Why The CFTC Chair’s ‘Look To The Courts’ Line On Prediction Markets Rings Hollow Now
Michael Selig published a Wall Street Journal op-ed vigorously defending the legality of prediction markets and CFTC jurisdiction. Roundup: New Zealand alleges Kalshi and Polymarket operate illegally.
The new chair of the Commodity Futures Trading Commission is mounting a public relations offensive to defend the legality of prediction markets.
Michael Selig penned an op-ed in the Wall Street Journal on Monday, headlined “States Encroach on Prediction Markets”:
The Commodity Futures Trading Commission for decades has overseen regulation of prediction markets—or event contracts, as we refer to them—that help market participants hedge risk, aggregate information and test hypotheses about future outcomes.
In recent years, states have waged legal attacks on the CFTC’s authority to regulate these financial instruments. If they succeed, participants would be barred from access to federally regulated event-contract markets. So it should come as no surprise that the commission is filing a friend-of-the-court brief Tuesday supporting Crypto.com in the Ninth U.S. Circuit Court of Appeals. …
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.
This piece came after the chairman began tweeting in ways that made his views increasingly clear.
Selig’s position that the CFTC has jurisdiction over prediction markets is defensible, regardless of one’s view of the industry or sports event contracts. And he could even be correct when all is said and done. Making new rules around prediction markets is also well within the CFTC’s remit.
The problem I have is that Selig himself seemed to imply that the CFTC was going to sit it out and “look to the courts” leading up to his confirmation. When Selig appeared in front of the Senate Agriculture Committee back in November as part of the nomination process, I catalogued everything he said in response to questions about prediction markets.
Here are some excerpts from Selig’s testimony. Let me know if you think this dovetails with his very public stance on the side of prediction markets today:
“I also believe that these types of issues are ones we can work through together. Some of them are Congressional issues as to whether we change statutes in certain areas. But of course, I was not at the CFTC at the time that this portion of the Dodd-Frank Act was drafted. I was not working in this committee or on the Hill at the time. And so these are just very challenging interpretive questions that I will look to the courts on.”
“I think it’s vitally important that the CFTC look to the courts on a lot of these issues. They’re, of course, being litigated across the country really, to the extent that any of these event contracts constitute gaming, of course, that’s a question for the courts.”
“As I mentioned, this is a really complicated issue. It’s an interpretive question that’s working its way through the courts. And so I will respect the decisions of those courts. I also am very interested to work with this committee, to the extent that there are views that we need to change anything in the statute. But this is ultimately a question for the courts. And as a chairman of an agency, I will always look to the views of the courts and to Congress, as the Supreme Court has said, in the Loper Bright decision. You know, the deference of the agency is limited. We have to look to the courts.”
“Senator, I, again, would look to the courts on these questions of facts and interpretation of the law. It’s a complex issue. …”
“Senator, on this issue, I would look to the courts, so I would look to what the courts say about that issue, and I think it’s still working its way through. So once we have an outcome that we can rely on and that we can interpret within the agency.”
“I think it would be irresponsible for me to prejudge that issue, and so I will come into the issue at the commission if confirmed, with a blank slate and look to the courts.”
On that last point, the hearing took place on Nov. 16. He was confirmed on Dec. 18. By Jan. 29, he said the CFTC would likely start getting involved in court cases. Is two months enough time to go from “blank slate” to the WSJ op-ed?
You can, of course, squint and parse and lawyer everything Selig said and probably square the statements in front of Senate Ag and the WSJ op-ed. You can obey the courts while also trying to back the legality of prediction markets… that would be the argument.
But if I’m going to parse language, repeatedly saying you will “look to the courts” — he used that exact phrase seven times in the hearing, by my count — doesn’t imply you have plans to put your thumb on the scale. Again, Selig is welcome to put his thumb on the scale in his role. It’s just not something I think anyone listening to his testimony would have expected, if they had listened to it in a vacuum or with no priors.
A group of 23 Senate Democrats clearly doesn’t love Selig’s pivot from the hearing to what he is saying now. From a letter from those senators to Selig last week, sent before the WSJ op-ed:
In your Senate Agriculture Committee confirmation hearing, you stated that it would be “irresponsible” to prejudge whether contracts tied to sporting events constitute gaming, and that you would approach the issue with a “blank slate.” When asked directly whether betting on the outcome of a professional football game is gambling, you answered simply: “I would look to the courts.” However, two months later, you announced that the Commission will intervene in the matter before it has been fully litigated in the courts by withdrawing guidance cautioning against the use of prediction markets for sports betting, and that the Commission may even enter ongoing litigation. In addition, you recently posted that you “strong[ly] disagree” that prediction markets violate the law, a stark reversal of your statements before the Committee.
Of course, people fudge their actual beliefs when trying to procure roles in the executive branch, judicial appointments, etc., all the time. It’s part of the game. But there’s a pretty gaping chasm between Selig’s words in the hearing and his actions now.
Also, to be clear, states don’t appear to have a huge problem with prediction markets, as long as they stay out of sports betting. (The one exception here is Nevada, which also has taken issue with trading/betting on elections.) This detail seemingly gets left out all the time when prediction market evangelists make their legal arguments. Selig doesn’t mention the word “sports” once, even though that’s the only thing states are pushing back against, in reality.
