Point of Focus:

• CFTC Chairman reaffirmed that event contracts fall under the agency’s jurisdiction as derivatives.
• Selig criticized former SEC Chairman Gary Gensler for arguing that prediction market contracts are not derivatives.
• The eventual ruling will determine the legal nature of the prediction markets.

Commodity Futures Trading Commission (CFTC) Chairman Mike Selig has sharply criticized former SEC Chairman Gary Gensler’s interpretation of US law governing prediction markets, arguing that event contracts tied to sports, politics, and other outcomes fall squarely under the CFTC’s regulatory authority.

The comments come amid an intensifying debate over the future of prediction markets in the US, as regulators, state gaming authorities, and industry participants clash over whether such products should be treated as derivatives or gambling instruments.

Selig defends CFTC authority

In a recent interview, Selig pushed back against Gensler’s recent claim that event contracts are not derivatives under existing law.

“Event contracts, whether on sports, politics, or any commodity, are within the CFTC’s remit. We’ll regulate these markets accordingly,” Selig said, arguing that the 2010 Dodd-Frank Act clearly grants the agency jurisdiction over commodity-linked derivatives.

Gary Gensler said the law was clear–“virtually every crypto asset is a security”–and drove the crypto industry offshore. Now, he says the law is clear–“event contracts are not derivatives”–and seeks to push the prediction markets offshore. He has a poor track record reading the… pic.twitter.com/ikcWI8I8rV

— Mike Selig (@ChairmanSelig) June 2, 2026

Selig drew parallels between Gensler’s current position on prediction markets and his previous stance on cryptocurrencies, where the former SEC chair frequently argued that most digital assets qualified as securities.

“Gary Gensler said the law was clear, ‘virtually every crypto asset is a security’, and drove the crypto industry offshore. Now, he says the law is clear and seeks to push the prediction markets offshore,” Selig wrote. “He has a poor track record reading the law.”

According to Selig, Dodd-Frank already provides the CFTC with authority to restrict certain event contracts involving issues such as terrorism, war, or assassinations, demonstrating that Congress anticipated the existence of these products within the derivatives framework.

Gensler questions congressional intent

Gensler, who previously chaired both the SEC and the CFTC, has argued that Congress never intended for prediction markets tied to sporting events or similar outcomes to bypass state gambling regulations.

Speaking on CNBC last week, Gensler said lawmakers behind the Dodd-Frank Act did not envision sports-related prediction contracts operating under federal derivatives rules.

“I just don’t think that’s what Congress did in 2010,” Gensler said, adding that the CFTC would likely need explicit congressional authorization before taking on broad oversight of prediction markets.

He also argued that state and tribal gaming regulators possess greater expertise in overseeing such activities than the federal commodities regulator.

Regulatory battle intensifies

The dispute comes as the White House’s Office of Management and Budget reviews a proposed CFTC rule that would establish exclusive federal oversight of prediction markets.

The sector has grown rapidly in recent months. According to blockchain intelligence firm TRM Labs, monthly prediction market trading volume surged from roughly $1.2 billion in 2025 to more than $20 billion in early 2026.

Legal uncertainty remains, however. Both Selig and Gensler acknowledge that the issue may ultimately be decided by the US Supreme Court, as courts weigh competing arguments over whether prediction markets should be regulated as derivatives or gambling products.

For now, platforms such as Kalshi continue to expand across much of the US, while regulators and state authorities battle over who should control one of the fastest-growing segments of digital finance.