CFTC chair defends prediction market oversight as states escalate enforcement
Federal and state authorities are intensifying a jurisdictional fight over prediction markets as regulators and prosecutors challenge whether event contracts are lawful derivatives or illegal gambling. The dispute is expanding through lawsuits against platforms including Kalshi and Polymarket, while the Commodity Futures Trading Commission argues the matter belongs under federal supervision and court review.
Highlights
- CFTC Chair Michael Selig criticizes escalating state-level lawsuits and criminal actions against prediction market operators, defending federal jurisdiction as states pursue aggressive enforcement.
- Selig calls for the Supreme Court to resolve whether event contracts are gambling or derivatives, aiming to settle federal versus state authority over prediction market oversight.
- On Thursday, the Justice Department and CFTC sued Arkansas AG Tim Griffin to block his action against Kalshi, while Louisiana filed lawsuits against Kalshi, Polymarket, Robinhood, and Coinbase as litigation widens across a dozen jurisdictions.
Jurisdiction clash over event contracts
As reported by The Block, Commodity Futures Trading Commission Chair Michael Selig says states are becoming increasingly aggressive in lawsuits and criminal actions tied to prediction market operators, even as the agency maintains that these products fall under its exclusive jurisdiction.Speaking at the Cantor Convergence conference, Selig calls the state suits "really egregious" and says some states are effectively trying to jail founders and chief executives of companies offering what he describes as lawful products under a federal regime. He argues that the disagreement over whether event contracts are gambling or derivatives should be resolved in court, not through threats of prison time.
Selig also says he wants the conflict elevated to the Supreme Court rather than fought state by state. He frames that approach as a way to settle the merits of the case and clarify the CFTC's authority over exchanges and prediction market platforms.
Litigation broadens across states
Legal pressure on the sector is widening as the CFTC and the U.S. Justice Department move to block state action while additional states pursue their own cases. On Thursday, the Justice Department and the CFTC sue Arkansas Attorney General Tim Griffin to stop his action against Kalshi.Louisiana also files a lawsuit on Thursday targeting companies including Kalshi, Polymarket, Robinhood and Coinbase. The expanding set of disputes, which involves roughly a dozen states and cities, underscores growing regulatory risk for crypto-linked and event-contract platforms as the boundary between gambling law and derivatives oversight remains contested.
In earlier coverage, we examined the Louisiana prediction market lawsuit that broadened the state push against crypto-linked event contracts.
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