CFTC Clashes With States Over Prediction Market Regulation

The Commodity Futures Trading Commission (CFTC) is clashing with state governments over the regulation of rapidly growing prediction markets. Following a surge in activity that exceeded $44 billion in 2025, several state officials are attempting to establish statewide prohibitions, arguing that these platforms constitute unregulated gambling. These states seek to protect state-sanctioned gaming and lotteries that fund municipal bonds for infrastructure and education in states such as Florida, Oregon, and West Virginia.

CFTC Chief Michael Selig and the Trump administration have opposed these state-level bans, asserting that the federal government maintains exclusive jurisdiction over these markets. Selig indicated that the agency would not allow state governments to undermine its authority over these products.

Industry leaders from the American Gaming Association and the National Council of State Legislatures have described the conflict as a top-tier issue for Congress. While some officials, such as Florida's Ben Watkins, suggest that prediction markets attract a different demographic and may not cannibalize traditional lottery revenue, others warn that the platforms create competing secondary lotteries that threaten billions in tax revenue.