No matter what Selig said back in November, it’s crystal clear where a CFTC led by him is headed now. And people can at least stop fooling themselves into believing that the commission is going to try to rein in prediction markets.
Related but not related, I’ll throw this nugget in here before we move on to the rest of the news:
Prediction markets roundup
Polymarket and Kalshi are illegal, regulator says (Newsroom): “Polymarket, Kalshi and similar prediction markets are illegal under New Zealand’s gambling laws, the nation’s gambling regulator has decided. … Department of Internal Affairs gambling director Vicki Scott tells Newsroom it believes they are illegal gambling platforms. …
“We consider platforms such as Kalshi and Polymarket to be gambling under New Zealand law,” Scott says. “Since they aren’t authorised operators, they are prohibited from offering their gambling products to people in this country.”
“To the extent these platforms are taking bets from New Zealand customers, they are breaching the law here and can expect to hear from us.”
Kalshi’s member agreement now includes New Zealand in a list of prohibited countries.
DraftKings CEO on appointment to CFTC committee:
DraftKings News@DraftKingsNewsOur CEO and Co-founder, @JasonDRobins has been appointed to the @CFTC's Innovation Advisory Committee (IAC). cftc.gov/PressRoom/Pres…
3:00 PM · Feb 16, 2026 · 6.68K Views2 Replies · 7 Reposts · 27 LikesIntegrity’s moment of peril (Axios): “Prediction markets are creating a digital Wild West, where well-placed opportunists can win big by betting on real-world events — from the capture of Nicolás Maduro to a surprise Super Bowl cameo. What may strike everyday people as blatant insider trading is defended as legal based on the letter of the law.”
“Why it matters: The spectacle of people profiting off privileged knowledge is accelerating a broader erosion of trust in a society where confidence and good faith were already in retreat.”
Kalshi Certifies Draft Lottery Bets — As CFTC Chair Stresses ‘Difference’ Between Chance And Skill Contracts (InGame): “Kalshi has self-certified contracts on draft lotteries such as the NBA’s — including what may be the first contract the prediction market has listed on an event designed to be pure chance — on the heels of Commodity Futures Trading Commission (CFTC) chair Michael Selig remarking that there is ‘definitely a difference’ between contracts on games of chance and skill.”
“A filing submitted earlier this month self-certifies a contract with the title, ‘Will <team> win the <league> Draft Lottery in <year>?’ This contract would initially depend in part on teams’ records, but would be based on random chance after the end of the regular season.”
I wrote this over at The Closing Line:
Maryland warns sports betting companies to avoid prediction markets or risk licenses (Fox 5, Video): “Maryland officials are cracking down on the rise of “prediction markets,” warning licensed sports betting companies to steer clear or face penalties, especially as March Madness approaches.”
Maryland had already made a warning along these lines back in November.
FanDuel Predicts Draws On Current Gambling Success, User Familiarity (InGame): “FanDuel didn’t attempt to reinvent either itself or the prediction market app when it launched FanDuel Predicts last year. That was sensible, given its hefty national sports betting market share and its parent company’s roots with the Betfair exchange. Instead, FanDuel Predicts gives sports bettors and prediction market newcomers alike something comfortable, while attempting to teach them something new and, ultimately, entice them to patronize everything the company offers, James Cooper, senior vice president, Flywheel and New Ventures at FanDuel told InGame.”
Congressional, Tribal Leaders Don’t Mince Words In Upping Pressure On CFTC (InGame): “The pressure is on. Tribal leaders last Wednesday told a congressional committee that sports event contracts are challenging the very way of life in Indian Country. A day later, 23 Senate Democrats, including three from the committee, sent a strongly worded letter to Commodity Futures Trading Commission (CFTC) Chair Michael Selig telling him to stand down.”
“For Indian Country, the rise of sports event contracts on prediction markets is a direct threat to sovereignty and a clear violation of the Indian Gaming Regulatory Act (IGRA). Indian Gaming Association (IGA) Chair David Bean and National Congress of American Indians (NCAI) President Mark Macarro led a tribal-commercial briefing before the Senate Committee on Indian Affairs saying ‘Tribal nations are unified with states to stop this illegal betting market. We are asking Congress to step in before irreversible damage is done to state and tribal budgets and our citizens’ livelihoods.’”
Woke Up And Chose Violence | The knives are officially out in the fight between prediction markets and the entrenched gambling industry (Straight to the Point): “I also take exception to the ongoing effort to recategorize everything, like framing active users as anyone who looks at prediction market graphs (which are now unavoidable thanks to the numerous partnerships Kalshi and other PMs have with the ‘fake news’ outlets they malign) (which begs the question, why would biased media use prediction markets if they are biased?)
Entertaining!:
Joon Lee@joonleeOne day after I tweeted this clip criticizing Kalshi CEO Tarek Mansour on Squawk Box, a Kalshi representative reached out asking to sponsor my YouTube channel. I don’t take sports gambling sponsorships. Sports only works if fans believe what they’re watching is real—and not
Joon Lee @joonleeOn Squawk Box, Kalshi CEO Tarek Mansour struggles to answer why a Bad Bunny dancer -- who watched rehearsals -- betting on the Halftime Show predictions markets would not be considered insider trading. Sports was estimated to be 90% of betting on Kalshi during the NFL season.3:58 PM · Feb 16, 2026 · 138K Views21 Replies · 39 Reposts · 763 Likes
