CFTC May Be Getting a Soft Spot for Prediction Markets

On Thursday, US Commodity Futures Trading Commission (CFTC) chairman Michael Selig said that the regulator intends to withdraw the unfinalized rules that were meant as a federal deterrent against prediction markets in the early days.

The idea was to limit these platforms’ ability to offer sports and political bets, but the buck has since passed to local attorneys general and gaming regulators, who have doubled down on their opposition.

CFTC May Be Finally Coming to Prediction Markets’ Aid 

In the same stride, the CFTC is visibly relenting, not least because the current administration and President Donald Trump are interested in prediction markets. POTUS is even working on launching his very own prediction platform.

The CFTC has withdrawn a memo in which it warned prediction markets against getting into sports event contracts. The regulator is also looking to set up a new regulatory framework, which will bind prediction markets to rules that could potentially ease tensions with local gaming watchdogs, although what this would look like is not yet clear.

Selig, though, has acknowledged that regulating the sector has proven difficult and that people have gotten the idea that the CFTC had failed market participants. 

“That is something I intend to fix by establishing clear standards for event contracts that provide certainty to market participants,” he vowed, promising a course correction and a clear standard for the vertical.

“Consistent with my commitment to fostering responsible innovation in crypto asset markets, I will continue to support the responsible development of event contract markets and the important role they play in the broader financial system, “ Selig added. 

Can the CFTC Argue Prediction Markets’ Case Against Gaming Regulators?

Just how these new rules would succor the prediction market in their hour of need is not yet clear. Prediction markets such as Kalshi, Polymarket, and Crypto.com have faced pushback in local states, which have repeatedly accused them of skirting gambling rules.

At the same time, the Coalition for Prediction Markets, a trade group built around protecting the interests of prediction market platforms, hailed Selig’s recent statements.

“We applaud Chairman Selig’s statements that the CFTC has ‘the expertise and responsibility to defend its exclusive jurisdiction’ over event contracts, and we welcome the participation of the Commission in matters where that jurisdiction is under attack,” the trade group said.