US Regulator Expands Talks With Sports Leagues Over Prediction Markets

The ongoing battle over sports prediction markets in the United States has entered a new phase after Commodity Futures Trading Commission (CFTC) chairman Michael Selig confirmed the regulator is now working directly with major professional sports leagues to strengthen oversight of the fast-expanding sector.

CFTC and MLB Shake Hands

Speaking during a conference hosted by the Financial Industry Regulatory Authority (FINRA) in Washington this week, Selig said the CFTC has already signed a memorandum of understanding with Major League Baseball and is currently in discussions with other major leagues across the country.

The effort aims to help regulators detect suspicious trading activity and potential insider trading tied to sports-related event contracts offered on platforms such as Kalshi and Polymarket.

Prediction markets allow users to trade contracts tied to the outcomes of real-world events, including elections, economic data, and increasingly, sports games. 

“Different Products, Parallel Regimes”

Supporters call the products financial instruments governed under federal commodities law, while critics argue they resemble sports betting too much and should, therefore, fall under the regulations of state gaming authorities.

Selig defended the distinction this week, saying prediction markets and traditional sportsbooks are “different products, parallel regimes.”

That position has intensified an ongoing legal and political fight between federal regulators and several states attempting to restrict or regulate the industry.

The CFTC recently backed Kalshi in its legal dispute with the state of Ohio after regulators there attempted to classify sports event contracts as unlicensed gambling products. Federal regulators argued the state had exceeded its authority.

At the same time, lawmakers in several states have moved to impose tighter rules on the sector. In Pennsylvania, legislators introduced a series of proposals to tax and regulate prediction market operators.

Meanwhile, lawmakers in Minnesota advanced legislation earlier this year aimed at restricting certain types of event contracts.

The debate has only grown in intensity as prediction market platforms keep attracting users interested in sports, politics, and financial events, while regulators attempt to determine where the line between investing and gambling should be drawn.