The federal agency overseeing prediction markets has new leadership as the industry pushes deeper into sports predictions, triggering lawsuits and regulatory backlash from states across the country.
The U.S. Senate confirmed Michael Selig on Thursday to serve as chairman of the Commodity Futures Trading Commission, placing him at the center of a growing legal and political fight over whether sports predictions are financial instruments subject to federal regulation or are subject to state gambling laws. He is also the commission’s only member with his term set to run through April 13, 2029.
While only launched earlier this year, sports predictions now account for roughly 90% of Kalshi’s trading during football season. The growth has drawn in major sports betting operators looking to compete in states where sports betting is illegal, intensified scrutiny from lawmakers, regulators, tribal gaming groups, and professional sports leagues, as well as raised questions about the CFTC’s role.
Selig signals restraint on sports contracts
Selig declined to take a definitive position on whether sports event contracts constitute gambling. Instead, he said courts should resolve the issue, even as members of Congress debate whether to clarify the CFTC’s role through amendments to the Commodity Exchange Act.
“I’m in favor of the minimum effective dose of regulation, no more, no less,” Selig told senators.
He said the agency should operate within existing law and allow judicial outcomes to develop rather than attempt to settle unresolved legal questions through rulemaking. That would seem to preserves a regulatory gray area that has allowed exchanges to self-certify sports contracts while state regulators argue the products amount to unlicensed sports betting and challenge their legality in court.
Courts split as markets expand
Judges in Nevada and New Jersey initially blocked state enforcement actions against prediction market operators, while a Maryland court ruled that state gambling laws were not preempted. More recently, a federal judge in Nevada reversed course, dissolving earlier injunctions and concluding that sports event contracts function as sports wagers rather than CFTC-regulated derivatives. Appeals remain pending, while similar cases unfold across other several states.
Selig replaces Acting Chair Caroline Pham, who led the agency for nearly a year. While favoring regulatory restraint, Selig said the CFTC must still act “as a cop on the beat” and prioritize enforcement against fraud, manipulation, and abusive conduct, though those comments were directed more towards cryptocurrency regulation.
The market has continued to expand amid that uncertainty. Kalshi and Polymarket introduced sports-related event contracts earlier this year. More recently, DraftKings launched its own federally regulated prediction market product two weeks after Fanatics went live, and FanDuel is expected to follow in the coming days, according to industry sources.
That’s introduced a product that looks similar to sports betting in large states like California and Texas, where traditional sports betting remains illegal. The shift has intensified scrutiny and widened a rift with the American Gaming Association, which has opposed prediction markets over concerns about consumer protections and regulatory consistency.
Congress weighs whether to intervene
Earlier this month, members of the House Committee on Agriculture questioned whether sports prediction markets belong under federal commodities law during a hearing tied to the long-stalled reauthorization of the CFTC.
Several lawmakers raised concerns about whether the agency has the authority, expertise, or resources to oversee products that increasingly resemble nationwide sports wagering. Some suggested Congress may need to amend the Commodity Exchange Act to clarify whether sports-based event contracts are permitted under federal law.
As those legal fights escalate, prediction market operators including Kalshi and Crypto.com have formed a lobbying coalition aimed at shaping federal policy as scrutiny intensifies.
