CFTC Chairman Draws Line In Prediction Market Fight As Senate Democrats Push Back
The battle over sports-linked prediction markets just went national. Commodity Futures Trading Commission Chairman Mike Selig has officially joined the prediction market fight. The lines are now clear. On one side, prediction markets, the Trump Administration, the CFTC and Republicans in Congress. On the other side, state regulators, state legislators, governors in both parties, and Democrats in Congress.
In a sharply worded Wall Street Journal op-ed, Selig signaled that the CFTC is prepared to defend its turf — namely what it sees as its exclusive authority over federally regulated event contracts. This comes as state regulators, legislators and Democratic lawmakers warn the agency may be overstepping.
Selig followed the op-ed with a video saying that the CFTC will be filing a "Friend of the Court" brief in the ongoing litigation against prediction markets nationwide.
“The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets,” Selig wrote in a column headlined “States Encroach on Prediction Markets.”
In the video he added, "we'll see you in court."
For an industry that has watched states like Nevada, Massachusetts and Illinois grapple with whether sports-based contracts are gambling or derivatives, that was more than rhetoric. It was a declaration of intent.
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Federal Muscle Enters The Nevada Fight
The timing of Selig’s op-ed and video Tuesday was no accident.
On Feb. 5, the CFTC filed a motion in the U.S. Court of Appeals for the Ninth Circuit. It seeks permission to submit an amicus brief in support of Crypto.com’s derivatives arm, Crypto.com | Derivatives North America (CDNA). The case stems from a dispute between CDNA and Nevada gaming regulators over whether sports prediction contracts fall under federal commodities law or state gambling statutes.
At issue: Whether a CFTC-registered Designated Contract Market can offer event contracts tied to sports outcomes without state gaming approval.
Its filing argues that the Commodity Exchange Act grants the CFTC exclusive jurisdiction over futures and derivatives trading. In plain English: If it’s a regulated derivatives product, states don’t get to treat it like a sportsbook.
The CFTC also cited leadership changes — Selig was confirmed in December and a new general counsel sworn in late January — as reasons for its late filing. It notes the transition “altered the CFTC’s programmatic priorities and institutional posture.”
Meanwhile, a district court judge in Massachusetts put Kalshi on the clock to implement a restraining order. It would geofence the site from trading in sports-event contracts in the Commonwealth.
Selig's video was shared by both Polymarket CEO Shayne Coplan and Kalshi CEO Tarek Mansour. Underdog CEO Jeremy Levine shared the video with the following comment: "Thank you @ChairmanSelig."
Translation: new sheriff, new strategy.
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Senate Democrats: Stay Out Of It
That strategy has already triggered alarm bells on Capitol Hill.
In a Feb. 13 letter led by Adam Schiff and Catherine Cortez Masto, they and 21 other Senate Democrats urged the CFTC to stay out of active court fights over prediction markets.
Their argument is blunt: Many of these contracts “mirror sportsbook wagers,” bypass state and tribal regulatory systems, and generate no direct public revenue for those jurisdictions."
The senators point to long-standing prohibitions within the Commodity Exchange Act and CFTC rules “gaming" contracts. If sports falls under “gaming,” they argue, the public-interest test has already been settled — such contracts should not be listed.
They also took aim at what they view as Selig’s evolving posture. During his confirmation process, Selig told lawmakers he would “look to the courts” when asked whether sports-event contracts constitute gambling. His recent comments suggest the agency is now prepared to push that boundary rather than wait for judicial clarity.
Bigger Than One Lawsuit
This fight is about more than Crypto.com, Nevada or Massachusetts.
Prediction market platforms such as Kalshi get more than 80% of their volume on sports outcomes. States and tribal regulators see those products as functionally identical to sports betting. The platforms argue they are federally regulated derivatives designed for hedging and price discovery.
For sportsbooks and state regulators, the stakes are obvious: tax revenue, consumer protection frameworks, and regulatory authority.
The CFTC sees this as defending federal supremacy over commodities markets.
For now, the Ninth Circuit appeal looms, the CFTC is preparing its brief, and Senate Democrats are demanding restraint.
The Supreme Court will likely decide whether a Super Bowl “event contract” is a hedge or a bet.
But make no mistake: Washington has officially joined the prediction market war.
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