U.S. CFTC Chair Selig Warns States Over Prediction Markets
- Selig says the CFTC holds exclusive power over event contracts and will litigate.
- States argue sports-based markets breach betting laws as the Nevada ruling backs them.
- Crypto leaders cheer the reset, while a senator and Spencer Cox warn of gambling harm.
U.S. Commodity Futures Trading Commission Chairman Mike Selig issued a sharp warning to state governments challenging prediction markets such as Polymarket and Kalshi. In a video posted Tuesday on X, he declared that the CFTC holds exclusive jurisdiction over these derivative markets and vowed to defend that authority in court.
His statement comes as several states pursue legal action against event-contract platforms, arguing they violate state sports-betting laws. The dispute now places federal regulators, state officials, and major crypto firms in a growing legal clash.
Federal Authority Versus State Laws
Selig said the CFTC has regulated these markets for more than two decades. He argued that prediction markets serve public functions by allowing Americans to hedge risks such as temperature shifts and energy price spikes. He also said they act as a check on news media and information streams.
At the same time, several states have targeted event-contract platforms. Nevada, Massachusetts, and New York have accused companies of breaching state sports-betting laws. A federal judge in Nevada ruled in November that state authorities were correct and that the contracts did not fall under CFTC oversight. That ruling remains under appeal.
Meanwhile, Coinbase has entered the dispute. The crypto exchange is suing Connecticut, Illinois, and Michigan over efforts to regulate sports contracts as gaming activities. As this legal fight widens, Selig insists that only the CFTC can regulate these derivatives markets.
Political Shifts and Industry Moves
Selig’s stance marks a shift from the agency’s earlier approach. Before President Donald Trump returned to Washington, the CFTC fought against some political betting contracts. The agency had argued that such contracts were unlawful and contrary to the public interest.
Courts later ruled against the CFTC in its dispute with Kalshi. After leadership changes under Trump’s administration, the agency dropped its legal fight. In early 2025, Don Trump Jr. joined Kalshi as a strategic adviser. In August, he also joined Polymarket’s advisory board.
In October, Trump Media & Technology Group, which owns Truth Social, announced plans to enter the prediction markets business. Within weeks of his Senate confirmation, Selig said the CFTC would reset its approach. He pledged to advance new rulemaking grounded in what he described as a rational interpretation of the Commodity Exchange Act that promotes responsible innovation.
Related: US Senate Confirms Michael Selig, Travis Hill to Lead CFTC and FDIC
State Resistance and Political Reaction
Utah Governor Spencer Cox responded directly to Selig’s statement. On X, he questioned the CFTC’s authority over what he described as the “derivative market” of sports events, including LeBron James rebounds. He called prediction markets gambling and said they harm families, especially young men.
Although Utah has not led major lawsuits, lawmakers there are considering measures to target certain sports contracts. Cox said he would use every power available to challenge federal claims in court. He also wrote in a Wall Street Journal essay that the agency would not sit idle while states seek prohibitions on these products.
Crypto executives welcomed Selig’s remarks. Tyler Winklevoss, co-founder of Gemini, said such leadership would help position the United States as a global hub for crypto and markets. On the other hand, Senator Elizabeth Warren criticized the move. She said the CFTC should focus on safeguarding derivatives markets rather than limiting state authority over gambling regulation.
As federal and state officials prepare for further legal battles, one question now looms: who ultimately controls the future of prediction markets in the United States?
