If states want to fight over sports event contracts, they should probably fight with the Commodity Futures Trading Commission, and not prediction market operators, the agency’s chairman suggested on Thursday.
CFTC Chair Michael Selig said as much during a hearing held by the House of Representatives’ Agriculture Committee, during which lawmakers aired their concerns about insider trading and the types of contracts offered by federally regulated prediction markets.
- CFTC Chair Michael Selig suggested that states should challenge his agency directly rather than suing prediction market operators over sports betting concerns.
- Lawmakers raised issues about insider trading, regulatory loopholes, and how prediction markets closely resemble traditional sports betting but operate under different rules during a lengthy committee hearing.
- The debate highlighted tensions between federal oversight and state authority, with some critics arguing prediction markets undermine local laws, tribal revenues, and consumer protections.
One exchange during Selig’s more than two-hour appearance before the committee touched on the CFTC’s recent litigiousness on behalf of prediction markets.
Among other things, the prediction market regulator announced earlier this month that it filed lawsuits against officials in Arizona, Connecticut, and Illinois, aiming to “reaffirm its exclusive jurisdiction” over the exchanges.
One Connecticut lawmaker, Democratic Rep. Jahana Hayes, said during Thursday’s hearing that, given these types of actions, she was concerned Selig’s agency would not give feedback about jurisdictional issues “full consideration” during its ongoing process to consider new rules for prediction markets.
Come at me, bro
Selig responded that there are two separate issues at play. One is “policy,” which presumably involves the types of event contracts offered by prediction markets, and something the CFTC is happy to hear about from interested parties, including Connecticut. The other, though, is jurisdiction, and the CFTC isn’t backing down from trying to protect what it sees as its turf.
“The concern is, when states start suing our registrants, this is not the right fight,” Selig said. “The fight is with us.”
Asked to repeat his stance, Selig noted that what’s happened so far is that states are suing prediction market operators.
“And that just wastes your own state's taxpayer dollars in suing participants that are complying with federal law,” he said. “So if you want to fight with us, we'll fight with you in court, but the real work should be done in the policy spectrum. Come in and comment, and we'll work with you all to get the policy right.”
“I appreciate that,” Hayes responded, “but I just would remind you that states' attorneys general are also elected by the people in those states, and they have a responsibility to ensure that they're fighting for the best protections for their constituents as well.”
The exchange was one of several on Thursday regarding prediction markets, the CFTC-regulated companies that offer opportunities to wager on elections, economics, and sporting events.
This has prompted pushback from state gambling regulators, like those in Connecticut, which see the exchanges as facilitating unauthorized sports wagering. The lawsuits are flying, including one in Nevada that was being argued on Thursday during Selig’s testimony to the House Agriculture Committee.
🚨 The CFTC “does not believe” that an event contract on a sports event “involves gaming.” 🚨
— Rob Schwartz (@FormerCFTCGC) April 16, 2026
Prediction markets are causing controversy and creating concern in multiple ways at the moment. One issue that was discussed at length during Thursday’s hearing was insider trading, particularly in connection with recent U.S. military actions.
“We have a zero-tolerance policy when it comes to insider trading, fraud or manipulation,” Selig said.
Also raised during the hearing was the fact that President Trump's family is involved in the prediction market business, with his son tapped as an advisor by both Kalshi and Polymarket.
“We do not pick winners and losers or engage in favoritism or bring politics into any of these matters,” Selig said.
Congressman Jim McGovern lays into Trump's CFTC chair over insider trading at Polymarket and Kalshi, especially the fact that Donald Trump Jr. is on the board of both companies, and could be using his knowledge to profit:
— More Perfect Union (@MorePerfectUS) April 16, 2026
"I mean, the president's son is on the board of both… pic.twitter.com/2NPsEErm8M
However, one other major area of controversy is the trading of sports event contracts, which resembles state-regulated sports betting. That, too, was discussed during Thursday’s hearing.
Indeed, one vivid instance of this was when Selig was pressed on the similarities of sports prediction markets and state-regulated sportsbooks by Democratic Congressman Gabe Vasquez of New Mexico.
Here's Democratic Rep. Gabe Vasquez's sportsbook-or-prediction market pop quiz for CFTC Chair Michael Selig.
— Geoff Zochodne (@GeoffZochodne) April 16, 2026
"And that's the problem, because the average consumer also can't tell," Vasquez said after Selig conceded he wasn't certain which was which. pic.twitter.com/1FaUR0igCz
Using some visual aids, Vasquez quizzed the chairman on a pair of betting lines from a recent MLB game, asking Selig which was from a prediction market and which from a sportsbook. When Selig said he wasn’t certain and asked Vasquez to “enlighten” him, the congressman said that’s the problem.
“Because the average consumer also can't tell,” Vasquez said. “Here you see that the results from the prediction market and the state-regulated gaming entity, and the lines that are put on these sports bets, aren't much of a difference, yet they are regulated completely differently.”
The biggest difference in regulation is the access they provide. CFTC-regulated prediction markets are available all over the U.S., while state-regulated online sportsbooks are available only where states permit them.
In New Mexico, Vasquez’s home state, that’s a big problem, because only Native American tribes are authorized to offer sports betting.
“When a federal agency like the CFTC allows prediction markets to bypass these established, longstanding legal requirements, but under a different label, and uses loopholes to evade regulation and consumer protection standards, it undermines tribal sovereignty and state protection,” Vasquez said.
In “practical terms,” he added, tribes are bleeding revenue to prediction markets that would otherwise be used for community programs and services. While the CFTC is tasked with overseeing derivatives markets, Vasquez noted that this has traditionally meant helping businesses “hedge real economic risk,” such as fuel and crop prices.
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The congressman then asked if player prop-like event contracts help hedge actual economic risks. Later, Vasquez said he doesn’t think it’s hedging at all, just betting, and that regulating sports betting is not something the CFTC was created to do.
“There are many risks that could be hedged through various contracts in our markets,” Selig responded. “The bottom line is that these markets need to be well-functioning and comprehensively regulated by the CFTC. Our statute mandates it, and we'll continue to do it well.”
There have been suggestions made by the CFTC in different settings that it sees sports event contracts as legal and fine for prediction markets to offer. This includes filings made in ongoing court cases.
“Stadiums function as regional economic anchors around a network of businesses, including hotels, restaurants, transportation providers, retailers, and event management firms,” the CFTC argued in an amicus brief field earlier this year. “For these reasons, hotels likely adjust pricing models, restaurants expand staffing to accommodate increased demand, vendors increase supply orders, and cities allocate resources to accommodate projected crowds. All of these decisions pose economic risk, which is precisely the type of economic exposure that derivatives markets are designed to mitigate.”
