23 U.S. Senators Urge CFTC Chairman to Reconsider Prediction Market Stance

• 23 U.S. Senators have recommended CFTC Commission Chairman Michael Selig reconsider his stance on prediction markets
• The Senators asked Selig to maintain the commission’s prohibition on sports event contracts
• Urged the CFTC to abstain from intervening in pending litigation amongst states

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Led by U.S. Senators Catherine Cortez Masto (D-Nev) and Adam Schiff (D-Calif), a total of 23 U.S. Senators urged Commodity Futures Tradition Commission Chairman Michael Selig to honor his comments regarding sports event contracts and the prediction markets during his recent confirmation hearing.

The U.S. Senators advised Selig to maintain the commission’s prohibition on Commodity Futures Trading Commission (CFTC) registered platforms listing sports event contracts, as well as those involving terrorism or assassination, and to abstain from intervening in pending state litigation involving prediction markets.

“The real-world consequences are already evident. Prediction market platforms are offering contracts that mirror sportsbook wagers and, in some cases, contracts tied to war and armed conflict. These products evade state and tribal consumer protections, generate no public revenue, and undermine sovereign regulatory regimes,” the Senators noted in their letter.

Stick With Original Comments

The Senators wrote to Selig and asked him to stick with his original comments regarding the prediction markets.

“However, two months later, you announced that the Commission will intervene in the matter before it has been fully litigated in the courts by withdrawing guidance cautioning against the use of prediction markets for sports betting, and that the Commission may even enter ongoing litigation. In addition, you recently posted that you ‘strong[ly] disagree’ that prediction markets violate the law, a stark reversal of your statements before the Committee,” the Senators wrote.

During a nomination hearing in November in front of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, Selig said several times he would will depend on the courts, ongoing litigation, and Congress regarding the CFTC’s role in regulating sports event contracts.

He made it clear during the hearing he would depend on court opinions to determine the CFTC’s role in regulating the sports event markets.

At one point, Minnesota Sen. Tina Smith (DFL) said that current CFTC regulations “clearly prohibit event contracts related to gaming from being offered.” If confirmed, she asked, can Selig commit to enforcing the prohibition?

The question, Selig said, is a complex one.

“As someone who has spent many years practicing law at law firms as well as studying the law at law school, these are complex issues as to interpretation of what it means to constitute gaming. Of course, I have the utmost respect for judges that are working on these issues in the court systems. I intend to always adhere to the law and follow what judicial decisions tell me to follow. I also believe that these types of issues are ones we can work through together. Some of them are Congressional issues, as to whether we change statutes in certain areas…these are just very challenging, interpretive questions I will look to the courts on,” he said.

However, speaking at a joint CFTC and SEC event in January, Selig publicly showed support for prediction market contracts. He reported several new planned initiatives from the CFTC to grow the markets and to take a more active role in defending its exclusive jurisdiction over these types of contracts.

Selig said the CFTC will withdraw a 2024 event contracts rule proposal that suggested prohibiting political and sports events, while also withdrawing a 2025 staff advisory warning for prediction market companies to be wary about offering sports event contracts due to ongoing state litigation.

The advisory, Selig said, was issued with the intent of bringing awareness to potential litigation, but has instead contributed to uncertainty around the markets.

The chairman said the CFTC will now look to draft new rules for event markets to provide clarity for prediction market companies.

Finally, Selig said the CFTC could begin participating in current state lawsuits against prediction contracts.

No Intervention in State Litigation

The U.S. Senators urged Selig and the CFTC to take two actions moving forward.

“First, we ask the CFTC to abstain from intervening in pending litigation involving contracts tied to sports, war, or other prohibited events, in alignment with your statements before the Senate Agriculture Committee. Second, should the Commission initiate a rulemaking on event contracts, as you suggested, we ask that those rules adhere to the statute and prior regulations, and reiterate that contracts involving gaming (including sports), war, terrorism, assassination, or other enumerated activities are barred and may not be listed, traded, or cleared under the Commodity Exchange Act,” they wrote.

Congress, they noted, made it clear that these activities are “contrary to the public interest.”

The Senators urged Selig to realign the CFTC’s actions with his testimony he provided to Congress under oath.