CFTC Claims Exclusive Authority Over Prediction Markets: Chair Selig Says, “This Power Grab Ignores The Law, Decades Of Precedent”

On 17 February 2026, the Commodity Futures Trading Commission (CFTC) filed an amicus brief asking for exclusive federal jurisdiction over prediction markets like Polymarket and Kalshi.

With this, CFTC has directly challenged state governments’ attempts to regulate event contracts as gambling products.

The filing in the US Circuit Court of Appeals for the Ninth Circuit shows that the federal regulators intend to establish prediction market platforms as legitimate financial instruments.

Commenting on the move, CFTC Chairman Michael S Selig said, “CFTC-registered exchanges have faced an onslaught of lawsuits seeking to limit Americans’ access to event contracts and undermine the CFTC’s sole regulatory jurisdiction over prediction markets.”

This power grab ignores the law and decades of precedent.

“The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products,” added Selig.

The brief, filed in North American Derivatives Exchange, Inc. et al v. The State of Nevada, represents the CFTC’s most aggressive defense of its regulatory authority to date. The case centers on whether prediction market platforms like Crypto.com can operate in Nevada despite the state gaming regulator’s attempts to impose restrictions. The CFTC argues that federal law preempts state gambling laws and that states lack authority to regulate markets within the CFTC’s exclusive jurisdiction over commodity derivatives.

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Regulatory Reversal Under CFTC Chair Michael Selig’s Leadership

This aggressive stance represents a dramatic reversal from the CFTC’s previous approach. In 2024, the agency proposed a rule that would have prohibited event contracts related to politics and sports. However, the arrival of Chairman Selig has fundamentally altered the agency’s direction.

The CFTC has filed a 29-page amicus brief in the Ninth Circuit prediction markets appeal filed by Crypto*com, and there is no mention of Rule 40.11(a)(1)’s blanket ban against ‘gaming’ contracts. The word ‘gaming’ appears only once in the entire brief. pic.twitter.com/SWsDQoGNd2

— Daniel Wallach (@WALLACHLEGAL) February 18, 2026

The prediction platforms allow users to trade shares based on the outcome of future events, ranging from election results to economic data. For many in the industry, including Ethereum co-founder Vitalik Buterin, prediction markets represent a powerful tool for gathering public sentiment and hedging risk, rather than just simple gambling.

However, the regulatory situation is messy. Some states treat these markets like casinos, subjecting them to local gaming laws. The CFTC, on the other hand, views them as financial derivatives—contracts used to manage risk, similar to how a farmer might hedge against crop prices.

This clash is exactly why legislation like the Treasury Crypto Clarity Act has been discussed in other contexts—everyone is fighting for clear rules of the road.

The CFTC relies on the Dodd-Frank Act, a major financial law passed after the 2008 crisis, which they argue gave them sole power over these types of swaps and derivatives. The brief states that Congress intended for these markets to be regulated federally, noting that event contracts allow businesses and individuals to hedge against risks.

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If Court Sides With CFTC, It Will Be A Huge Win For Legitimacy Of Crypto Prediction Markets

This legal battle matters because platforms need to know who their boss is. We have already seen platforms like Kalshi implement surveillance systems to satisfy federal regulators. If states win this battle, crypto platforms might have to navigate 50 different rulebooks instead of one.

It would treat them as serious financial tools rather than online casinos. This could open the door for more mainstream adoption and potentially safer platforms for you as a user.

However, federal oversight brings its own intense scrutiny. The CFTC is strict about market integrity. We have already seen real-world consequences for bad actors, such as the recent case where Israelis were arrested for insider trading on Polymarket. Exclusive federal jurisdiction means these markets will be policed heavily for manipulation.

For now, we wait for the Ninth Circuit’s decision. This ruling will likely set the precedent for how one can or can’t participate in prediction markets for years to come.

Follow us on X and YouTube for real-time updates on this legal battle.

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