The new chairman of the Commodity Futures Trading Commission said Thursday the agency will craft new, clear rules to govern prediction markets.
“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,” said CFTC head Michael Selig during an event held jointly with Securities and Exchange Commission Chairman Paul Atkins.
Selig said he ordered agency staff to withdraw a proposed rule from 2024 that would have prohibited trades on sports and politics. He also directed them to rescind a 2025 advisory that urged prediction markets to exercise caution over offering sports contracts.
“While the advisory was issued at the staff level with the intent of bringing awareness to the litigation,” Selig said, “it has instead contributed to uncertainty in our markets.”
Kalshi, Polymarket and others are embroiled in court cases in multiple states over event contracts on sports. The prediction platforms have boomed in popularity, offering users a forum to wager on the outcomes of events in politics, markets, culture and more.
Contracts on live sports have drawn comparisons to the wave of legalized sports betting in the U.S.
State regulators and attorneys general argue that states have the right to legalize and regulate sports betting in their jurisdictions. Tribal nations, too, have sued over their sovereign right to govern gambling on their lands.
The Kalshi website arranged on a laptop in New York, US, on Monday, Feb. 10, 2025.
Gabby Jones | Bloomberg | Getty Images
Kalshi insists its offerings do not constitute gambling — that they are derivatives regulated at the federal level and not subject to state regulation.
Selig said Thursday he wants to revisit how involved the CFTC becomes in those federal district and circuit court cases.
“Where jurisdictional questions are at issue, the Commission has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives,” he said.
Selig’s comments received an enthusiastic response from the Coalition for Prediction Markets.
“By withdrawing uncertain guidance around sports-event contracts and committing to undertake comprehensive rulemaking, the Commission takes a key step to foster market clarity, responsible innovation, and trust in American markets,” a spokesperson for the industry group told CNBC.
Selig’s comments are his first public remarks as chairman at the CFTC. He promised more cooperation between the CFTC and the SEC to work on crypto regulation, credit swaps and other innovative financial instruments.
“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,” Selig added.
— CNBC’s Jessica Golden contributed to this article.
Disclosure: CNBC has a business relationship with Kalshi