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- The Commodity Futures Trading Commission has stepped into a Ninth Circuit fight to defend its exclusive authority over prediction markets.
- This signals a major federal push to prevent states from treating event contracts as traditional gambling.
Commodity Futures Trading Commission (CFTC) Chair Michael Selig has initiated a broad reset of federal policy on prediction markets, withdrawing a 2024 event-contracts proposal and a 2025 staff advisory that had signaled deference to state enforcement.
Last Thursday, the CFTC filed a motion seeking permission to submit an out-of-time amicus brief in North American Derivatives Exchange d/b/a Crypto.com v. Nevada, a case where a CFTC-registered designated contract market is challenging Nevada’s effort to treat event contracts as state-regulated gambling.
The CFTC argues the appeal raises “important questions about the scope and applicability of” the Commodity Exchange Act (CEA), including whether states can regulate trading on CFTC-registered Designated Contract Markets.
Case could set a benchmark
Industry groups such as the Coalition for Prediction Markets welcomed the agency’s intervention. The motion also catalogs state actions – Hawaii bill H.B. 2198, Nevada enforcement against Polymarket, and cease-and-desist letters from Tennessee regulators – underscoring why the CFTC says a federal answer is needed.
The CFTC’s intervention could reshape the compliance landscape. If courts accept the CFTC’s view that the CEA gives it exclusive jurisdiction over swaps and similar event contracts, state-level bans or licensing attempts could be pre-empted, reducing the patchwork risk that has complicated platform operations and customer access.
That would help reputable, CFTC-registered markets offer predictable products and clearer consumer protections under a single federal regime.
Conversely, litigation and regulatory uncertainty will likely persist while the agency finalizes new rulemaking. Some platforms may pause or alter offerings in certain states to limit enforcement risk, and operators should expect heightened scrutiny and potential enforcement against unregistered or offshore sites.
Financially, clearer federal rules could unlock investment and product innovation, but only after courts and the CFTC settle the immediate jurisdictional questions.
Based on reporting by Jason Brett for Forbes.
