The CFTC Says States Have No Business Regulating Prediction Markets

TLDR

• The CFTC filed an amicus brief asserting exclusive federal authority over prediction markets in a case involving Crypto.com and Nevada
• CFTC Chair Michael Selig warned states challenging the agency’s authority will be “met in court”
• 23 US senators urged Selig to stay out of pending litigation involving prediction markets
• Polymarket sued Massachusetts, arguing only the CFTC can regulate such markets
• Utah’s governor called prediction markets gambling and vowed to fight them in court

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CFTC Files Court Brief Claiming Sole Authority Over Prediction Markets as States Push Back

The US Commodity Futures Trading Commission has filed a court brief arguing it holds exclusive federal authority over prediction markets, escalating a legal battle with state regulators across the country.

The amicus brief was submitted to the US Court of Appeals for the Ninth Circuit in a case involving Crypto.com and the state of Nevada. Crypto.com’s prediction-market arm sued Nevada in June 2025 after the state tried to stop it from offering sports-event contracts.

A judge ruled that sports-event contracts fell outside the CFTC’s jurisdiction and could be regulated under Nevada’s gaming laws. Crypto.com appealed that decision, which led to the CFTC stepping in with its brief.

CFTC Chair Michael Selig said the agency has regulated prediction markets for over two decades. He described the contracts as commodity derivatives that fall squarely within the CFTC’s legal remit under the Commodity Exchange Act.

Selig said Congress granted the CFTC “exclusive jurisdiction” over futures and event contracts as part of the Dodd-Frank Act following the 2008 financial crisis. He argued the law covers contracts based on any quantifiable result of an event, including sports outcomes.

Prediction market platforms like Kalshi and Polymarket have grown rapidly, especially after the 2024 US election. States say these platforms are effectively running sportsbooks and violating local gambling laws.

States and Senators Push Back

On Friday, 23 US senators — led by Democrats Catherine Cortez Masto and Adam Schiff — wrote to Selig urging him not to intervene in pending court cases. They said the CFTC was converting a legal prohibition into “case-by-case policy judgments.”

The senators argued prediction market platforms are offering contracts that mirror sportsbook wagers, evade state consumer protections, and undermine state and tribal regulatory regimes.

Polymarket filed its own lawsuit against Massachusetts last week, claiming that only the CFTC, as a federal regulator, has the authority to oversee these markets.

Congress Eyes Market Structure Bill

A separate digital asset market structure bill, the CLARITY Act, passed the House in July 2025. The Senate Agriculture Committee advanced it in January, but as of Tuesday it was unclear if it had enough support to pass a full Senate vote.

Lawmaker Support

Republican Senator Bill Hagerty said he welcomed Selig’s stance. He said clear rules would give markets and regulators the certainty needed to drive innovation.

Selig was scheduled to speak about the CLARITY Act’s progress at an event hosted by the Trump family-backed platform World Liberty Financial at Mar-a-Lago on Wednesday.

Under former CFTC Chair Rostin Behnam, the agency had been working on rules to ban bets on political events. That rulemaking was scrapped earlier this month.

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