The chairman of the U.S. Commodity Futures Trading Commission (CFTC), Michael Selig, took a public and unusually direct stance by publishing an op-ed in the Wall Street Journal defending the regulator’s authority over event contract markets, also known as prediction markets.
Read also: Iowa starts 2026 with lower sports betting volume
In the text, Selig revealed that the CFTC filed an amicus curiae brief with the Ninth Circuit Court of Appeals in support of Crypto.com, as the platform faces a legal dispute related to these types of instruments. The agency’s chairman warned that the commission “will no longer stand idly by” while state governments attempt to curtail federal jurisdiction over products that, by law, belong exclusively to the agency.
What event contracts are and why the CFTC considers them under its orbit
Selig described event contracts as financial derivatives that allow companies and individuals to take positions on the outcome of future events without needing to own the underlying asset. According to the official, these instruments have concrete and legitimate economic uses.
Among the examples he cited were farmers seeking to protect themselves from adverse weather changes that could affect their crops, and small business owners wanting to hedge against potential tax increases or spikes in energy prices. Selig maintained that, under the Commodity Exchange Act, these contracts qualify as swaps and, therefore, fall within the CFTC’s scope of supervision.
The regulator’s chairman also emphasized that the legal definition of “commodity” in federal regulations is very broad and includes most goods, services, rights, and financial interests. The only historical exceptions, he noted, are onions—due to a market manipulation episode—and movie box office receipts, the latter being the result of lobbying efforts by the Hollywood industry.
Nearly 50 active cases challenge federal authority in the U.S.
The op-ed warned that nearly 50 active cases across the country present legal challenges against exchanges offering event contracts. Many of these lawsuits argue that such contracts are equivalent to gambling and, therefore, should be subject to each state’s gambling laws.
Selig described these efforts as a direct invasion of the CFTC’s exclusive authority under federal law. He warned that if states succeed in imposing their control, participants could lose access to federally regulated event contract markets, which would fragment the oversight of financial instruments traded on a national scale.
Read also: Malaysia prepares law against illegal gambling and online betting to strengthen regulatory control
Among the exchanges involved in state-driven lawsuits, he mentioned Kalshi, Polymarket, Coinbase, and Crypto.com, all of which are registered with the CFTC.
The history behind the regulation of prediction markets in the U.S.
In his article, Selig traced a historical line that places the CFTC as the supervisor of these markets for decades. In 1992, the commission granted a special exemption to the University of Iowa’s Iowa Electronic Markets, allowing them to operate contracts linked to election results and corporate earnings.
Later, HedgeStreet—now known as Nadex—became the first market to offer event-based binary contracts for retail traders, with products linked to indicators such as mortgage rates and fuel prices.
Selig argued that Congress designed the regulatory framework to absorb financial innovation, not to limit it. He pointed out that futures, swaps, and exchange-traded funds (ETFs) were also unknown products at one time, and that in each case, Congress granted the CFTC the necessary authority to regulate them as markets evolved.
The global boom of prediction markets as a regulatory argument
The official also appealed to the sector’s explosive growth to reinforce his stance. He cited industry estimates that the global number of users has quadrupled in the last two years, reaching approximately 15 million participants. As an example of the impact of these markets, he mentioned that on the eve of the 2024 U.S. presidential election, trading activity reflected expectations regarding the magnitude of President Donald Trump’s victory.
For Selig, these figures are concrete evidence of public demand for these types of instruments and reinforce the need for clear and unified federal regulation.
Read also: Sands China doubles final dividend despite lower earnings in 2025
