CFTC asserts exclusive authority over prediction markets in court filing

The Commodity Futures Trading Commission filed an amicus brief in federal court this week, staking a claim that will reshape how prediction markets operate across America. The move represents the agency's most direct assertion yet that it—not individual states—holds the power to regulate platforms like Kalshi and Polymarket, which allow users to wager on the outcomes of elections, sports events, entertainment moments, and other real-world occurrences.

CFTC Chairman Michael Selig framed the filing as a necessary defense against what he called state overreach. In a Wall Street Journal op-ed published Monday, he wrote that the agency would no longer tolerate states attempting to impose their own prohibitions on these products. The brief itself was filed in the Ninth U.S. Circuit Court of Appeals in support of Crypto.com, which is currently in a dispute with Nevada's Gaming Control Board—a case that has become a focal point in the larger jurisdictional battle.

The timing matters. Nearly fifty legal cases are now active across various states, all challenging prediction market platforms on similar grounds: that event contracts are, in essence, gambling dressed up in financial language. Critics have pointed to the similarity between betting on a political outcome on Polymarket and placing a wager at a sportsbook, arguing that the regulatory framework should be identical. Kalshi, one of the largest platforms, has pushed back against this characterization, maintaining that it operates within federal rules and that its contracts function as regulated commodity derivatives, not gambling instruments.

Selig's position is that prediction markets serve legitimate economic purposes and operate under CFTC oversight as swaps—a category of financial derivatives that fall squarely within the agency's domain. He has argued that the platforms are not unregulated free-for-alls but rather self-regulatory organizations that are examined and supervised by experienced CFTC staff. In his first public remarks as chairman at the end of January, he signaled his intent to draft new, clearer rules governing the space and to defend the agency's exclusive jurisdiction wherever it is challenged.

The stakes are substantial. If states succeed in establishing their own prohibitions, the prediction market industry could fracture into a patchwork of different regulatory regimes, making it difficult for platforms to operate nationally. Conversely, if the CFTC prevails, it will have cemented its authority over a growing sector that many see as the future of event-based derivatives trading. Selig has made clear the agency's posture: in a video posted to social media on Tuesday, he told those challenging CFTC authority, "We will see you in court."

What remains uncertain is whether the courts will agree with the CFTC's reading of its own jurisdiction. The Ninth Circuit case involving Crypto.com will likely be watched closely as a test of how federal judges view the question. The broader regulatory landscape is also in flux—Selig has promised to revisit the agency's rules on involvement in federal and circuit court cases, suggesting that the CFTC may be preparing for a prolonged legal campaign. For now, the prediction market platforms continue to operate while the jurisdictional question works its way through the courts, leaving their long-term status in America still unresolved.