CFTC Chair Selig Pushes Federal Rules as States Sue Prediction Markets
CFTC Chair Michael Selig proposed new prediction market rules at the agency's first Innovation Advisory Committee meeting, while defending federal jurisdiction against more than 20 ongoing state lawsuits, including a $36 billion suit against Kalshi in New York.
Selig Takes the Fight to the States
Commodity Futures Trading Commission Chair Michael Selig has been anything but quiet about where his agency stands on prediction markets. On Thursday, speaking at the CFTC’s first Innovation Advisory Committee meeting, Selig proposed a new set of rules for prediction markets and made clear the agency has no intention of ceding ground to state regulators. The meeting, which also included panels on cryptocurrency and artificial intelligence, marked a formal step toward codifying federal oversight of an industry that has rapidly become one of the most contested spaces in American gambling and finance.
Selig drew a pointed historical comparison in his prepared remarks. “Today, prediction markets find themselves enduring the same type of assault from state and national politicians that plagued the Chicago Board of Trade for much of its early existence,” he said. His proposed rules cover consumer protection, market design, and product governance, while also stressing the CFTC’s exclusive authority over federally regulated event contracts. Amendments to Rule 40.11 would clarify how contracts involving gaming, war, terrorism, and assassination are handled.
New York’s $36 Billion Lawsuit Looms Large
The backdrop to all of this is a lawsuit from New York Attorney General Letitia James, filed last month, accusing prediction market Kalshi of operating an unlicensed and illegal gambling operation. State officials are seeking $36 billion in fines, damages, and restitution. New York Gov. Kathy Hochul and James both argue that wagering on sports, elections, and cultural events is “quintessentially gambling” rather than legitimate commodities trading. The state also contends that Kalshi’s contracts sidestep New York’s minimum gambling age of 21, allowing 18-to-20-year-olds to participate.
A federal judge has already sided with New York, ruling that the federal Commodity Exchange Act does not supersede state gambling law. Selig’s response was to issue a notification of market emergency and direct Kalshi to keep operating in the state anyway. Kalshi has called the lawsuit “political theater,” according to CDC Gaming.
Selig was less diplomatic. Standing alongside President Donald Trump at a White House Innovation summit Wednesday, he called James a “rouge state attorney general” who seeks to “push these financial markets offshore to unregulated and foreign venues.” The reference was to New York’s attorney general, whose name he misspelled in his remarks.
Industry and Oversight Questions Both Surface
The Innovation Advisory Committee meeting brought out voices from across the industry, and not all of them were singing in unison. Kalshi co-founder Luana Lopes Lara argued that federally regulated prediction markets offer stronger consumer protections than a fragmented state-by-state system. “I’ve never heard a single argument on why state-by-state has better consumer protection than a federal framework,” she told the committee.
CME Group Chairman and CEO Terry Duffy raised a different concern, questioning the CFTC’s approach to self-certified contracts. Duffy noted that roughly 2,500 contracts have been self-certified since the Trump administration took office in January 2025, and pointed out that the agency has not opposed a single one. That kind of hands-off posture, even as the CFTC wages legal battles against states for interfering with those same markets, draws a complicated picture of what federal oversight actually looks like in practice.
More than 20 lawsuits are currently ongoing between state gaming regulators, tribal organizations, and both prediction markets and the CFTC itself. The legal and regulatory fight is far from resolved. What is clear is that Selig sees his agency as the sole legitimate authority over designated contract markets, and he is prepared to say so loudly and often, in committee rooms and on White House lawns alike.
What new rules did CFTC Chair Selig propose for prediction markets?
At the CFTC's first Innovation Advisory Committee meeting on Thursday, Selig outlined proposed rules covering consumer protection, market design, and product governance. He also noted that recently proposed amendments to Rule 40.11 would clarify contracts involving gaming, war, terrorism, and assassination.
Why is New York suing Kalshi?
New York Attorney General Letitia James sued prediction market Kalshi for allegedly running an unlicensed, illegal gambling operation. State officials are seeking $36 billion in fines, damages, and restitution. New York officials argue Kalshi's event contracts bypass state age restrictions, allowing 18-to-20-year-olds to wager, while the legal gambling age in New York is 21.
How many lawsuits are currently targeting prediction markets?
According to CDC Gaming, more than 20 lawsuits are ongoing between state gaming regulators and tribal organizations against prediction markets and the CFTC.
What was the federal court's ruling on the New York vs. Kalshi dispute?
A federal judge sided with New York officials, ruling that the federal Commodity Exchange Act did not supersede state gambling law. In response, CFTC Chair Selig issued a notification of market emergency and ordered Kalshi to continue operating in New York.