Commodity Futures Trading Commission Chairman Mike Selig emphasized that the agency will persist in defending its exclusive right to regulate prediction markets through the courts. Selig stated, 'Regardless of the subject, whether sports, politics, or otherwise, if a product is validly offered within a CFTC-regulated exchange, it falls under our regulatory purview.' The CFTC is currently engaged in lawsuits against several states, including Arizona, Illinois, and Connecticut, to establish its authority over commodity derivatives markets.
Selig's comments come after a recent Third Circuit Court ruling that supports the CFTC's oversight of prediction markets. The agency is also involved in a major litigation effort to establish that prediction markets provide derivatives products under the Commodity Exchange Act, rather than gambling services regulated by individual states. Selig noted that the CFTC's regulatory authority is clear when it comes to swaps on federally regulated Designated Contract Markets, and that states cannot override federal oversight with their own gambling laws. The CFTC is in the process of clarifying its oversight of prediction markets through formal rulemaking and is open to suggestions on how to evaluate this process.