Commodity Futures Trading Commission Chair Michael Selig has sharply criticized state enforcement actions against prediction market companies, arguing that disputes over event contracts should be settled in court rather than through criminal cases against founders and chief executives.
Speaking at the Cantor Convergence conference, Selig said several states are taking an extreme approach while the broader legal fight over whether certain prediction market contracts amount to illegal gambling remains unresolved. He framed the issue as a test of the CFTC’s exclusive jurisdiction over platforms operating under a federal regime.
Selig defends federal oversight
Selig said the recent state lawsuits are "really egregious" and used the appearance to defend the CFTC’s authority over prediction markets. His remarks centered on the view that platforms offering lawful products under federal oversight should not face state-led criminal prosecution while core legal questions are still being contested.
According to Selig, states are not simply challenging business models through civil litigation. He said they are "essentially trying to lock up founders and CEOs of these companies," a development he presented as incompatible with a market structure overseen by a federal regulator.
Fight over event contracts
At the center of the dispute is whether event contracts offered by companies such as Kalshi and Polymarket should be treated as illegal gambling products or as contracts that fall within the CFTC’s remit. Selig said that issue should be tested on the merits in court rather than through enforcement that could expose executives to jail time.
He suggested that a definitive answer may ultimately have to come from the U.S. Supreme Court. In his telling, that would be preferable to allowing separate state actions to dictate outcomes across the country while the underlying jurisdictional question remains unsettled.
States and companies already in the clash
Selig’s comments come as the CFTC is already engaged in broader legal and regulatory battles with several states and cities over prediction market contracts. Louisiana and other jurisdictions have filed lawsuits aimed at companies including Kalshi, Polymarket, Robinhood, and Coinbase.
Those cases have become part of a wider contest over who gets to decide the legality of these products. Selig argued that the federal government, through the CFTC, should be the body defending and defining that jurisdiction rather than leaving the matter to a patchwork of state-level actions.
What comes next
For now, Selig is urging that the conflict be resolved at the federal level and through the courts. His remarks did not announce a new enforcement action or ruling, but they made clear that the CFTC leadership sees the state cases as a direct challenge to the agency’s authority.
The next confirmed step is continued litigation over whether these event contracts are lawful and who has the power to regulate them. Selig indicated that, if necessary, the dispute over prediction markets and gambling law may need to advance to the Supreme Court for a final answer.
Source: www.theblock.co