The U.S. Commodity Futures Trading Commission (CFTC) took a firm stance on prediction market regulation, arguing that the markets should fall under federal, not state, oversight.Polymarket.

On Feb. 17, the CFTC filed a “friend-of-the-court” brief in the Ninth U.S. Circuit Court of Appeals in support of Crypto.com amid its fight with the Nevada Gaming Control Board, according to a video statement from CFTC Chairman Mike Selig.

“The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products,” Selig said in a statement.

This move comes as Kalshi, a CFTC-regulated prediction marketplace, faces legal action from the New York Gaming Commission for allegedly operating illegally within the state. The New York action is just one of many lawsuits filed by state regulators, including Nevada’s, against the platform.

The expansion of established sportsbook operators like DraftKings and FanDuel into prediction markets further complicates the landscape.

Kalshi’s co-founder Luana Lopes Lara has criticized the lawsuit against Kalshi, and prediction markets, in general.

“It’s not surprising that entrenched interests are seeding false narratives to discredit prediction markets: this is very similar to what the banks did to discredit the crypto industry (a good reminder not to blindly trust what you read online),” Lopes Lara wrote in a post on X in Nov. 2025.

The CFTC’s involvement highlights the ongoing debate regarding the classification of these markets. The platforms, and now the CFTC itself, argue that prediction market contracts should be classified as derivatives and under the federal oversight of the CFTC, while some state gaming regulators argue that they should be seen as gambling markets and regulated on the state level as such.

This article was generated with the assistance of AI workflows.