The US derivatives regulator is getting ready to rewrite the rules for prediction markets, as platforms like Polymarket and Kalshi explode in popularity by letting traders bet yes-or-no on everything from elections to pop culture moments.
Speaking publicly for the first time as chair of the Commodity Futures Trading Commission (CFTC) on Thursday, Michael Selig said the agency is moving toward clearer, more workable standards for event contracts — a category the CFTC has technically overseen for more than 20 years, but never fully nailed down.
“It is time for clear rules and a clear understanding that the CFTC supports lawful innovation in these markets,” Selig said in prepared remarks. He added that, in line with his broader crypto agenda, the agency will back the “responsible development” of prediction markets rather than try to shut them down.
Polymarket Becomes a Go-To Venue for Real-Time Bets
Prediction markets have surged into the spotlight as both crypto-native platforms and regulated US firms compete for traders looking to express views on breaking news — 24/7.
Polymarket has emerged as a major hub, especially for politics and current events, with individual markets often pulling in tens or even hundreds of millions of dollars in trading volume. That growth has made it harder for regulators to ignore what was once considered a niche corner of finance.
Selig framed his broader agenda as a shift toward regulatory clarity and coordination, positioning the CFTC as a regulator that can modernize its rules without smothering innovation. He described the moment as a once-in-a-generation chance to update how the US oversees digital finance.
“Today marks the beginning of a new chapter for the CFTC,” he said, adding that the agency will focus on “regulatory clarity, inter-agency coordination, and permissionless innovation.”
Event Contracts Head Toward a Formal Rulebook
Selig also said the CFTC is working more closely with the Securities and Exchange Commission through an initiative known as Project Crypto, aimed at clearing up long-standing confusion over who regulates what in digital asset markets.
He didn’t shy away from politics either, crediting the Trump administration with reversing what he called years of “regulation by enforcement.”
“Operation Chokepoint 2.0 is history,” Selig said, adding that new legislation and pending market structure bills have positioned the US as “the crypto capital of the world.”
On prediction markets specifically, Selig outlined several immediate changes before a broader rewrite takes shape. He said he has instructed staff to withdraw a 2024 proposal that would have banned political and sports-related event contracts, as well as a 2025 staff advisory that warned firms about offering sports-related contracts amid ongoing litigation.
Looking ahead, he said the agency will begin drafting a dedicated event contracts rulemaking, arguing that the current framework is outdated and leaves too much uncertainty for market participants.
“The existing rules have proven difficult to apply,” Selig said, “and that lack of clarity has held these markets back.”
The CFTC will also revisit its role in ongoing court cases and work with the SEC on a joint interpretation of key definitions under Title VII, with the goal of drawing cleaner lines between commodities, securities, swaps, and options.
Prediction Markets Are No Longer Niche
All of this comes as trading activity keeps rising — even as some state gaming regulators push back against the spread of event-based betting.
Selig’s message was clear: prediction markets are no longer a fringe experiment. Whether they stay onshore, legal, and well-regulated now depends on whether Washington can deliver rules that make sense for markets that move at internet speed.
