The CFTC defends enforcement of market expectations as states challenge platforms

The Commodity Futures Trading Commission filed an amicus brief in federal court on Tuesday to assert the agency’s right to enforce prediction markets rather than individual states, according to its new chairman, Michael Selig.

Selig argued in a Wall Street Journal op-ed on Monday that the CFTC has always had the authority over prediction markets and determining whether event contracts constitute gambling, as critics claim. Selig pointed to the nearly 50 active legal cases against prediction markets and said the CFTC would step in to prevent state encroachment.

“The CFTC will not sit idly by while overzealous state governments work to undermine the agency’s exclusive jurisdiction over these markets by seeking statewide bans on these exciting products,” he wrote.

The move comes as prediction markets like Kalshi and Polymarket face legal challenges in multiple states over event contracts. The platforms allow users to bet on the outcomes of events in popular culture, sports, entertainment, and more.

Critics of prediction markets have argued that the offerings amount to little more than gambling, although Calci has defended his platform and argued that it adheres to federal regulations. Sports betting on prediction platforms have drawn comparisons to legal sports betting in the United States

In his first public comments as CFTC head at the end of January, Selig said he was prepared to craft new, clear rules governing prediction markets and reconsider the agency’s rules on participating in federal and circuit court cases.

“When issues of jurisdiction are at issue, the Commission has the experience and responsibility to defend its exclusive jurisdiction over commodity derivatives,” he said at the time.

In his op-ed on Monday, Selig said event contracts “serve legitimate economic functions” and operate under CFTC rules as “swaps” rather than gambling. He also assumed that trading event contracts is good for the market and for Americans in general.

“These exchanges are not the Wild West, as some critics claim, but self-regulatory organizations that are vetted and supervised by experienced CFTC staff,” Selig wrote.

In a video posted Tuesday on X, Selig said his message to those challenging the CFTC’s authority is clear: “We’ll see you in court.”

“Today, the CFTC is taking an important step to ensure that these markets have a place here in America and have the integrity, flexibility, and vitality that our derivatives markets deserve,” he said.

Selig said the amicus brief will be filed with the 9th U.S. Circuit Court of Appeals to support Crypto.com in its dispute with the Nevada Gaming Control Board.

Disclosure: CNBC and Kalshi have a business relationship that includes a minority investment in CNBC.