CFTC to write new rules for prediction markets, chairman Michael Selig says

The Commodity Futures Trading Commission (CFTC) will draft new rules to govern the fast-growing prediction markets industry, its chairman said on Thursday, after withdrawing earlier proposals that would have restricted trading on sports and political events.

CFTC Chairman Michael Selig said the agency would move toward clearer regulation for event-based contracts, arguing that regulatory uncertainty has hindered markets and failed to serve the public interest.

“It is time for clear rules and a clear understanding that the CFTC supports lawful innovation in these markets,” Selig said in prepared remarks. “Consistent with my commitment to fostering responsible innovation in crypto asset markets, I will continue to support the responsible development of event contract markets.”

Prediction markets allow traders to take yes-or-no positions on the outcome of future events, ranging from elections and economic data to sports and cultural awards. Platforms such as Kalshi and Polymarket have seen a surge in activity in recent years, drawing scrutiny from state regulators and tribal governments.

“Despite their history, many view them as novel or unsettled, and that uncertainty has not served our markets, nor has it served the public interest,” Selig said during a joint appearance with Securities and Exchange Commission Chairman Paul Atkins.

Selig said he had ordered staff to withdraw a proposed 2024 rule that would have banned contracts tied to sports and politics, and to rescind a 2025 staff advisory urging caution in offering sports-related event contracts.

“While the advisory was issued at the staff level with the intent of bringing awareness to the litigation, it has instead contributed to uncertainty in our markets,” Selig said.

Contracts linked to live sports have drawn comparisons to the expansion of legalized sports betting in the United States. State regulators and attorneys general argue that states retain the authority to regulate sports wagering, while tribal nations have asserted their sovereign rights over gambling on tribal lands.

Kalshi has said its products are federally regulated derivatives rather than gambling, and therefore fall under the CFTC’s jurisdiction.

Selig said the agency may take a more active role in federal court cases involving prediction markets, where jurisdictional questions are being tested.

“Where jurisdictional questions are at issue, the Commission has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives,” he said.

Selig also pledged closer coordination with the SEC on oversight of crypto assets, credit swaps, and other emerging financial instruments.

“As the new frontier of finance descends upon us, regulators must relentlessly modernize, harmonize, and future-proof their approach to regulation,” Selig said, adding that investor protection, anti-fraud enforcement, and market integrity would remain core priorities.

The Coalition for Prediction Markets (CPM) welcomed the move, saying the withdrawal of earlier guidance and the commitment to comprehensive rulemaking would help foster market clarity and responsible innovation.

Selig’s remarks marked his first public comments since taking office as CFTC chairman.