CFTC’s Changing Stance on Prediction Markets
Shift in Regulatory Approach by the CFTC
On Thursday, Michael Selig, chairman of the US Commodity Futures Trading Commission (CFTC), indicated the agency’s plan to retract previously proposed but unfinalized regulations aimed at curbing prediction markets. These initial proposals were designed to limit the ability of such platforms to offer betting on sports and political events. Since then, enforcement responsibility has largely fallen to state attorneys general and local gaming authorities, who have increasingly resisted these platforms.
Emerging Support for Prediction Markets
The CFTC appears to be softening its stance, influenced in part by interest from the current administration, including President Donald Trump, who is reportedly developing his own prediction market platform. The agency has withdrawn a warning memo that discouraged prediction markets from engaging in sports-related contracts. Instead, the CFTC is considering a new regulatory framework aimed at establishing clear rules for prediction markets, which might help reduce conflicts with local regulators. Specific details about these regulations remain under development.
Chairman Selig has acknowledged the challenges in overseeing this sector and addressed concerns that the CFTC has not effectively supported market participants. He promised to establish definitive guidelines to offer clarity and security for those involved in event contracts.
Furthermore, Selig emphasized the CFTC’s commitment to encouraging responsible innovation in crypto asset markets, underscoring the importance of event contract markets within the broader financial ecosystem.
Challenges from Local Gaming Authorities and Industry Response
The exact ways in which the forthcoming regulations will assist prediction markets remain unclear. Platforms like Kalshi, Polymarket, and Crypto.com continue to face scrutiny at the state level, where officials argue these services may be violating gambling laws. Despite this, the Coalition for Prediction Markets, an entity advocating for these platforms, praised Chairman Selig’s remarks, highlighting the CFTC’s expertise and authority over event contracts.
The coalition welcomed the CFTC’s readiness to protect its exclusive jurisdiction and participate actively when regulatory boundaries are contested.
