SEC Chair Paul Atkins has come to the defense of CFTC Chair Michael Selig as the derivatives agency continues its aggressive push to regulate prediction markets. During an interview with CNBC, Atkins was asked whether the CFTC has sufficient resources to oversee the rapidly growing sector. 'He's doing a great job at the CFTC,' Atkins said of Selig. 'He's trying to make sense of the various innovative products that are being traded around the world.' The CFTC has been pushing ahead in overseeing prediction markets, which allow people to bet on events like which team will win the World Cup or when the U.S. will 'confirm that aliens exist.' Firms like Polymarket and Kalshi have gained popularity, particularly following the 2024 elections, and are each now worth billions of dollars.
The CFTC faces significant resource constraints compared to its regulatory counterpart. For fiscal year 2027, the CFTC has asked Congress for a budget of $410 million, an increase of about 12.3% from the previous year. In comparison, the SEC is asking for $1.908 billion, a decrease from fiscal year 2026. The staffing disparity is even more pronounced, with the SEC employing over 4,000 people compared to about 550 employees at the CFTC. Selig is currently the only commissioner at the agency, leaving four empty spots. The proposed prediction market rule included the notable line 'Chairman Selig voted in the affirmative. No Commissioner voted in the negative.'
The CFTC has been pushing ahead with its jurisdictional claims despite widespread state opposition. Over the past year, states and their regulators have come under the federal agency's crosshairs as Selig seeks to maintain jurisdiction over prediction markets for sports betting. The CFTC has since sued several states in an effort to get 'exclusive jurisdiction' as states have pushed back to maintain their authority. Last week, the CFTC debuted a sweeping rule proposal that would generally allow sports betting on prediction markets, while setting limits on bets on terrorism and assassinations. The agency has taken the unusual step of suing six states to defend what it calls its exclusive jurisdiction, with 16 states currently in legal proceedings with prediction market platforms.
Former SEC Chair Gary Gensler has filed an amicus brief with the U.S. Court of Appeals for the Sixth Circuit, directly challenging the CFTC's jurisdiction over sports betting. According to reports from The Block, Gensler argues that the Dodd-Frank Act does not grant the CFTC authority over sports wagering, contradicting current CFTC Chair Michael Selig and prediction-market platform Kalshi. In his brief, Gensler clearly states that he believes 'sports bets are not swaps' and says that at no point did anyone consider approving sports contracts when writing the Dodd-Frank Act in 2010. Gensler's stance directly challenges the federal cover behind a $165 billion-a-year sports trading business, with the timing becoming particularly significant as the CFTC's prediction-market proposal is currently under White House review by the Office of Management and Budget.
The dispute highlights significant industry support, with thirty Native American tribes and 11 tribal associations filing an amicus curiae brief in support of Ohio. According to gaming attorney Daniel Wallach, this tribal support highlights the breadth of Kalshi's position, noting the company is grounding its claim of exclusive federal jurisdiction not only in Dodd-Frank but also in the 2000 Commodity Futures Modernization Act and the CFTC Act of 1974. The American Gaming Association (AGA) and Better Markets, a nonprofit focusing on financial regulation, have also filed briefs in support of Ohio. The CFTC is also positioned to regulate the cryptocurrency industry, with lawmakers working to pass a sweeping bill to regulate the sector for the first time at the federal level, which would give the agency broad authority over those assets. Sen. Blanche Lincoln, who played a significant role in writing the Dodd-Frank Act, has since registered as a Kalshi lobbyist and supported the company's right to offer sports contracts on events such as the Super Bowl and the Masters.
