- Mike Selig of the CFTC said the agency filed a friend-of-the-court brief in support of prediction markets to protect its sole control amid a wave of state-led lawsuits.
- Selig said that event contracts are federally regulated derivatives, not gambling.
- According to him, limiting federal oversight would hurt the integrity of the markets, the safety of investors, and the U.S.'s position as a leader in global financial markets.
Mike Selig, the chairman of the U.S. Commodity Futures Trading Commission, said that the agency has taken steps to protect its power over prediction markets.
Selig said on X and in a Wall Street Journal opinion piece that prediction markets are neither new nor a fringe product. He pointed out that the CFTC has been in charge of event contracts for more than twenty years.
According to Seeling, these markets have real economic uses, such as helping businesses and people protect themselves from real-world risks like temperature fluctuations, spikes in energy prices, and changes in taxes. They also help gather information about what will happen in the future.
The CFTC Chair said that state governments have filed several lawsuits trying to get event contracts to be seen as gambling and come under state law. He clarified that nearly 50 cases are underway across the country against platforms used by millions of Americans, including Kalshi, Polymarket, Coinbase (COIN), and Crypto.com.
He also warned that if the lawsuits are successful, it could keep U.S. participants from using federally regulated prediction markets.
“These are regulated derivatives markets, not the Wild West,” said Selig. He added that CFTC-registered exchanges are watched over and must follow rules against manipulation and the Bank Secrecy Act, which includes controls against money laundering and verifying customers.
He said that the agency has long handled event contracts, dating back to the Iowa Electronic Markets in the 1990s and later to retail platforms that let traders guess at mortgage rates and gas prices.
The CFTC Chair also talked about how quickly prediction markets are growing, noting that industry estimates indicate that the number of global users has grown fourfold over the past two years to about 15 million.
He told the states not to step on federal authority because it could hurt the U.S.'s leadership in financial markets. “To those seeking to challenge the Commission’s jurisdiction over these contracts,” Selig said, “we’ll see you in court.”
Selig’s statement was supported by Coinbase Chief Legal Officer Paul Grewal and Wyoming Senator Cynthia Lummis, among many.
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