'Stay tuned’: CFTC signals rulemaking push on prediction markets

Rulemaking is on the way for prediction markets, according to Commodity Futures Trading Commission Chair Michael Selig, as the agency moves to further assert its jurisdiction over event contracts.

Speaking Tuesday at the Milken Institute Future of Finance event, Selig said the CFTC is not limiting its efforts to courtroom battles with states — the agency also plans to write rules and issue guidance for prediction markets.

"We're going to be setting very clear standards as to what can be self-certified in our markets and what cannot and how to evaluate the different products that are offered in the space," Selig said. "We are also planning to go forward with an advanced notice of proposed rulemaking in the near future that will set the stage for more fulsome rulemaking."

States and the CFTC have clashed over the past month as states like Nevada and Tennessee have brought cases against prediction markets. Prediction market operators argue that all so-called event contracts are federally regulated, arguing that Congress granted the CFTC exclusive jurisdiction over these derivatives under the Commodity Exchange Act. Meanwhile, states say the platforms are violating local gaming and gambling laws, particularly related to sports-related bets.

Last month, the agency submitted an amicus brief in a case between Crypto.com and the state of Nevada, arguing that it had "exclusive jurisdiction" over event contracts and accused states of overstepping.

During the Biden administration, the CFTC took a different stance toward prediction markets. Under CFTC Chair Rostin Behnam, the agency had been working on rulemaking to ban bets on political events. In 2024, the commission voted to propose rules restricting event contracts tied to gaming, war, terrorism, and assassination because they could be "contrary to the public interest." That rulemaking was scrapped earlier this year.

Prediction markets are an important tool to have in the U.S., Selig said on Tuesday.

"What we're doing for these markets, beyond getting involved in the litigation, is setting clear rules and regulations," he said. "We are going out with guidance in the very near future, so please stay tuned."