CFTC defends its right to prediction market enforcement as states challenge platforms

The Commodity Futures Trading Commission filed an amicus brief in federal court on Tuesday to assert the agency’s right to enforce prediction markets instead of individual states.

CFTC Chairman Michael Selig argued in a Monday Wall Street Journal op-ed that the CFTC has always had authority over prediction markets and determining whether the event contracts constitute gambling, as critics allege. Selig noted nearly 50 active legal cases against prediction markets and said the CFTC would be stepping in prevent state encroachment.

“The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products,” he wrote.

The move comes as prediction markets like Kalshi and Polymarket face legal challenges in multiple states over event contracts. The platforms allow users to bet on the outcomes of events in pop culture, sports, entertainment and more.

Critics of prediction markets have argued that the offerings amount to little more than gambling, though Kalshi has defended its platform and argued that it abides by federal regulations. Sports betting on the prediction platforms have drawn comparisons to legalized sports betting in the U.S.

In his first public comments as CFTC chairman at the end of January, Selig said he was prepared to draft new, clear rules to govern prediction markets and revisit the agency’s rules on involvement in federal and circuit court cases.

“Where jurisdictional questions are at issue, the Commission has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives,” he said at the time.

In his Monday op-ed, Selig said event contracts “serve legitimate economic functions” and operate under CFTC rules as “swaps” rather than gambling. He also posited that trading on event contracts are beneficial for the market and for Americans at large.

“These exchanges aren’t the Wild West, as some critics claim, but self-regulatory organizations that are examined and supervised by experienced CFTC staff,” Selig wrote.

In a Tuesday video posted to X, Selig said his message to those who challenge the CFTC’s authority is clear: “We will see you in court.”

“Today, the CFTC is taking an important step to ensure that these markets have a place here in America and have the integrity and resilience and vibrancy that our derivative markets deserve,” he said.

Selig said the amicus brief would be filed in the Ninth U.S. Circuit Court of Appeals in support of Crypto.com in its dispute with the Nevada Gaming Control Board.

Disclosure: CNBC and Kalshi have a commercial relationship that includes a CNBC minority investment.