The Commodities Futures Trading Commission (CFTC) is supporting the fast emerging prediction markets. Following an onslaught of state-based lawsuits, CFTC Chairman Mike Selig has issued a statement defending these marketplaces and filed a friend-of-the-court brief advocating federal oversight rather than piecemeal state regulation.
Chairman Selig stated that American prediction markets aren’t new.
“They have been regulated by the CFTC for more than two decades and serve legitimate economic purposes. These markets have changed the way people consume news, monitor events, engage in politics, and can be more accurate than competing products. Congress gave the CFTC comprehensive authority over any contract based on a commodity, and the legal definition of a commodity is very broad. Thanks to [the President of the United States], we’ve reversed course on crypto in a way that will ensure the US remains the crypto capital of the world.”
He added that prediction markets play an important role in hedging as well as holding news media to account and other information streams.
“We will see you in court,” stated Selig.
Currently, multiple states, including Massachusetts, Nevada, and Connecticut, have filed suit against platforms such as Kalshi and Polymarket, which dominate the prediction market. Other platforms are also in the crosshairs of state authorities. The prosecution focuses on allegations of transgressing state gambling or sports betting laws. Entrenched incumbents are also concerned about losing market share to more technologically advanced platforms.
It has been reported that 34 state attorneys general joined an amicus brief opposing federal preemption.
The outcome of the legal battle could have a dramatic impact on prediction markets, which have grown rapidly. The simplicity and user-focused interaction have made these platforms popular with consumers.
Weekly combined volume is estimated to hover between $4.3 billion and $5.3 billion in recent weeks, with peaks above $6 billion earlier in February 2026.
The fight between state rights and federal authority has been ongoing since the beginning of the Republic. State pre-emption in certain situations such as private and public markets has helped to make these markets the most efficient and effective in the world.