PANews reported on February 18th that, according to The Block, the U.S. Commodity Futures Trading Commission (CFTC) stated in its latest court filings that, authorized by Congress, it has "exclusive jurisdiction" over futures and event contracts (including prediction market contracts), and criticized some state governments for overstepping their authority in attempting to regulate prediction markets. The agency filed an amicus brief with the U.S. Court of Appeals for the Ninth Circuit concerning a lawsuit between Crypto.com and the state of Nevada. Previously, Crypto.com's prediction market business sued the state of Nevada, attempting to prevent it from banning the platform from offering sports event contracts; the trial court ruled that sports event contracts were not under the CFTC's jurisdiction, and Crypto.com has appealed.
In its filing, the CFTC stated that the Dodd-Frank Act granted it exclusive regulatory power over futures and related derivatives following the 2008 financial crisis. It also noted that event contracts include not only binary outcomes but also contracts based on quantitative indicators such as the magnitude of event outcomes, like the win-loss margin in sports events. This submission is seen as a significant step by the CFTC to strengthen its federal regulatory authority over prediction markets. With the rapid growth of prediction markets, related regulatory controversies continue to escalate, involving platforms such as Kalshi and Polymarket.
CFTC Chairman Michael Selig stated that event trading contracts fall under the category of commodity derivatives and should be uniformly regulated by the CFTC, criticizing some state governments for using litigation to fight for regulatory power as a "power struggle." Furthermore, the CFTC's regulatory direction has recently shifted. During former Chairman Rosen Behnam's tenure, the regulator pushed for rules restricting prediction contracts related to political, war, and terrorism events, but this rule-making process was canceled this month. Currently, prediction market operators generally argue that event trading contracts fall under federal regulation, while states believe that related products involve gambling or sports betting and should be regulated by local gambling laws, leading to an escalating regulatory battle between the two sides.
