CFTC Chair Asserts Exclusive Regulatory Authority Over Prediction Markets

CFTC Chairman Mike Selig asserted exclusive federal regulatory authority over prediction markets, arguing that states cannot substitute gambling laws for federal derivatives oversight on CFTC-regulated exchanges. The agency has sued Arizona, Illinois, and Connecticut while filing an amicus brief in consolidated Ninth Circuit cases scheduled for April 16, 2026 arguments. A Third Circuit ruling on April 6, 2026 supported CFTC oversight, and a federal judge blocked Arizona from criminally charging Kalshi on April 10, 2026. However, Nevada and Massachusetts have secured preliminary injunctions against prediction market providers, creating a jurisdictional conflict. The CFTC is conducting formal rulemaking to clarify its authority under the Dodd-Frank Act, which allows blocking swaps involving gaming or activities contrary to public interest.

CFTC's Assertion of Exclusive Federal Authority Over Prediction Markets

• ▪Mike Selig stated that states do not have the ability to nullify federal oversight and substitute gambling laws where derivatives laws apply
• ▪Mike Selig stated that when a swap is offered on a federally regulated Designated Contract Market, those trades are subject to federal regulation
• ▪Mike Selig stated that validly offered products within a CFTC-regulated exchange are regulated by the CFTC regardless of whether they involve sports, politics, or other subjects
• ▪A Third Circuit Court ruling on Monday, April 6, 2026, determined that the CFTC has to oversee prediction markets
• ▪CFTC Chairman Mike Selig stated that the CFTC has exclusive regulatory authority over commodity derivatives markets

Legal Strategy and Ongoing Litigation Against States

• ▪A federal judge blocked Arizona from bringing criminal charges against Kalshi on April 10, 2026
• ▪The CFTC has filed lawsuits against Arizona, Illinois, and Connecticut over prediction markets
• ▪A Ninth Circuit Court of Appeals panel will hear arguments in consolidated cases around prediction markets and state regulators on Thursday, April 16, 2026, at 16:00 UTC
• ▪The CFTC filed an amicus brief in a consolidated case before the Ninth Circuit Court of Appeals regarding prediction markets
• ▪The Ninth Circuit Court of Appeals jurisdiction includes Nevada
• ▪Mike Selig indicated that Arizona, Illinois, and Connecticut may not be the last states the CFTC sues over prediction markets

Regulatory Framework Under Dodd-Frank and Public Interest Analysis

• ▪Mike Selig stated that the CFTC is open to suggestions regarding what the rulemaking process for prediction markets should look like and how to evaluate it
• ▪The Dodd-Frank Act allows the CFTC to block swaps based on categories including war, terrorism, assassination, gaming, anything otherwise illegal, or other similar activity
• ▪Mike Selig stated that even if the CFTC has to do a public interest analysis for categories like war, terrorism, assassination, or gaming, that does not mean those products are not within the CFTC's exclusive regulatory authority
• ▪Under the Dodd-Frank Act, the CFTC can regulate swaps and can block certain types based on whether they are in the public interest
• ▪Mike Selig stated that under the Dodd-Frank Act, the CFTC decides whether a product is contrary to the public interest

Interagency Coordination on Digital Asset Classification

• ▪Mike Selig stated that the CFTC will review any comments on the final interpretation published with the SEC and will reconsider things if they receive feedback
• ▪Mike Selig stated that the CFTC and SEC guidance was intended to be comprehensive so both companies and agencies had examples
• ▪Mike Selig stated that the CFTC and SEC guidance established clear lines drawn in the statute to distinguish between commodities and securities
• ▪The CFTC and SEC published a final interpretation on digital asset classification in March 2026