U.S. commission fights states on prediction markets: "We will see you in court"
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Polymarket event contracts displayed on a computer. Photo: Gabby Jones/Bloomberg via Getty Images
The Commodity Futures Trading Commission is launching a legal campaign to defend its regulatory turf on prediction markets, setting up a clash with states that have sought to block them.
Why it matters: Prediction markets like Kalshi and Polymarket have been surging in popularity, raising questions about the legality of sports event contracts and other trading opportunities in a growing gambling culture.
Driving the news: CFTC chair Mike Selig said Tuesday that the commission is filing a friend-of-the-court brief in cases where "American prediction markets have been hit with an onslaught of state-led litigation."
- The CFTC will "defend its exclusive jurisdiction over these derivative markets," Selig said in a video post. "To those who seek to challenge our authority in this space, let me be clear — we will see you in court."
The other side: The American Gaming Association, which represents casinos and has opposed prediction markets, did not immediately respond to a request for comment.
- The group argued in January that sports event contracts offered by prediction markets "are indistinguishable from legal sports betting" and are illegal.
- A slew of states have taken legal action against prediction markets, including Nevada, Massachusetts, Maryland, Arizona, Michigan, New York and Illinois.
Follow the money: The prediction markets pose an increasingly substantive threat to the established sportsbooks.
- Several have chosen to embrace the trend and launch their own prediction markets, including DraftKings, FanDuel and Fanatics.
- Others have not, including BetMGM and Caesars.
- Adam Greenblatt, CEO of sportsbook BetMGM, told Axios in an interview this month that prediction markets should not be allowed to provide sports event contracts outside conventional state gaming commission licensing and oversight: "They pay no state taxes, there are no consumer protections, there are no penalties for underage play."
The intrigue: Selig's remarks suggest that the CFTC is supportive of the booming prediction markets.
- "They provide useful functions for society by allowing everyday Americans to hedge commercial risks, like increases in temperature and energy price spikes," Selig said. "They also serve as an important check on our news media and our information streams."
- Selig — who was nominated as chair by President Trump in October and confirmed by the Senate in December — said in January that the CFTC would write new rules governing event contracts.
