CFTC defends its right to prediction market enforcement as states challenge platforms

The Commodity Futures Buying and selling Fee filed an amicus temporary in federal courtroom on Tuesday to assert the company’s right to implement prediction markets as an alternative of particular person states, in accordance to its new chairman, Michael Selig.

Selig argued in a Monday Wall Road Journal op-ed that the CFTC has at all times had authority over prediction markets and figuring out whether or not the occasion contracts represent playing, as critics allege. Selig famous almost 50 energetic authorized instances in opposition to prediction markets and mentioned the CFTC could be stepping in to stop state encroachment.

“The CFTC will not sit idly by whereas overzealous state governments undermine the company’s unique jurisdiction over these markets by searching for to set up statewide prohibitions on these thrilling merchandise,” he wrote.

The transfer comes as prediction markets like Kalshi and Polymarket face authorized challenges in a number of states over occasion contracts. The platforms enable customers to guess on the outcomes of occasions in popular culture, sports activities, leisure and extra.

Critics of prediction markets have argued that the choices quantity to little greater than playing, although Kalshi has defended its platform and argued that it abides by federal laws. Sports activities betting on the prediction platforms has drawn comparisons to legalized sports activities betting within the U.S.

In his first public feedback as CFTC chairman on the finish of January, Selig mentioned he was ready to draft new, clear guidelines to govern prediction markets and revisit the company’s guidelines on involvement in federal and circuit courtroom instances.

“The place jurisdictional questions are at problem, the Fee has the experience and duty to defend its unique jurisdiction over commodity derivatives,” he mentioned on the time.

In his Monday op-ed, Selig mentioned occasion contracts “serve legit financial capabilities” and function underneath CFTC guidelines as “swaps” quite than playing. He additionally posited that buying and selling on occasion contracts is helpful for the market and for People at massive.

“These exchanges aren’t the Wild West, as some critics declare, however self-regulatory organizations which are examined and supervised by skilled CFTC employees,” Selig wrote.

In a Tuesday video posted to X, Selig mentioned his message to those that challenge the CFTC’s authority is evident: “We’ll see you in courtroom.”

“In the present day, the CFTC is taking an necessary step to be sure that these markets have a spot right here in America and have the integrity and resilience and vibrancy that our by-product markets deserve,” he mentioned.

Selig mentioned the amicus temporary could be filed within the Ninth U.S. Circuit Courtroom of Appeals in assist of Crypto.com in its dispute with the Nevada Gaming Management Board.

CNBC couldn’t confirm that the amicus temporary had been filed.

Disclosure: CNBC and Kalshi have a industrial relationship that features a CNBC minority funding.