“To those who seek to challenge our authority in this space, let me be clear: we will see you in court.”
That is a clear departure from the CFTC’s past legal positions regarding event contracts. The commission was previously in federal court against Kalshi over its election markets in 2024, although that appeal was dropped after US President Donald Trump took office in 2025. Similar expansion attempts from other exchanges in years past were stymied through other means, such as no-action letters.
Since his appointment in December, Selig denounced previous administrations with terms like “merit regulation” and “regulation by enforcement”. Five days prior to the X video, Selig gave an extended interview on the Odd Lots podcast from Bloomberg, where he laid out the commission’s blitz for prediction market innovation. That includes new contract markets on everything from politics to finance, pop culture, and sports, most notably for gaming stakeholders.
“We don’t merit regulate, we don’t tell people what they should be entering into contracts on,” Selig said on the podcast. “We create rules and regulations around those markets to make sure that they have integrity, that they’re resilient, that they’re vibrant and they have guardrails and investor protections.”
Who protects whom in CFTC cases with prediction markets?
The Crypto-Nevada case is one of many ongoing lawsuits involving prediction markets in state and federal courts around the US. The range of outcomes has been broad since the suits started popping up last spring, but states have secured favourable rulings after an early winning streak for prediction markets.
Perhaps the most notable example is Kalshi’s suit against Nevada, which is also currently before the Ninth Circuit. In that case, Kalshi won an early preliminary injunction that since has been dissolved, allowing Nevada to pursue civil enforcement penalties against the platform.
In a statement, Nevada Gaming Control Board Chair Mike Dreitzer said the board “continues to vigorously fulfil its obligation to safeguard Nevada residents and gaming patrons”. Conversely, Selig also maintains that the CFTC is well-equipped to regulate prediction markets and protect consumers, though the extent to which the commission will delve into ongoing cases is unclear.
“We have regulated these markets for many, many years, for decades,” Selig told Odd Lots. “They have some of the most stringent regulatory requirements. So I think everybody can rest assured that we are on top of protecting the markets. And we think it’s great that there’s a broad swath of interest in the markets.”
CFTC must follow federal rulemaking guidelines
From a legal perspective, there is growing sentiment that a resolution will not come until the matter reaches the Supreme Court, which could take years. In the meantime, Selig pledged to embark on new rulemaking processes regarding prediction markets. But there is no telling when those changes would be finalised, or what they might entail.
Carl Kennedy, a former CFTC special counsel and co-chair of Katten’s financial markets and regulation group, explained that the commission must follow the Administrative Procedure Act in its rulemaking like all other federal agencies. Rules must be proposed via the Federal Register, with a period for public comments.
Once the period ends, each comment must be addressed before a final version can be voted on by CFTC commissioners. There are typically five commissioners at any given time, but Selig is currently the lone member. After a final version is approved, the implementation process begins.
“There’s an effective date, a compliance date and generally that’s tied to when the final rule hits the Federal Register,” Kennedy said.
The CFTC can then “build any sort of implementation timeline they want”, which can become “a substantive issue” for licensees, Kennedy said. There is some push and pull regarding transition, but it is unclear how the CFTC might work with prediction markets specifically to finalise any changes.
The more comments, the longer the process
If recent developments are any indication, any upcoming proposals regarding prediction markets would attract a high level of interest. An impromptu CFTC portal for comments last year received dozens of submissions from the gaming industry, tribal entities, major sports leagues, legal groups and lobbyists. Additionally, gaming trade groups and state and federal officials submitted letters and other materials independently.
Kennedy said that generally speaking, the more interest a proposal receives, the longer it takes to get through the process. But the commission “has in the past been comfortable addressing very controversial rules,” he added, and is “very skilled” at analysing and grouping large sets of feedback.
One example was the joint adoption of new product definitions by the CFTC and Securities and Exchange Commission in 2012, which Kennedy said garnered immense interest from various industries. In that case, it took two years to get from the notice of advanced rulemaking in August 2010 to the final rule posting in the Federal Register in August 2012.
“There were a lot of comments to get through and that’s why it took two agencies a lot of time to finalise those rules, but they did it,” Kennedy said. “So the CFTC has a lot of experience in that, and I don’t think that they would take their responsibility lightly. I’ve never seen them do that with respect to things that are as important as rulemaking.”
Establishing clear rules for listing contracts
The scope of the proposed changes also would impact the rulemaking process. A previous proposal involving sports contracts from 2024 was recently withdrawn at Selig’s direction, which Kennedy thinks will lead to a discussion about standards for listing contracts.
“I believe what Chairman Selig intends to do is to come up with standards for how these instruments will be traded, whether certain categories of instruments require additional protections, whether certain products need to go through more aggressive review processes by the agency before they’re able to be listed and traded on an exchange,” he said.
Notably, the CFTC’s existing rules already prohibit the listing of any contract that “involves, relates to, or references terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law”. In some court cases, prediction markets have successfully argued that sports contracts do not constitute gaming, but there has been no clear resolution.
This discrepancy highlights the regulatory differences between traditional gaming and prediction markets. Gaming entities and their products are overseen and approved directly by state authorities, whereas prediction markets are considered “self-regulatory organisations”, per Selig. This means that licensed exchanges police their participants and certify their own contracts, though the commission still retains authority over licensees.
On Odd Lots, Selig was asked about differences between exchanges and the subjectivity of settling certain contracts. The example given related to whether rapper Cardi B actually “performed” during the Super Bowl halftime show; some markets said yes, others said no.
“Each exchange has its own rulebook that’s been approved by the agency, it has its own requirements for contracts that are certified on the exchange. … Of course, now we’re seeing some differences amongst Kalshi’s rulebook and Polymarket’s rulebook,” Selig said.
Expansion into casino-like contracts coming?
While the lawsuits, proposed legislation and regulatory processes continue, there is a fear from the gaming industry that the self-certification framework will allow prediction markets to continue expanding their contract offerings in the meantime. If sports and parlay-style contracts are categorised as legitimate financial vehicles, could, for example, the spin of a roulette wheel or the roll of a die be the same?
Selig was asked on Odd Lots where that line should be drawn. While he made distinctions between games of chance versus games of skill, he seemed to indicate that such contracts would not inherently be deemed invalid.
“I think when we look at what’s a commodity, it’s possible that you could construct some sort of contract, an esoteric derivative, but really the underlying in a game of skill is very different. With a game of chance, it’s harder to say. It’s possible you could construct something, but it’s less likely that it’s a real underlying,” Selig said.
There is “no requirement” in the Commodity Exchange Act, the CFTC’s governing legislation, that there “has to necessarily be some merit-based result from a contract”, he added.
Dingnews.com 23/02/2026