In a significant escalation of federal regulatory authority, the U.S. Commodity Futures Trading Commission (CFTC) has announced it will actively challenge state-level attempts to regulate prediction markets. Chairman Mike Selig, in a Wall Street Journal op-ed published Tuesday, declared his agency possesses exclusive jurisdiction over these markets and will support Crypto.com’s legal appeal against state regulations.
Appointed by former President Donald Trump, Selig argued that prediction markets face ‘an onslaught of state-driven litigation’ with numerous states classifying them as gambling operations subject to local restrictions. ‘The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction,’ Selig stated, characterizing prediction markets as ‘exciting products’ rather than gambling ventures.
The commissioner grounded his position in the 1936 Commodity Exchange Act, asserting prediction markets constitute derivative instruments falling squarely within federal purview. Selig emphasized these platforms operate as ‘self-regulatory organizations examined and supervised by experienced CFTC staff,’ contrasting with critics who describe them as unregulated ‘Wild West’ operations.
The announcement triggered immediate backlash from consumer protection advocates and state officials. Emily Peterson-Cassin of the Demand Progress Education Fund warned the move echoes regulatory failures preceding the 2008 financial crisis: ‘The CFTC is trying to let gamblers gamble on every aspect of life.’ Utah Governor Spencer Cox, a Republican, vowed to deploy ‘every resource’ to challenge the federal position, asserting prediction markets ‘are gambling – pure and simple’ that destroy lives.
Critics highlighted potential conflicts of interest, noting Donald Trump Jr.’s advisory roles with major prediction market platforms Polymarket and Kalshi. The controversy sets the stage for a legal battle pitting federal regulatory authority against states’ traditional control over gambling regulation.