The new chairman of the Commodity Futures Trading Commission said Thursday that the commission will develop clear new rules to govern prediction markets.
“Despite their history, many see (prediction markets) as novel or unstable, and that uncertainty is not serving our markets and not serving the public interest,” CFTC Commissioner Michael Selig said at an event co-hosted with Securities and Exchange Commission Chairman Paul Atkins.
Selig said he has ordered agency officials to rescind proposed rules starting in 2024 that would ban sports and political transactions. He also directed prediction markets to rescind recommendations in 2025 to be more cautious in offering sports contracts.
“While this advisory was issued at the staff level to increase awareness of litigation, it instead increased market uncertainty,” Selig said.
Mr. Carsi, Mr. Polimarket and others are embroiled in lawsuits in multiple states over sports-related event contracts. Prediction platforms are rapidly growing in popularity, offering users a forum to bet on the outcome of political, market, cultural, and other events.
Live sports deals are being compared to the wave of legalized sports betting in the US
State regulators and attorneys general maintain that states have the right to legalize and regulate sports betting within their jurisdictions. Tribal nations are also suing over their sovereignty over gambling on their lands.
Kalsi’s website placed on a laptop on Monday, February 10, 2025 in New York, USA.
Gabby Jones Bloomberg | Getty Images
Kalsi maintains that its offerings do not constitute gambling and are derivatives regulated at the federal level and not subject to state regulation.
Selig said Thursday that he wants to reconsider the extent to which the CFTC will be involved in these federal district and circuit court cases.
“Where jurisdictional issues are at issue, the Commission has the expertise and responsibility to protect exclusive jurisdiction over commodity derivatives,” he said.
Selig’s comments received an enthusiastic response from the Prediction Markets Coalition.
“By reversing uncertain guidance on sports event contracts and committing to comprehensive rulemaking, the European Commission is taking an important step toward promoting market transparency, responsible innovation, and trust in the U.S. market,” a spokesperson for the trade group told CNBC.
Selig’s comments are his first public remarks as CFTC chairman. He pledged further cooperation between the CFTC and SEC to address cryptocurrency regulation, credit swaps, and other innovative financial products.
“As new frontiers in finance descend upon us, regulators must relentlessly modernize and harmonize their approaches to regulation and prepare for the future. But we must not abandon the long-standing principles that remain our North Star, such as investor protection, anti-fraud and anti-manipulation, and market integrity,” Selig added.
— CNBC’s Jessica Golden contributed to this article.
Disclosure: CNBC has a business relationship with Kalsi
