CFTC Warns Prediction Market Opponents We Will See You In Court

The Commodity Futures Trading Commission signaled a more aggressive legal posture toward state level challenges against prediction markets, with Chairman Michael Selig warning regulators that federal authority will be defended in court.

Good to Know

• CFTC filed a friend of the court brief to assert exclusive jurisdiction over prediction market derivatives.
• Chairman Michael Selig publicly warned state regulators that legal disputes will be fought in federal courts.
• Ongoing cases involve platforms such as Kalshi and Crypto.com facing opposition from several state gaming authorities.

The agency moved formally into the legal fight on Tuesday, submitting an amicus brief intended to “defend its exclusive jurisdiction over these derivative markets.”

That filing is the first direct courtroom step taken by the federal regulator since disputes escalated between prediction market operators and state level gaming regulators in Nevada, Massachusetts, and New Jersey.

Michael Selig, who assumed the chairman role in December 2025, paired the legal filing with a public message delivered through a video posted on X.

“To those who seek to challenge our authority in this space, let me be clear: We will see you in court,” Selig said.

Prediction Are Financial Tools Rather Than Gambling

Federal officials continue to argue that event based contracts fall under derivatives law rather than gaming statutes, placing them within the oversight structure traditionally used for commodities and financial hedging instruments.

“Prediction markets aren’t new,” Selig said. “The CFTC has regulated these markets for over two decades. They provide useful functions for society by allowing every-day Americans to hedge commercial risks, like increases in temperature and energy-priced spikes. They also serve as an important check on our news media and our information streams.”

While Selig highlighted risk management and information discovery as public benefits, he avoided referencing sports related contracts directly. Market activity on platforms such as Kalshi has nonetheless been heavily concentrated in sportsbook style offerings including spreads, totals, and proposition style outcomes.

State Regulators Continue To Challenge Market Structure

Legal friction has grown steadily over the past year as several states questioned whether prediction market contracts resemble unlicensed sports wagering products. Enforcement actions and litigation from gaming regulators triggered the current jurisdictional dispute now moving through federal courts.

“Over the past year, American prediction markets have been hit with an onslaught of state-led litigation,” Selig said. “Today, the CFTC is taking an important step to ensure that these markets have a place here in America and have the integrity and resilience and vibrancy that our derivative markets deserve.”

Industry dynamics became more complex after major sportsbook operators DraftKings and FanDuel launched their own prediction market products late last year. Neither company currently offers sports event contracts within states where they already operate regulated sportsbooks, reflecting sensitivity around overlapping regulatory regimes.

Selig also tied the issue to global competitiveness in financial innovation, positioning prediction markets as part of the broader derivatives ecosystem rather than an expansion of gambling activity.

“As the 250th anniversary of our nation’s founding approaches, America must maintain its status as the global leader in financial markets,” Selig wrote on X.

The legal clash now centers on whether prediction platforms will be treated as federally supervised financial exchanges or subject to the patchwork of state gaming laws that govern traditional sports betting.