Prediction markets saw increased attention in Washington D.C. this week as Democrats called for an investigation into the federal agency fighting to oversee the industry, while Republicans met with company executives after reports of suspicious trading tied to a former congressman.
In a letter sent Monday, Reps. Dina Titus (D-NV), Rosa DeLauro (D-CT), and Jared Huffman (D-CA) requested that Commodity Futures Trading Commission Inspector General Christopher Skinner examine the agency’s legal rationale, resource allocation, and regulatory approach to sports event contracts and other prediction market products.
They argued that the CFTC has significantly expanded the interpretation of its authority, while simultaneously backing away from efforts to regulate.
Democrats call for CFTC probe
Titus and her colleagues asked Skinner to review:
- the legal basis for the agency’s jurisdictional claims;
- its decision to withdraw prior guidance on event contracts;
- the impact on state and tribal gaming regulation;
- consumer protection implications; and
- whether its litigation strategy represents an appropriate use of agency resources.
The letter points to the CFTC’s withdrawal of a proposed rule that would have clarified restrictions on certain event contracts, as well as the agency’s decision earlier this year to rescind an advisory stating that sports event contracts generally violated the Commodity Exchange Act‘s public-interest standard. It also points out that it remains a comparatively small agency despite increasingly committing resources to prediction market-related litigation.
Last week, the New York Times reported that the CFTC’s workforce has fallen to roughly 550 employees from more than 700 during the Trump administration and that officials who raised concerns about involving prediction markets were later sidelined, investigated or pushed out. More buyouts and early retirements are available, according to Politico Pro.
Chairman Michael Selig declined to take a definitive position on whether sports event contracts constituted gambling during his confirmation hearing in December. In the past two months the agency has sued Arizona, Connecticut, Illinois, Minnesota, New York and Wisconsin over efforts to restrict sports event contracts — which now represent over 85% of trading activity on Kalshi.
Republicans meet with prediction markets
The House Financial Services Committee reportedly held a Republican-only roundtable Wednesday with Kalshi CEO Tarek Mansour, Polymarket Chief Learning Officer Neal Kumar, Robinhood Vice President JB Mackenzie and American Gaming Association Senior VP Chris Cylke.
Committee chairman French Hill (R-AR) has previously said lawmakers are evaluating whether federal law governing event contracts may require clarification.
George Santos referred to feds (again)
The roundtable came the same week of reports that Kalshi referred former congressman George Santos to federal prosecutors after flagging suspicious trading activity tied to a market on whether he would attend Trump’s State of the Union address.
Santos allegedly bet against his own attendance despite publicly discussing plans to attend the speech. Santos was expelled from the House in 2023 and later granted clemency by President Donald Trump after pleading guilty to federal fraud and identity theft charges.
Prediction markets get political
Congress has increasingly focused on insider trading and other prediction market concerns, proposing restrictions on participation by lawmakers, federal officials and military personnel, while several committees have launched investigations and pressed the CFTC to strengthen oversight of event contracts.
Last week, Trump publicly defended the CFTC’s authority over the industry, calling it “critically important” that the agency maintain exclusive jurisdiction over prediction markets while criticizing public officials seeking to restrict them.
That support comes amid growing ties between Trump’s orbit and the industry. Trump Media has partnered with Crypto.com on prediction market offerings, while Donald Trump Jr. serves as an adviser to both Polymarket and Kalshi.
Kalshi began offering sports event contracts three days after Trump took office and has grown trading volume more than 1,000% since and doubled its valuation to more than $22 billion.
