The US Commodity Futures Trading Commission (CFTC) has stepped in to support prediction markets as several state regulators target to restrict this service. In detail, the CFTC has filed an amicus, also known as a friend‑of‑the‑court, to protect its authority over the US prediction markets.
CFTC uses its federal power
The CFTC’s filing comes amid Crypto.com’s appeal against the state’s efforts to block prediction markets. CFTC Chair Michael Selig boldly stepped ahead to defend the agency’s exclusive federal jurisdiction over these prediction markets.
Several states, plus state gaming regulators in the US, are against the prediction market, claiming that this service is illegal gambling under state laws. These state regulators have filed lawsuits and enforcement efforts against prediction markets.
For newbies, prediction markets are financial platforms where participants trade in the outcomes of any future events, such as elections, games, weather, or sports game outcomes.
According to state regulators, prediction markets like Polymarket and Kalshi lack the required state gambling licenses and should comply with state regulations.
Predominantly, the US states such as New York, Nevada, Massachusetts, Maryland, and others have voiced against prediction markets
However, for the CFTC, prediction market platforms are federally regulated commodity derivatives under the Commodity Exchange Act. As this act comes under federal law, states cannot regulate any laws that have federal authority. The CFTC Chair warned challengers, saying, “We will see you in court,” according to a video posted on X.
CFTC was once against non-compliant prediction markets
In 2022, the CFTC targeted Polymarket and PredictIt, claiming that these platforms offered prediction markets without proper registration under the Commodity Exchange Act. The commission also went against specific political-event contracts for Kalshi.
In short, the CFTC was not inherently against prediction markets; rather, it spoke out against certain non-compliant operations. However, the agency withdrew from its restrictive stances and started embracing prediction markets since 2025, as the pro-crypto administration came to power in the US.
CFTC’s blockchain leap is significant
Since the US began working for the pro-crypto leader amid ongoing criticism, the CFTC has so far supported blockchain growth. Selig recently remarked that proper regulations for crypto markets will result in the rise of new on-chain markets and financial applications.
The agency has also formed an Innovation Advisory Committee (IAC), where crypto and traditional finance leaders join to mold future regulations in digital assets, blockchain, and prediction markets. Last year, the CFTC enabled federally regulated exchanges for spot crypto trading in the US.
