CFTC Chair Criticizes ‘Politically Driven’ Legal Action Against Prediction Markets

(AsiaGameHub) –   The leader of the Commodity Futures Trading Commission (CFTC) has cautioned that prediction markets could meet a fate similar to FTX without a unified regulatory approach.

Michael Selig, during a guest appearance on the Farokh Radio podcast, shared his worries that the sector might ‘implode’ as it is pushed further into offshore markets.

He remarked: “We witnessed the downfall of FTX and various crypto entities, and I fear a similar outcome for prediction markets if they are forced into unregulated offshore spaces.

“It is essential that these platforms register within the United States so that our regulatory framework can ensure market fairness, safeguard investors, and establish clear boundaries.”

Regulated by the CFTC, companies like Kalshi and Polymarket have seen significant growth in the U.S., serving as substitutes for sports wagering in regions where such activities remain illegal.

Major gambling firms, including DraftKings and FanDuel, have also introduced prediction market products to gain a foothold in states where they were previously restricted. 

Nevertheless, various states have challenged these moves, arguing that the platforms are breaching local gambling statutes by providing services that resemble sports betting.

Last month, a bipartisan proposal was submitted to the US Senate by Senators Adam Schiff and John Curtis, seeking to prohibit sports-related contracts and ‘casino-style games’ on prediction platforms. 

“Congress must act to shut down this loophole, which undermines state protections for consumers, interferes with tribal rights, and generates no tax income,” Schiff stated regarding the legislation.

In response, Selig criticized the ‘politically motivated’ legal challenges from states, calling for cooperation with the CFTC to develop transparent regulatory guidelines.

“There is a tendency to avoid collaboration, and I am unsure why some states take this path when we are eager to coordinate with commissions to establish proper policies,” he noted. 

“Our goal is to refine policy alongside all interested parties. We want to avoid a situation where states sue our registered entities to claim jurisdiction, mirroring the previous administration’s approach to crypto through enforcement-led regulation.”  

Internationally, several countries have also moved to ban platforms such as Polymarket and Kalshi. 

Recently, a court in Romania ruled against Polymarket following a challenge to the National Office for Gambling’s decision to blacklist the site as an unauthorized gambling service.

Conversely, Gibraltar, a prominent European iGaming center, has signaled its support for the industry by granting a license to a prediction market firm.

Nigel Feetham, Gibraltar’s Minister for Justice, Trade and Industry, expressed confidence in the sector’s future, informing parliament that it represents a ‘significant opportunity for expansion’.