CFTC chair instructs staff to draft new rulebook for prediction markets
James Siva, chairman of the California Nations Indian Gaming Association (CNIGA), said “Two months after telling Senators he would allow the courts to conduct a neutral review of what constitutes ‘gaming’ under the Commodity Exchange Act, CFTC chair Mike Selig appears to be abandoning his duty to regulate these illegal gambling platforms and instead will serve as their cheerleader,” Siva said in a statement.
In his first public remarks since taking office Selig said yesterday (29 January) that the agency will move to establish a new regulatory framework for event contracts, including those linked to sporting outcomes.
As part of that shift, Selig said he has directed staff to withdraw both a 2024 proposed rule that would have prohibited political and sports-related event contracts, and a 2025 staff advisory warning registered platforms against offering sports-related contracts while litigation remains ongoing.
Platforms including Kalshi and Crypto.com are currently embroiled in court cases in multiple states over the legality of event contracts tied to sports, with critics arguing the products function as de facto unlicensed online betting.
“Clear standards”
Selig commented that prediction markets are not a recent innovation. “They have operated within the CFTC’s regulatory perimeter for more than two decades,” he said.
“But, despite their history, many view them as novel or unsettled. That uncertainty has not served our markets well, nor has it served the public interest.”
He argued that the existing regulatory framework has proven difficult to apply and has failed to provide legal certainty for market participants.
As a result, the CFTC will now move forward with drafting new event contract rules designed to establish “clear standards” and give firms confidence to operate within the law.
The withdrawal of the earlier rule proposal and staff advisory marks a significant policy reversal at the agency, which in recent years has faced mounting pressure from state regulators, tribal gaming interests, and lawmakers concerned that prediction markets offering sports contracts amount to unregulated sports betting accessible nationwide.
While the 2025 advisory was intended to alert registrants to legal risks stemming from court challenges, Selig said it had instead “contributed to uncertainty in our markets.”
Cooperation with SEC
Beyond rulemaking, Selig said he has instructed CFTC staff to reassess the commission’s involvement in cases currently before federal district and circuit courts, particularly where jurisdictional questions are at stake.
He also announced plans to work more closely with the Securities and Exchange Commission (SEC) on a joint interpretation of financial products. “This effort would draw clearer lines between certain commodity and security options, CFTC-regulated swaps, and SEC-regulated security-based swaps,” he said.
Framing prediction markets as part of a broader wave of financial innovation, Selig said the CFTC must modernise its regulatory approach while maintaining core principles such as investor protection, anti-fraud safeguards, and market integrity.
He also said he looks forward to partnering with SEC chair Paul Atkins on “Project Crypto” and leading the CFTC into what he described as a “new era” for financial markets.
Swift criticism
The announcement drew swift criticism from tribal gaming leaders, who argue that prediction markets offering sports contracts violate federal and state law and threaten tribal sovereignty.
James Siva, chairman of the California Nations Indian Gaming Association (CNIGA), accused Selig of reversing commitments he made to lawmakers earlier this year.
“Two months after telling Senators he would allow the courts to conduct a neutral review of what constitutes ‘gaming’ under the Commodity Exchange Act, CFTC chair Mike Selig appears to be abandoning his duty to regulate these illegal gambling platforms and instead will serve as their cheerleader,” Siva said in a statement.
Siva warned that such platforms “flagrantly violate federal and state law, undermine tribal sovereignty, compromise sports integrity, and inflict grave harm on consumers in all 50 states,” calling on Congress to intervene.
“It is more urgent than ever that Congress step in and insist that online gambling and sports betting through prediction markets is not legal anywhere, anytime, to anyone with a smartphone,” he said.
Concerns over prediction markets have intensified as platforms rapidly expanded sports-related offerings, prompting opposition from the regulated gaming sector and lawmakers.
The American Gaming Association (AGA) and the Indian Gaming Association (IGA) urged Congress to intervene earlier this month, warning that these products function as sports betting outside established gaming law, threatening state authority, tribal sovereignty, and consumer protection.
The groups said platforms now offer complex multi-leg wagers, as well as bets on non-traditional outcomes like collegiate athlete transfers, with trading volume growing without formal CFTC review.
https://next.io/news/regulation/cftc-draft-new-rulebook-prediction-markets/