The curious case of Michael Selig and his predictions about markets
If there is one thing you can predict with delight these days, it is that Michael S. Selig will write about prediction markets, whether on X or elsewhere, and that something about them will be a bit unpredictable.
In his recent Wall Street Journal piece, Selig, the chairman of the U.S. Commodity Futures Trading Commission (CFTC), laments what he portrays as a state-level siege on federally regulated event contracts. He reminds readers that “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,” and warns that states are now seeking to undermine this federal authority.
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.
Mike Selig, CFTC chairman
In his op-ed, prediction markets are not gambling. Instead, they serve a “legitimate economic function,” and state objections are framed as cultural and political resistance rather than sound regulatory concern. Selig argues that these markets allow farmers to hedge weather risk and small business owners to manage exposure to taxes or energy prices, presenting a version of event contracts that feels far removed from traditional betting.
Yet on other public occasions, Selig has sounded far less certain about where the line is drawn between an event contract and a wager. During his Senate confirmation hearing, lawmakers repeatedly pressed him on whether sports-based prediction markets should be considered gambling. Selig declined to draw that line, responding instead that “these are complex issues as to interpretation of what it means to constitute gaming,” and stressing that he would defer to judicial decisions rather than make a categorical determination himself.
That cautionary approach stands in contrast to his current posture as chairman. At his hearing, Selig also said he would “look to the courts” to resolve disputes over whether certain contracts violate gaming prohibitions. In his recent writing, however, he asserts that the CFTC “will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction,” treating the classification of event contracts as settled rather than unresolved.
CFTC’s Selig files ‘friends of the court’ brief in bid to support prediction markets
The distinction matters because the term event contract is the legal framework that allows the CFTC to regulate contracts tied to real-world outcomes as federal derivatives instead of state-regulated wagers. Since becoming chairman, Selig has supported withdrawing prior agency advisories and rule proposals that would have restricted sports and political event contracts, and has called for “clear standards for event contracts that provide certainty to market participants.”
What is genuinely new here is the response. The CFTC is now actively intervening in appellate litigation to defend its authority over event contracts and is doing so publicly. The agency has framed the dispute as one of federal supremacy rather than regulatory overlap. With nearly 50 active state-level cases, this is no longer a theoretical debate but a coordinated regulatory conflict. In a video posted on Tuesday (February 17), Selig says that the CFTC has filed a “friend of the court” brief in response to a Crypto.com lawsuit with the Ninth U.S. Circuit Court of Appeals in Nevada playing out in real time.
In Massachusetts, a court refused to pause an injunction blocking Kalshi from offering sports-related event contracts, with the judge noting that the company adopted its business model with full awareness of potential state law conflicts. In Nevada, courts allowed state gaming regulators to proceed against similar offerings after rejecting efforts to shield them under federal derivatives law. In Connecticut, regulators ordered Kalshi, Robinhood, and Crypto.com to halt what the state described as unlicensed sports wagering. Each case underlines how unsettled the distinction between event contracts and wagers remains at the state level.
Selig’s argument relies heavily on history, pointing to the Iowa Electronic Markets in the early 1990s and to Nadex’s binary contracts as evidence that event-driven derivatives have long existed under federal oversight. His stance is that these products did not originate with crypto platforms and that the Commodity Exchange Act was intentionally written broadly enough to accommodate financial innovation.
This is supposedly central to the dispute. The Act’s definition of a commodity encompasses almost everything except onions and movie box office receipts, an intentional design meant to future proof federal oversight. From Selig’s perspective, state attempts to classify event contracts as gambling amount to rewriting federal law through litigation rather than legislation.
Still, the tension remains unresolved. During Selig’s confirmation process, senators warned that some prediction markets appear to be “trying to have it both ways,” marketed as financial instruments while functioning like traditional sports betting that states regulate. They suggested the distinction might be semantic rather than substantive. Selig did not dispute that characterization at the time.
Now, his written advocacy assumes a cleaner boundary between federal derivatives regulation and state gambling law than his earlier testimony suggested existed. The change draws attention to the central question facing regulators and courts alike. When does an event contract become a wager, and who gets to decide?
For platforms such as Kalshi, Polymarket, Coinbase, and Crypto.com, the answer could determine whether prediction markets expand or fragment in the United States. More broadly, the fight may redefine the limits of federal preemption, the role of states in policing market behavior, and how financial innovation is supervised when it closely resembles regulated gaming.
In prediction markets, credibility and clarity are essential. Regulators are no exception.
Featured image: Mike Selig via X / Canva
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