TLDR
- CFTC asserts its exclusive jurisdiction over prediction markets in a new court filing.
- The agency pushes back against states’ regulatory efforts on prediction markets.
- CFTC seeks to block state control over event contracts like sports betting.
- The dispute involves Crypto.com’s sports-event contracts under Nevada’s laws.
In a recent legal filing, the Commodity Futures Trading Commission (CFTC) has claimed exclusive federal authority over prediction markets. The agency’s brief was submitted to the U.S. Court of Appeals for the Ninth Circuit, in a case involving Crypto.com and Nevada’s state laws. This filing emphasizes the CFTC’s stance that it has sole jurisdiction over event contracts, which include prediction markets for sports and other events.
CFTC’s Position on Prediction Markets
The CFTC argues that it has been granted exclusive jurisdiction over commodity derivatives, including event contracts, by Congress. This jurisdiction, as established in the Dodd-Frank Act after the 2008 financial crisis, covers futures and contracts related to events.
According to the CFTC, this includes contracts linked to the outcome of sports events, regardless of the specific details of the events.
The Commodity Futures Trading Commission (CFTC) Chair Mike Selig said the agency has federal jurisdiction over U.S. prediction markets, not state governments. Selig directed the CFTC to file an amicus brief asserting its authority amid legal challenges from states targeting…
— Wu Blockchain (@WuBlockchain) February 18, 2026
CFTC Chair Michael Selig emphasized that prediction markets such as those run by Crypto.com, Kalshi, and Polymarket fall within the CFTC’s regulatory reach. “Event contracts allow businesses and individuals to hedge event-driven risks and provide public information on future outcomes,” said Selig. He further stressed that the CFTC, with its expertise, is best equipped to regulate these markets, ensuring that they remain within federal laws.
State Pushback and Legal Disputes
The CFTC’s claim of jurisdiction has sparked tension with state regulators, particularly those in Nevada, where Crypto.com has been involved in legal action. In this case, Crypto.com filed a lawsuit to prevent the state from regulating its sports-event contracts under Nevada’s gaming laws
Initially, a judge ruled that these contracts did not fall under the CFTC’s jurisdiction, permitting Nevada to apply its gaming laws. Crypto.com has since appealed that decision.
States like Nevada have expressed concern about the potential for prediction markets to circumvent state gambling laws, particularly concerning sports betting. The CFTC, however, contends that event contracts are not simply bets but are actual derivatives traded through established financial systems, including clearinghouses, with built-in investor protections.
Political and Legislative Reactions
While the legal battle continues, there has been growing concern among lawmakers about the scope of prediction markets. Some members of Congress, particularly from Nevada, have called for stricter regulation of these markets.
In a letter sent to CFTC Chairman Selig, Senators Catherine Cortez Masto and Adam Schiff urged the commission to follow existing statutes and not interfere with state-level regulatory efforts.
On the other hand, some lawmakers, such as Republican Senator Bill Hagerty, have voiced support for the CFTC’s position, advocating for clear federal rules that could foster innovation while maintaining market stability.
State Governors Respond
State-level resistance to prediction markets has also been vocal, with some governors calling them forms of gambling. Utah Governor Spencer Cox, for instance, argued that these markets could harm families and communities.
He further expressed his intention to challenge the CFTC’s authority in court, citing concerns over the impact of such markets on his state’s residents.
Despite the opposition, the CFTC remains firm in its stance that prediction markets are commodities and should be regulated at the federal level. The outcome of this legal battle could have wide-reaching implications for the future of prediction markets in the U.S.
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