CFTC Defends Exclusive Federal Jurisdiction Over Prediction Markets

The Commodity Futures Trading Commission (CFTC) filed an amicus curiae brief with the U.S. Court of Appeals for the Ninth Circuit to assert its exclusive federal jurisdiction over prediction markets. The move seeks to block state regulators from treating event contracts as unlicensed gambling, specifically supporting platforms such as Kalshi and Polymarket.

This legal intervention follows a lawsuit by the Nevada Gaming Control Board, which secured a temporary restraining order against Kalshi for allegedly offering unlawful sports-related contracts. While the CFTC argues these markets function as futures contracts that allow individuals to hedge commercial risks and manage portfolios, regulators in Nevada and Massachusetts have pursued cease-and-desist orders and lawsuits to stop their operations.

CFTC Chairman Michael S. Selig characterized state attempts to regulate these markets as a power grab that ignores legal precedent. Conversely, Utah Governor Spencer Cox condemned the agency's stance, arguing that these platforms are simply gambling and harm families. Industry groups, including the American Gaming Association and the Indian Gaming Association, have urged Congress to intervene, claiming the contracts undermine tribal sovereignty and risk facilitating match-fixing.

The conflict is further complicated by reports that Donald Trump Jr. serves as a strategic advisor for Kalshi and is an investor in Polymarket, creating potential conflicts of interest within the Trump administration's support for the platforms.