CFTC Chair Michael Selig Vows to Defend Federal Authority Over Prediction Markets Amid Growing State Litigation
Washington, D.C., Feb. 17 2026 – The Commodity Futures Trading Commission (CFTC) chair, Michael Selig, signaled a firm response to a wave of state‑level lawsuits targeting prediction‑market platforms that trade event‑based contracts. In a short video posted to X on Tuesday, Selig announced that the agency has filed an amicus curiae brief to reaffirm its exclusive jurisdiction over these markets, which the CFTC treats as a subset of derivatives.
“Prediction markets have been under CFTC oversight for more than two decades,” Selig said. “They serve a valuable societal function by allowing ordinary Americans to hedge commercial risks and by acting as a check on misinformation.”
State Challenges Escalate
Over the past several months, state regulators in Tennessee, Massachusetts, and other jurisdictions have moved to halt or restrict platforms such as Coinbase, Crypto.com, Kalshi, and Polymarket. The actions range from cease‑and‑desist orders to formal lawsuits alleging that the contracts offered by these platforms constitute gambling under state law.
Polymarket, for example, filed a suit in federal court against Massachusetts, arguing that only the CFTC—by virtue of its federal mandate—has the authority to police prediction‑market activity. The filing underscores the emerging jurisdictional clash between federal regulators, who view these contracts as derivatives, and state gambling authorities, who see them as wagering.
Selig Takes the Fight Public
The CFTC’s amicus brief, filed in a pending case concerning the scope of federal versus state power, is intended to persuade the court that the commission’s jurisdiction cannot be superseded by state legislation. The brief reinforces the agency’s position that the Commodity Exchange Act gives the CFTC exclusive oversight of any contract that qualifies as a “derivative,” a definition that encompasses most prediction‑market products.
Selig’s stance was reiterated in an op‑ed for The Wall Street Journal on Monday, where he warned that states were “encroaching” on the CFTC’s statutory authority. He also indicated that the commission would seek guidance from the courts during a scheduled hearing in November.
Congressional Pushback
A bipartisan group of 23 senators, led by Committee on Banking, Housing, and Urban Affairs Chairman Senator Ron Wyden, sent a letter to Selig on Friday urging the commission to refrain from intervening in ongoing litigation. The senators argued that the CFTC’s public comments suggest a willingness to reinterpret congressional prohibitions through regulatory or litigation tactics, a move that could place the agency at odds with state and tribal gambling statutes expressly left untouched by federal preemption.
“The Commission’s approach risks converting a statutory ban into a case‑by‑case policy decision,” the letter read, citing Selig’s remarks as evidence of an expanding regulatory posture.
Legislative Landscape
The jurisdictional dispute is unfolding against the backdrop of a broader legislative effort to clarify the regulatory framework for digital assets. The House passed a digital‑asset market‑structure bill under the CLARITY Act in July, and the Senate Agriculture Committee advanced it in January. However, the bill’s prospects for full Senate approval remain uncertain, and it does not yet address the specific status of prediction markets.
Selig is slated to discuss the bill’s progress at an event organized by World Liberty Financial—a crypto platform backed by the Trump family—hosted at Mar‑a‑Lago’s club in Florida on Tuesday.
Analysis
The CFTC’s aggressive defense of its jurisdiction signals a likely escalation in federal‑state legal battles over prediction markets. If the courts side with the commission, platforms could continue operating under a unified federal framework, potentially easing compliance burdens and fostering broader adoption of event‑based contracts as hedging tools.
Conversely, a ruling that favors state authority could fragment the market, requiring platforms to navigate a patchwork of state gambling regulations or to withdraw services from certain jurisdictions. Such an outcome would likely spur further lobbying from industry groups and could accelerate legislative action on the CLARITY Act or a dedicated prediction‑market statute.
The senators’ letter highlights a broader concern about regulatory overreach. While the CFTC argues that prediction markets are analogous to futures and swaps, many state attorneys general continue to classify them as gambling—a distinction that carries distinct licensing, taxation, and consumer‑protection regimes.
Key Takeaways
- CFTC amicus brief: The agency is actively seeking judicial affirmation of its exclusive authority over prediction markets, treating them as derivatives under the Commodity Exchange Act.
- State litigation surge: Multiple state regulators have filed actions against major crypto platforms offering event contracts, framing the activity as gambling.
- Congressional dissent: Over two dozen senators have urged the CFTC to step back from the litigation, warning that the commission’s public stance may conflict with existing statutory prohibitions.
- Legislative uncertainty: The CLARITY Act‑driven market‑structure bill remains pending in the Senate, leaving the regulatory future of prediction markets in limbo.
- Potential outcomes: A federal ruling favoring the CFTC could solidify a nationwide regulatory regime for prediction markets; a state‑favored decision could fragment the sector and increase compliance complexity.
The coming months will likely see intensified courtroom battles and heightened lobbying from both industry stakeholders and state authorities. How the courts and Congress ultimately delineate jurisdiction will shape the trajectory of prediction markets and their role within the broader crypto ecosystem.
Source: https://cointelegraph.com/news/cftc-michael-selig-defending-prediction-markets?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
