Trump's CFTC Chair Takes Offensive in Prediction Markets Battle Against States

Michael Selig arrived at the Commodity Futures Trading Commission two months ago with a clear mission: to protect prediction markets from the states trying to shut them down. On Tuesday, he made his move. The CFTC filed court documents in a case involving Nevada and Crypto.com, asserting that only the federal agency—not individual states—has the authority to regulate platforms like Kalshi and Polymarket. These are financial exchanges where Americans can wager on everything from Olympic medal counts to election outcomes to whether aliens exist. The stakes are enormous. In 2024 alone, Americans bet nearly $150 billion on sports, according to the American Gaming Association. Selig's filing represents one of his first major acts since taking the helm, and it amounts to a direct challenge to a bipartisan coalition of state officials, traditional gambling companies, and lawmakers who view prediction markets as nothing more than illegal sports betting dressed up in financial language.

Selig has been signaling his intentions for weeks through social media posts and media appearances, but Tuesday's filing escalated the conflict into open legal warfare. "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 derivatives markets deserve," he wrote on X. Then came the warning: "To those who seek to challenge our authority in this space, let me be clear: We will see you in court." The language was unmistakable. This was not a regulatory agency seeking compromise. This was a chair willing to fight.

The opposition came swiftly and from unexpected quarters. Utah Governor Spencer Cox, a Republican, fired back on social media, calling the prediction markets Selig was defending "gambling—pure and simple" with "no place in Utah." Senator Catherine Cortez Masto of Nevada, a Democrat, issued a statement arguing that Congress never granted the CFTC authority over sports gaming or gambling of any kind—that power belongs to the states. Former New Jersey Governor Chris Christie, now an adviser to the American Gaming Association, was blunt in an interview with POLITICO: "A bet is not an investment," he said. "He calls them derivatives. The derivatives market is something where someone can bet on how many strikeouts Gerrit Cole will have for the Yankees on Opening Day? I mean, come on. It's ridiculous. It's a bet, and they should comply with the law." Christie accused Selig and the CFTC of showing "absolutely no respect or regard for states' rights."

The prediction markets themselves have undergone a remarkable transformation. Once confined to academic corners of finance, they exploded into mainstream prominence after the 2024 election. Major Wall Street institutions like the New York Stock Exchange's parent company now back them. CNN and CNBC partner with them. Donald Trump Jr. advises both Kalshi and Polymarket. The markets have become ubiquitous in both financial and media circles, and their growth has been turbocharged by the Trump administration's friendlier regulatory posture. Under President Joe Biden, the CFTC had attempted to restrict what these markets could offer, proposing explicit bans on elections and sports betting. That plan never materialized. Now, with Selig at the helm, the trajectory has reversed entirely.

The CFTC's position rests on a simple claim: the agency has been regulating prediction markets since the early 1990s and is best equipped to continue doing so. A CFTC spokesperson stated that the agency "will provide clear rules of the road to ensure these markets continue to flourish while preserving market integrity and customer protection." The Coalition for Prediction Markets, an industry group representing Kalshi, Crypto.com, and others, echoed this argument, warning that "a patchwork of state regimes would create uneven protections for consumers and incentives to move more activity offshore, undermining customer safeguards." Former CFTC Chair Chris Giancarlo, who led the agency during Trump's first term, endorsed Selig's approach. "These markets are not going to work if they're chopped up piecemeal by the states," Giancarlo said. His law firm, Willkie Farr & Gallagher, represents Polymarket—a detail that underscores how the prediction market industry has woven itself into the fabric of Washington's legal and financial establishment.

But not all former regulators agree. Timothy Massad, who chaired the CFTC under President Obama, expressed serious doubts about whether the agency has the resources and expertise to oversee these markets effectively. "The CFTC doesn't have the expertise or staff that they need to police these markets," Massad said, pointing to novel regulatory challenges like insider trading risks. He characterized Selig as having become "an advocate" for the markets rather than a neutral regulator. "He's jumping in all the way," Massad observed. The comment captured a fundamental tension: Selig is not merely defending CFTC jurisdiction—he is actively championing the expansion of prediction markets themselves.

The legal battle now moves to the Ninth Circuit Court of Appeals, where the Nevada case will test whether federal authority truly trumps state control. The outcome will likely determine the future shape of prediction markets in America. If Selig prevails, these platforms could expand nationally under a single federal regulatory framework. If states succeed, the markets face fragmented, state-by-state restrictions that could cripple their growth. For now, Selig has drawn his line. The question is whether the courts will hold it.