: Prediction Markets Belong to Federal Jurisdiction
Mike Selig, Chair of the US Commodity Futures Trading Commission (CFTC), recently declared that prediction markets fall under federal regulatory authority. He announced that the agency has filed an amicus brief in court, emphasizing that these markets are not within the jurisdiction of individual states. He warned that any state challenging the CFTC's authority could face legal action.
Functional and Controversial Markets
Selig noted that the CFTC has effectively overseen related derivative markets for over 20 years. Prediction markets provide a way for the public to hedge against business risks, such as temperature fluctuations or energy price changes, and also serve as a check on media and information accuracy. However, several states, including Nevada, have taken action against certain platforms, citing potential violations of sports betting laws.
Ongoing Legal Disputes
Previously, a federal judge in Nevada ruled that prediction market contracts fall outside the CFTC’s scope, though the decision is currently under appeal. While the CFTC has had legal conflicts with platforms like Kalshi, the agency has since redefined its approach following regulatory changes during the Trump administration.
Updating Rules to Balance Innovation and Oversight
Selig stated that the CFTC will advance new rulemaking to interpret the Commodity Exchange Act in a reasonable and consistent manner, supporting responsible innovation in line with Congressional intent.
State Resistance Grows
Utah Governor Spencer Cox responded on social media, calling prediction markets essentially 'pure gambling,' and vowed to fight back in court using all available means.