Well, we finally have our answer as to what the CFTC intends to do about sports event contracts — embrace them.
For months, the Commodity Futures Trading Commission has been conspicuously cautious about sports and other event contracts, repeatedly suggesting that the issue would ultimately be resolved by the courts. That posture just changed, and in a way that materially alters the regulatory chessboard.
On January 29, CFTC Chair Michael Selig delivered public remarks titled “The Next Phase of Project Crypto: Unleashing Innovation for the New Frontier of Finance,” alongside SEC Chair Paul Atkins. While most of the speech focused on the administration’s crypto policy, the final section sent a clear and unmistakable signal: the CFTC is no longer standing on the sidelines when it comes to event contracts. It intends to regulate them and defend its turf.
This is a notable pivot from Chair Selig’s statements at his November nomination hearing, where he repeatedly emphasized deference to judicial interpretation and expressed comfort with whatever outcome the courts reached. Now, the message has changed. Acknowledging that event contracts are widely viewed as legally unsettled, Selig laid out a concrete plan to inject certainty—and innovation—into the space.
Specifically, he announced that the CFTC will:
- Withdraw the 2024 proposed rule that would have prohibited political and sports event contracts by redefining “gaming.”
- Withdraw the 2025 staff advisory that urged regulated entities to prepare for adverse state regulatory action.
- Initiate new rulemaking for event contracts, establishing “clear standards” and providing “certainty” to market participants, likely by formally recognizing them as legitimate financial instruments for risk management.
- Reassess the Commission’s role in pending federal litigation, making clear that where jurisdiction is disputed, the CFTC has both the “expertise and responsibility to defend its exclusive authority over commodity derivatives.”
Although the Chair stopped short of spelling out the agency’s precise legal arguments, the direction of travel is clear. The CFTC appears poised to affirmatively support federal regulation of event contracts—and to do so in a way that preempts state gaming laws.
Prediction markets have recently been on something of a losing streak at the state level, including Nevada’s enforcement action against Polymarket and the preliminary injunction issued by a Massachusetts court in Suffolk County. Federal silence made those state actions harder to counter, but federal engagement threatens to change that dynamic.
With the CFTC signaling that event contracts fall squarely within its jurisdiction, prediction markets gain a powerful ally in both policy debates and courtroom battles. The momentum shifts (at least somewhat) away from state regulators and toward a unified federal framework.
There’s another important wrinkle here to also consider. Meaningful CFTC action could ultimately qualify as “final agency action” under the Administrative Procedure Act, opening the door for states to challenge the Commission directly rather than targeting individual market operators. If that happens, the fight would move to federal court, on federal administrative law terms.
In short: the era of regulatory ambiguity may be coming to a close. The CFTC has picked a side, and for prediction markets, it may be a consequential one.
We’ll be watching closely as this develops.