The Chairman of the Commodity Futures Trading Commission, Mike Selig, stated that the agency will persist in defending its exclusive right to regulate prediction markets in court. Selig emphasized that the type of event being predicted is irrelevant, as long as the product is offered within a CFTC-regulated exchange, it falls under the agency's regulatory purview.
The CFTC's lawsuits against several states are aimed at establishing its authority over commodity derivatives markets. A recent Third Circuit Court ruling supported the CFTC's position, and the agency is engaged in a significant litigation effort to assert that prediction markets provide derivatives products, not gambling services. Selig noted that the CFTC has the power to regulate swaps and can block certain types based on public interest. The agency is currently undergoing a formal rulemaking process to clarify its oversight of prediction markets and is open to suggestions.
Additionally, the CFTC and SEC are reviewing comments on their joint interpretative guidance and are working to establish clear lines of authority.