CFTC to Begin Fierce Defense of Sports Prediction Markets

To the surprise of a few, new Commodity Futures Trading Commission (CFTC) chairman Michael Selig isn’t as neutral on sports predictions.

The CFTC head wrote an op-ed for the Wall Street Journal this week, making his support for sports prediction markets clear. Selig highlighted the industry's protection under the Commodity Exchange Act (CEA) and the numerous economic benefits it provides. He also blasted state lawmakers pushing the rein in prediction markets, painting them as “overzealous.” 

The op-ed promises a “fierce” defense of the industry, adding a significant ally to its fight.

Selig Blasts Concerns from States

The CFTC head didn’t mince words when discussing the strong opposition states are forming against sports prediction markets. He ripped them, accusing them of using bogus legal arguments to wrestle control away from the CFTC. 

Well-known CFTC-registered exchanges used by tens of millions of Americans—including Kalshi, Polymarket, Coinbase, and Crypto.com—face an onslaught of state-driven litigation across the country, with nearly 50 active cases presenting a range of legal challenges,” Selig’s op-ed reads. “The most common allegation is that these contracts are a form of gambling and therefore subject to state laws. 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.

Amicus Brief Cites CEA 

Michael Selig didn’t stop with promises of support. 

The CFTC officially submitted an amicus brief with the US Circuit Court of Appeals for the Ninth Circuit, which is currently reviewing a lawsuit between Nevada and Kalshi. The brief focuses on the CEA, which the regulators believe covers sports prediction markets.

“As the statutory definition makes clear, the relevant inquiry is intentionally broad,” the filing reads. “The statute is framed in expansive terms, requiring only that the contract be ‘associated with potential financial, economic, or commercial consequence.’ That definitional framework reflects Congress’s recognition that derivatives markets serve a wide spectrum of market participants whose economic exposures are not limited to any specific market participant… Because the statute does not demand certainty, sports event contracts fall comfortably within the statute’s reach.”

Will Selig’s Shift Matter?

While Selig’s shift on prediction markets wasn’t surprising, there is some question about how much it will mean.

As volume has increased for prediction market operators, public opposition has continued to grow. That is especially true in conservative southern states like Texas and Georgia, which have rejected regulated sports betting altogether. Lawmakers and residents have had moral concerns that have grown as the societal damage from the industry has become clear. 

These states are known as Republican strongholds, but some have seen voters shift to the left ahead of the midterm election. Given the larger issues being discussed ahead of November, some could choose to reject prediction markets to gain an edge against Democrats in unexpectedly tight races.