TL;DR:Â
- The Office of Information and Regulatory Affairs (OIRA) received the CFTC proposal on Tuesday, May 26, 2026, to begin its formal evaluation.Â
- Donald Trump publicly backed CFTC Chairman Michael Selig’s authority to maintain exclusive jurisdiction against state restrictions.Â
- The CFTC commissioner has sued six states, including Wisconsin and Minnesota, for attempting to regulate or ban event contracts on digital platforms.
The White House initiated the formal evaluation of the proposed regulation for prediction markets submitted by the Commodity Futures Trading Commission (CFTC). On Tuesday, May 26, 2026, the Office of Information and Regulatory Affairs (OIRA) confirmed receipt of the technical document, which remains listed under a pending review status on its official platform. A CFTC spokesperson stated that the agency will provide additional details once the standard interagency process in Washington is completed.
Conflict over exclusive jurisdiction of derivative contracts
The regulatory framework for prediction markets is currently under technical debate due to the nature of event contracts. These financial tools empower users to conduct commercial operations based on the outcomes of real-world events, such as elections, sports events, or international military conflicts.
The CFTC report issued in March 2026 notes that the agency established an operational guidance specifying that platforms designated as contract markets act as front-line regulators. These entities bear the legal responsibility to ensure that operations are not susceptible to price manipulation or abusive trading practices. Congressional scrutiny of these platforms increased following the detection of suspicious financial transactions linked to electoral processes in recent months.
For his part, CFTC Chairman Michael Selig maintains the technical stance that these financial structures fall under the exclusive jurisdiction of the federal derivatives agency. Based on this regulatory argument, the commission filed formal lawsuits against six U.S. states—Wisconsin, Illinois, Arizona, Connecticut, New York, and, most recently, Minnesota—that enacted internal regulations to restrict or ban the operation of tech firms like Kalshi and Polymarket. State governments argue that these services violate local gaming and gambling laws, particularly regarding sporting events.
Executive branch backing and judicial impact
U.S. President Donald Trump intervened directly in the jurisdictional dispute on Tuesday evening through public statements. The president characterized the need to defend the CFTC’s sole authority to regulate prediction markets as critical, arguing that regulatory unification will allow the competitive development of the industry against other international markets.
The president’s assertions included disqualifications of local government officials who defend state rights to limit these platforms, such as Illinois Governor JB Pritzker, who defended his state’s measures aimed at banning insider trading in online contracts.
The executive environment’s involvement in this sector also encompasses private financial aspects. Donald Trump Jr. holds investment positions in Polymarket through the venture capital firm 1789 Capital, in addition to serving as a strategic advisor for the firm Kalshi.
Despite the political pressure exerted from the White House, institutional analysts anticipate that the executive’s intervention will not modify the legal trajectory of event contracts. According to a technical analysis published by TD Cowen’s research group on Wednesday, May 27, 2026, the dispute over the CFTC’s sovereignty will be resolved within the scope of the federal courts and not through decrees by regulatory agencies.
