CFTC Chairman Mike Selig emphasized that the agency will continue to assert its exclusive regulatory authority over prediction markets in court, stating that any 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 solidify this authority, with Selig citing a recent Third Circuit Court ruling as supporting the agency's position.
The agency is currently engaged in a major litigation effort to establish that prediction markets provide derivatives products under the Commodity Exchange Act, rather than gambling services regulated by states. Selig noted that the CFTC's view is clear: when a swap is offered on a federally regulated market, the transaction is subject to federal regulation, and states cannot override this oversight with their own gambling laws. The CFTC is also going through a formal rulemaking process to clarify its oversight of prediction markets and is open to suggestions on this process. Additionally, the agency is reviewing comments on its recent interpretative guidance with the SEC, which provides a taxonomy for evaluating digital assets and ensures clear lines are drawn between commodities and securities.