The Commodity Futures Trading Commission (CFTC) has officially gone on the offensive in its defense of prediction markets.
Key Takeaways
- CFTC chair makes first significant statement about fighting for federally-regulated prediction markets.
- Selig did not mention sports in the examples he gave of derivative markets.
- Multiple states are in a legal battle with trading exchanges over sports event contracts.
CFTC chairman Michael Selig released a video on the social media site X, telling state regulators and challengers of the federally-regulated derivative markets that his agency is taking legal action.
“To those who seek to challenge our authority in this space, let me be clear: We will see you in court,” Selig said.
I have some big news to announce… pic.twitter.com/3OBNTaOnIL
— Mike Selig (@ChairmanSelig) February 17, 2026
The CFTC filed a friend-of-the-court brief on Tuesday to “defend its exclusive jurisdiction over these derivative markets.” This is the first legal step the federal agency has taken since prediction markets like Kalshi and Crypto.com began a court battle with gaming regulators in states like Nevada, Massachusetts, and New Jersey.
Selig, who took over as chairman in December 2025, recently said he would back prediction market platforms facing legal action. On Tuesday, he made his strongest statements yet.
Enjoying Covers content? Add us as a preferred source on your Google account“Over the past year, American prediction markets have been hit with an onslaught of state-led litigation,” Selig said. “Today, the CFTC is taking an important step to ensure that these markets have a place here in America and have the integrity and resilience and vibrancy that our derivative markets deserve.”
Defending derivatives
Selig defended trading exchanges that offer derivative markets, but he didn’t mention sports contracts when giving examples of why prediction platforms are essential to the public. However, the vast majority of Kalshi’s trading volumes have come from sportsbook-like markets that offer spreads, totals, moneylines, and props.
DraftKings and FanDuel, the two biggest sports betting brands in the U.S., launched prediction markets late last year, but neither are offering sports contracts in states where they operate regulated sportsbooks.
“Prediction markets aren’t new,” Selig said. “The CFTC has regulated these markets for over two decades. They provide useful functions for society by allowing every-day Americans to hedge commercial risks, like increases in temperature and energy-priced spikes. They also serve as an important check on our news media and our information streams.”
Court battles
State-level gaming regulators have tried to keep prediction market platforms from offering sports event contracts in legal sports betting jurisdictions, claiming that those companies violate state laws through unlicensed gaming. Several states have issued cease-and-desist orders, leading to lawsuits filed by Kalshi, Crypto.com, and Coinbase.
Prediction markets have fought back with arguments that they are regulated by the CFTC, and states don’t have jurisdiction over their offerings. The legal debate, which could eventually work its way up to the Supreme Court, is that these sports markets are a form of gaming and not derivatives, so it’s still uncertain exactly where Selig stands on NBA or college basketball contracts.
Regardless, the CFTC has chosen a clear side in the legal battle.
“As the 250th anniversary of our nation’s founding approaches, America must maintain its status as the global leader in financial markets,” Selig wrote on X.
As the 250th anniversary of our nation’s founding approaches, America must maintain its status as the global leader in financial markets. To anyone seeking to challenge the Commission’s authority over these contracts, I want to make it clear: we’ll see you in court.
— Mike Selig (@ChairmanSelig) February 17, 2026
