As the Trump administration steps into a legal fight over prediction markets, the centerpiece is a dispute over who gets to regulate event-based betting: states with gambling prohibitions, or the federal Commodity Futures Trading Commission. AP reported that Michael Selig, the newly appointed CFTC chairman, is backing Kalshi and Polymarket in the case tied to Nevada enforcement actions, with a “friend of the court” filing as Kalshi appeals to the U.S. Court of Appeals for the 9th Circuit.
Selig’s intervention comes at a moment when the prediction market industry is expanding, and when states that want to restrict such platforms have been using lawsuits and injunction requests to try to stop them. AP said the administration’s support could have “enormous implications” for how sports betting is regulated, particularly if Kalshi and Polymarket succeed in maintaining broad access to markets they say should fall under futures-style oversight.
The CFTC is at the center of the argument because AP said it currently regulates prediction markets, which has allowed Kalshi and others to operate nationwide, including in states where gambling is otherwise illegal. In the case the administration has joined, Nevada’s gaming regulator has contended that the companies are effectively running unlicensed sports betting operations in the state, a position that AP said led to a temporary restraining order against Kalshi.
AP reported that prediction market contracts can be bought and sold based on the probable outcome of events. Customers can wager on a range of possibilities, from whether it will rain in Los Angeles to sports championship outcomes and geopolitical events, and AP said the contracts are typically priced between one cent and 99 cents. Kalshi and Polymarket also have different shares of their activity tied to sports, with AP reporting that roughly 90% of Kalshi’s trading volume goes toward sports wagers and that about half of Polymarket’s trading is tied to sports.
Selig’s public reasoning for the CFTC’s position appears to focus on whether these platforms are truly “betting” or whether they more closely resemble futures products. AP said that Selig has argued prediction markets do the same thing as other futures contracts, including allowing users to hedge against uncertainty such as bad weather or changes in energy prices, rather than being wagers “against the house” in the way sports books operate.
Nevada’s case, as described by AP, is the largest lawsuit in the cluster of challenges to prediction markets and has been tied to the Nevada Gaming Control Board. AP said the board sued or issued enforcement actions against Kalshi and Polymarket, and that a federal judge agreed with the NGCB and issued a temporary restraining order against Kalshi from operating in Nevada. In response, AP said Kalshi has appealed the ruling to the 9th Circuit, which is why the CFTC is weighing in.
AP also reported that Selig has shifted his stance since his confirmation process. The report said Selig told senators during his confirmation hearing that it would be best for the CFTC to defer to the courts on the core legal issue. The administration’s current support for Kalshi and Polymarket comes alongside Selig’s broader efforts to set regulatory direction for the market segment, including an announced “Innovation Advisory Committee” that AP said includes senior executives from Polymarket, Kalshi, Coinbase, Robinhood, and several large sports betting companies, while also lacking representation from consumer advocates or public-interest groups.
The report noted that Selig has advanced the view that states cannot preempt federal regulators, and AP quoted him saying, “To those who seek to challenge our authority in this space, let me be clear, we will see you in court.” AP said some Republicans pushed back as well, including Utah Gov. Spencer Cox, who AP reported as saying in a statement posted to Twitter that he did not remember the CFTC having authority over the “derivative market” of LeBron James rebounds and that prediction markets defended by Selig are “gambling — pure and simple.”
AP further reported that any favorable outcome in the case could also create financial and political questions because Donald Trump Jr. has invested in Polymarket through his venture capital firm and is described by AP as a strategic advisor for Kalshi. The administration’s decision to publicly back the companies and define their markets as within CFTC jurisdiction sets up continued courtroom scrutiny over whether states can enforce their gambling rules against platforms they view as primarily sports wagering tools.