The Commodity Futures Trading Commission (CFTC) acted decisively on 19 February 2026 to assert its authority over U.S. prediction markets. Chair Mike Selig directed agency lawyers to submit court arguments confirming federal oversight while several states pursue legal action against event-contract platforms.
Selig stressed that prediction markets fall under federal derivatives regulation rather than state control. He argued that the commission has supervised these markets for decades and views them as tools helping participants manage risks linked to weather and energy price fluctuations.
The Commodity Futures Trading Commission (CFTC) now plans new rulemaking to clarify acceptable contracts, strengthen oversight standards, and encourage responsible innovation, with CFTC officials aiming to provide clearer federal guidance for prediction markets.
Legal disputes have centered on platforms including Polymarket and Kalshi, which face accusations that some contracts resemble sports betting, which is restricted under state law.
A federal judge in Nevada previously sided with state authorities, although appeals continue as the CFTC defends its jurisdiction, with CFTC officials arguing federal oversight should prevail.
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Companies Expand Amid CFTC Regulatory Oversight
Prediction markets continue to attract corporate interest despite legal disputes. Major exchange Coinbase has launched lawsuits against several states after officials tried applying gaming regulations to event contracts linked to sports outcomes. These actions illustrate broader confusion over whether prediction markets function as financial derivatives or gambling services.
However, policy orientation changed after leadership transitions following the return of Donald Trump to Washington. Resistance to certain contracts shown by the commission earlier softened, and disputes with Kalshi were brought to an end following the rejection of earlier agency stances by the courts. On the other hand, business ties were strengthened after Don Trump Jr. joined Kalshi as an advisor.
Growth also extended to media ventures. Trump Media & Technology Group, the parent company of the Truth Social social media platform, announced its entry into the prediction market industry.
Political Leaders Reject Federal Position
Some political leaders criticized the position taken by the commission. Spencer Cox from Utah said that prediction contracts are similar to gambling and that they are damaging families as well as the state’s authority. The lawmakers from Utah are also taking steps against sports-related contracts, even though they did not lead the lawsuits.
At the federal level, Senator Elizabeth Warren charged that regulators were undermining state safeguards and shifting focus away from financial stability. This is just another example of the conflict between federal regulators who want a unified approach to regulation and state governments that want to maintain control over gambling laws.
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