CFTC Chairman Mike Selig emphasized that the agency will continue to defend its exclusive regulatory authority over prediction markets in court, stating that any valid product offered within a CFTC-regulated exchange falls under federal regulation, regardless of the subject matter. The CFTC's lawsuits against several states aim to establish its authority over commodity derivatives markets. Selig cited a recent Third Circuit Court ruling as support for the agency's position, which asserts that the CFTC has the authority to oversee prediction markets.
The agency is engaged in a major litigation effort to argue that prediction markets provide derivatives products under the Commodity Exchange Act, rather than gambling services regulated by states. Selig noted that the CFTC decides whether a product is in the public interest and that the agency's lawsuits focus on this aspect, regardless of the underlying events.
The CFTC is currently undergoing a formal rulemaking process to clarify its oversight of prediction markets and is open to suggestions on the process.