Securities Regulation Daily Wrap Up, EXCHANGES AND MARKET REGULATION—Selig defends CFTC prediction market lawsuits v. states, says they ensure agency’s jurisdiction, (May 7, 2026)

By Suzanne Cosgrove

The preemption cases may end up in the Supreme Court, the chairman said, as it appears there may be split rulings by the circuit counts.

In a televised interview with CNBC anchor Sara Eisen on Monday, CFTC Chairman Michael Selig said he supported the range of contracts seen in the prediction market space, which he said, “is sort of like an entrepreneurial startup in the world of futures markets.”

“As a believer in free markets, I think we're going to have markets for anything and everything,” Selig said. He added: “I think it's ultimately going to really make the United States a leader in futures and derivatives.”

Eisen then pointed out that some lawmakers have questioned whether there should be prediction markets based on sensitive topics like national security, war, and elections. “Why is that okay?” she asked.

“Our statute does provide the agency with authority in its discretion to review these contracts to the extent that they involve war, terrorism, assassination or gaming,” Selig replied. “We can have a 90-day period where we review them, and we may reject those contracts.”

To date, the CFTC has not allowed war, terrorism, or assassination contracts in U.S. markets, but some of this is available offshore and on platforms that are not regulated by us or not registered with us, Selig said.

Rules of the road. “American people do deserve clear rules of the road for all these new markets, and so we're not slowing down,” Selig said. “We're continuing to propagate new rules, and of course, use our enforcement authority where it makes sense to do so.”

The CFTC put out a request for public comment on its prediction market rulemaking, with responses to Proposed Rule 91 FR 12516 due last month, by April 30. As noted in a recent Better Markets opinion piece, the outline from the agency—and the comments it received—will inform the CFTC as it writes new guidelines about whether—and how—platforms can offer bets to U.S. customers.

As of the formal deadline at the end of April, there were over 1,500 comments on the proposal. “A stunning amount, considering the ordinarily sleepy agency typically has a small number of industry commentators providing feedback,” Better Markets said.

State lawsuits. Selig also reiterated that the CFTC has primary jurisdiction over prediction markets and said he would not back down from his ongoing fight with the states over gambling laws.

“When I came into the seat [the CFTC chairmanship], I saw that many of our CFTC registrants [who] are registered exchanges were being sued by states that were really seeking to nullify federal law. We have a comprehensive federal regulatory scheme when it comes to commodity derivatives. And many of these states said, ‘Well, we're going to ignore that, we're going to apply state gambling laws.’ And so, of course, the CFTC had to step in,” he said.

As reported previously, the CFTC has sued several states, including New York, Arizona, Connecticut, Illinois and Wisconsin, and filed an amicus brief in the Ninth Circuit Court of Appeals, over the regulation of prediction markets. The states, in turn, have ordered exchanges like Kalshi and Crypto.com to stop offering event contract trading without obtaining state gambling licenses.

“I reviewed these cases personally and have been working with my general counsel's office to bring suits in various states,” Selig said. “Really, these lawsuits are intended to protect our jurisdiction.” Selig also said he sees the cases potentially going to the Supreme Court, as “we may have a split at the circuits.”

“We will watch these cases closely, but what's important is we continue to adhere to our federal regulatory statutes and adhere to the law,” Selig said.

Insider trading. Given the explosion of prediction market contracts, “Is it hard for you to monitor insider trading with your staff and resources at the CFTC?” Eisen asked.

“Our authority is really similar to the SEC.” he said. “We police for the misappropriation of confidential or non-public information, and the misappropriation of that when you have a duty of confidence to your employer or anybody else. So, it's really facts and circumstances analysis,” he continued.

Selig cited recent charges against U.S. Army soldier Gannon Ken Van Dyke as an example. Van Dyke allegedly used classified information to trade on the Polymarket marketplace regarding a U.S. military operation to capture former Venezuelan President Nicolás Maduro.

“Anyone should be on notice that to the extent they're engaging in any sort of misappropriation of information where they have a duty, we're going to be watching and we're going to take action,” Selig said.

CLARITY Act. As for the CLARITY Act, which would be the first comprehensive U.S. framework for crypto market structure, and is currently under consideration by the Senate, Selig appeared optimistic.

It is “really important we get legislation that locks that in, and so we've been all hands on deck, pushing to get this done,” he told Eisen.

“We're hoping for a markup this month, and hopefully next month we can get this on the floor for a vote and maybe ring in the 250th anniversary [of the U.S.] with some crypto legislation,” Selig said.

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