Mike Selig Throws CFTC Weight Behind Prediction Markets
After deflecting questions from senators in November, Mike Selig indicates the CFTC will back prediction markets’ ability to offer sports- and political-based event contracts.
Commodities Futures Trading Commission Chairman Michael Selig is no longer mincing words on how he plans to address the prediction markets landscape.
Making his first public remarks since being named CFTC chairman in December, Selig threw his full support behind prediction markets and said his agency will take all the necessary steps to remove uncertainty and clear up the legal gray areas that have overshadowed them.
Selig said he has directed the CFTC to withdraw a rule proposed in 2024 that would prohibit prediction markets from offering event contracts tied to sports and politics. He also said the agency may back prediction markets in federal and circuit courts.
The views he expressed on Thursday mark a stark contrast to the vague answers he gave to senators during his confirmation process.
“It’s time for clear rules and clear understanding that the CFTC supports lawful innovation in these markets,” Selig said during his opening statement at the CFTC and SEC Harmonization joint event in Washington D.C. “Consistent with my commitment to fostering responsible innovation in crypto asset markets, I will continue to support the responsible development of event contract markets and the important role they play in the broader financial system.”
Selig Clearing Path for Prediction Markets
Selig spoke for about 20 minutes at the CFTC/SEC event but saved his thoughts on prediction markets until the end of his public statement. The moderator didn’t raise the hotbed topic during a 25-minute fireside chat between Selig and SEC Chairman Paul S. Atkins.
The CFTC Chair began by announcing the withdrawal of the CFTC’s 2024 proposal to prohibit political and sports event contracts, as well as a 2025 staff advisory that cautioned registrants against providing access to sports-related contracts.
The issue has been playing out in courts around the country. Kalshi is facing legal battles in several states over the legality of sports event contracts.
In Massachusetts on Jan. 20, a Superior Court judge granted the state an injunction to stop Kalshi from offering sports markets. Other states, including New York, New Jersey, Ohio, and Nevada, have cited the Massachusetts ruling to strengthen their own cases against Kalshi.
Selig said that under his watch, the regulatory agency will examine how it can participate in court cases. This could bolster the legal argument of Kalshi, Polymarket, and other prediction market platforms, which have argued in court that they offer federally-regulated derivatives and that state regulators lack authority over them.
“While the advisory was issued at the staff level with the intent to bring in clarity and awareness to the litigation, it’s instead contributed to uncertainty in the markets,” Selig said on Thursday.
The CFTC staff, Selig indicated, will draft new rules for event contracts, pointing out that the current framework has been difficult to apply and hasn’t worked well for market participants.
“When jurisdictional questions are at issue, the commission has the expertise and the responsibility to defend its exclusive jurisdiction over commodity derivatives,” Selig said.
Lastly, the CFTC will work more closely with the SEC to better define the agencies’ oversight of regulated swaps. Both agencies want to draw clearer boundaries, so companies know which rules apply.
“Clear, coordinated guidance will allow firms to scale products responsibly and reduce the number of innovations that fall into what Chairman Atkins has so aptly described as the no-man’s land between our two agencies,” Selig said.
Selig Changes His Tune
In November, senators pressed Selig on whether he would enforce the CFTC’s stance of prohibiting prediction markets from offering sports event contracts, a perceived breach of state and Indian gaming regulations.
The Trump nominee responded repeatedly that he’d yield to the courts’ decisions.
“These are complex issues as to interpretation of what it means to constitute gaming, and of course, I have the utmost respect for our judges that are working on these issues in the court system, and I intend to always adhere to the law and follow what judicial decisions tell me to follow,” Selig said in response to a senator’s question. “I also believe that these types of issues are ones that we can work through together.”
A month and a half after his confirmation on Dec. 18, Selig’s stance has clearly changed, and prediction markets have found a new ally in their legal battles.
Support From Prediction Market Players
The Coalition for Prediction Markets — a trade group consisting of Kalshi, Coinbase, Crypto.com, Robinhood, and Underdog that counts former congressmen Democrat Sean Patrick Maloney and Patrick McHenry as executives — released a statement applauding Selig’s new stance.
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