CFTC Will Join Prediction Markets In Court Battles; Drops Fight Against Sports Contracts

By Bill Speros

Jan 29th, 2026 4:15 PM EST

3D10WWR Canada. 25th Oct, 2025. In this photo illustration, the CFTC (Commodity Futures Trading Commission) logo is seen displayed on a smartphone screen. (Credit Image: © Thomas Fuller/SOPA Images via ZUMA Press Wire) EDITORIAL USAGE ONLY! Not for Commercial USAGE!

The new chair of the Commodity Futures Trading Commission Thursday said his agency stands ready to defend its turf in court. CTFC Chairman Michael S. Selig said the CFTC will join prediction markets in court battles "to defend its exclusive jurisdiction over commodity derivatives." Those platforms include Kalshi, Robinhood, the U.S. version of Polymarket, crypto.com; and markets operated via Underdog and licensed sports betting operators. In addition, the CFTC will drop its formal opposition to sports-event contracts.

Through a sweeping policy statement as part of his opening remarks to a CFTC-SEC Joint Crypto Era Meeting, Selig made it clear his agency views prediction markets as a legitimate, long-standing part of the federal derivatives market. In his first public statements since becoming CTFC chair, Selig chairman stressed that these contracts have existed under CFTC oversight for more than two decades and said ongoing regulatory uncertainty has harmed both innovation and the public interest.

That declaration matters because it lands in the middle of a growing wave of legal battles between prediction market operators and state gambling regulators — cases in which the CFTC has, seen its authority potentially eroded by state judges and legislators.

While states including Massachusetts, Nevada, New Jersey, and others argue that sports-based event contracts amount to illegal gambling, the CFTC has been on the sidelines. Now, it plans to defend the position that these products as federally regulated commodity derivatives. In several ongoing cases, jurisdiction — not consumer protection — is the central dispute, with states asserting gambling authority and prediction markets pointing to exclusive federal oversight under the Commodity Exchange Act.

Against that backdrop, the chairman announced a sharp policy reset.

CTFC Formally Drops Opposition To Sports Event Contracts

First, Selig said the CFTC will withdraw its 2024 proposed rule that would have banned political and sports-related event contracts, along with a 2025 staff advisory that warned registrants away from offering sports-based markets. The chairman acknowledged that both measures, intended to flag litigation risks, instead deepened confusion and chilled lawful market activity.

Second, the agency will begin drafting a new event contracts rulemaking designed to replace what the chairman called an unworkable regulatory framework. The goal is to establish clear standards for which event contracts are permitted — and under what conditions — rather than leaving those decisions to courtroom battles and staff guidance.

Third, the chairman said the CFTC will reassess how it participates in pending federal lawsuits involving prediction markets. Where jurisdiction is at issue, he said, the agency has both the expertise and responsibility to defend its exclusive authority over commodity derivatives — a stance that effectively puts the CFTC on the same side of the courtroom as prediction market operators challenging state enforcement.

Finally, the CFTC plans to work with the SEC on a joint interpretation of Title VII definitions to better delineate where derivatives regulation ends and securities regulation begins. The chairman said clearer coordination would help prevent innovative products from falling into a regulatory “no man’s land” between agencies.

What This Means?

The battle between prediction markets and state regulators and legislators appears likely headed to the Supreme Court and/or Congress.

Earlier this week, a Massachusetts judge issued an outline to a preliminary injunction against Kalshi that would geofence the platform from offering sports-event contracts within the Commonwealth.

"The challenge for these guys is that it really does fall into state jurisdiction. If the regulators or the state files first, it seems like there's more than a 50% chance they could win, based on what happened in Massachusetts," Hot Paper Lantern CEO Ed Moed told Bookies.com Thursday. "They're going to fight 200 court cases until they get to the Supreme Court. Right now, they're stuck. And then when they finally get there, it's kind of stacked," added Moed, a long-time gaming industry communications professional.

In terms of the injunction in Massachusetts, Gaming Industry Attorney Daniel Wallach told Bookies.com this week that the judge's decision to give Kalshi only 30 days to geofence the Commonwealth from sports-event contracts, as opposed to the 90 sought by the prediction market was a significant rebuke.

"The judge is really holding Kalshi's feet to the fire on the scope of the injunction.," Wallach said.

Given that backdrop in the Bay State and elsewhere, the message from Selig on Thursday was unmistakable. The CFTC no longer wants prediction markets regulated through litigation, warning letters, or state-by-state crackdowns. Instead, the agency is positioning itself as the primary referee — even as courts continue to sort out whether states are willing to accept that role.

For sports betting regulators and lawmakers watching closely, the statement signals that the federal-state clash over prediction markets is far from over — but the CFTC has now firmly picked a side.

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