CFTC Chair Mike Selig Claims Exclusive Authority Over Prediction Markets

Prediction markets allow participants to trade event contracts tied to outcomes such as elections and economic data, but sensitive subjects including war and gambling have long occupied a gray area between derivatives oversight and gambling laws. Uniform review standards from the U.S. Commodity Futures Trading Commission could affect the compliant operation of Polymarket and Kalshi in the United States.

The CFTC issued a staff advisory on prediction markets on June 10 and formally opened a rulemaking and public comment process. Event contracts involving war, gambling and other sensitive categories will be reviewed case by case. Chairman Mike Selig said the era of operating without clear rules was over, as the agency shifts its policy focus from litigation to rules established in advance. The document did not address trading amounts or penalties.

Prediction markets allow traders to buy and sell event contracts tied to outcomes such as elections and sporting contests. The U.S. Commodity Futures Trading Commission, citing the Commodity Exchange Act, treats them as derivatives under its exclusive jurisdiction. The dispute centers on states continuing to pursue platforms such as Polymarket and Crypto.com under gambling laws, with federal preemption determining whether operators face uniform nationwide rules or a patchwork of state regulations.

On May 26, 2026, Donald Trump said on Truth Social that preserving the CFTC's exclusive jurisdiction over prediction markets was critical. The same day, a new CFTC rule was submitted to the White House Office of Management and Budget for review. On June 10, the CFTC released a proposal to amend Rule 40.11 and establish a 90-day review process for contracts involving war, terrorist attacks, assassinations and gambling. The proposal is a regulatory rule, and no financial amount was disclosed.

Prediction markets allow users to trade on the outcomes of political, sporting and other events, with trading volumes reaching billions of dollars. The U.S. Commodity Futures Trading Commission argues that event contracts traded on designated contract markets are “swaps” governed by the Commodity Exchange Act, preempting separate state regulation under gambling laws. The dispute will determine whether platforms such as Kalshi and Polymarket can operate nationwide.

Represented by the U.S. Department of Justice, the CFTC filed separate lawsuits against Illinois, Arizona and Connecticut on April 2, 2026. Since April 1, 2025, the Illinois Gaming Board had issued cease-and-desist orders to three CFTC-registered markets: KalshiEx, Crypto.com and Polymarket. The federal government is asking the courts to affirm the CFTC’s exclusive jurisdiction and permanently bar state enforcement, without seeking monetary damages.