CFTC Chair Michael Selig Signals New Regulatory Framework for Prediction Markets

The US Commodity Futures Trading Commission (CFTC) is preparing to reset rules for prediction markets. On Thursday, the newly appointed Chair, Michael Seli,g stated that the agency will develop a clearer, more consistent regulatory framework for the fast-growing sector.

CFTC Charts a New Course for Prediction Markets

According to a Bloomberg report published earlier today, CFTC Chair Michael Selig is moving forward with plans to launch regulations for prediction markets. The commission has reportedly withdrawn its 2024 proposal to ban political and sports‑related prediction markets. The Chair has also ordered the cancellation of a 2025 advisory that warned prediction markets against offering sports-related contracts.

During an event held with the Securities and Exchange Commission Chairman Paul Atkins, Selig stated,

“Despite their history, many view them [prediction markets], as novel or unsettled, and that uncertainty has not served our markets, nor has it served the public interest…While the advisory was issued at the staff level with the intent of bringing awareness to the litigation, it has instead contributed to uncertainty in our markets.”

This regulatory development comes amid the growing influence of prediction markets in the crypto space. For instance, Coinbase launched prediction markets recently, as part of its vision of expanding itself into an “Everything Exchange.” Gemini has also entered the expanding space with the introduction of Gemini Predictions.

While this marked Selig’s first remarks as the CFTC Chair, he promised to introduce more comprehensive regulations, cooperating with the SEC. He added,

“As the new frontier of finance descends upon us, regulators must relentlessly modernize, harmonize, and future-proof their approach to regulation. But we must not abandon our age-old principles, like investor protection, anti-fraud and anti-manipulation, and market integrity, which remain our North Star.”

Legal Battles Erupt Over Prediction Markets and Sports Wagers

Leading prediction platforms like Kalshi, Polymarket, and many more are facing legal challenges in multiple states over event contracts tied to sports. People now use these prediction markets to bet on political, financial, and cultural events. 

The increasing popularity of prediction markets in this aspect has drawn comparisons with the recent development of legalized sports betting in the US. State regulators and attorneys general maintain that individual states have the authority to legalize and oversee sports betting within their borders. Tribal nations have also filed lawsuits, asserting their sovereign right to regulate gambling on their lands. 

The jurisdiction debate and fights from three U.S. states prompted Coinbase to file a lawsuit against these states. Commenting on this growing debate, Selig noted, “Where jurisdictional questions are at issue, the Commission has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives.”