TL;DR
- The CFTC filed a Feb. 17 amicus brief in the Ninth Circuit backing Crypto.com against Nevada’s Gaming Control Board, asserting federal oversight.
- Chairman Mike Selig said the agency will not “sit idly by” as states challenge the CFTC’s “exclusive jurisdiction” over event contracts.
- Kalshi is facing action from the New York Gaming Commission, and sportsbook incumbents DraftKings and FanDuel entering prediction markets are sharpening the derivatives versus gambling classification fight.
The U.S. Commodity Futures Trading Commission is stepping into a fast-expanding prediction market arena with a clear message: these products belong under federal supervision. The CFTC is positioning prediction markets inside the federal derivatives perimeter, not the state gambling box. The agency’s move arrives as platforms such as Kalshi and Polymarket face lawsuits and enforcement pressure from state gaming regulators. By escalating from commentary to legal action, the CFTC is effectively telling exchanges, traders, and state authorities that jurisdictional clarity will be set in court, not negotiated market by market. That stance raises the stakes.
Federal-State Jurisdiction Moves to Court
On Feb. 17, the CFTC filed a friend-of-the-court brief in the Ninth U.S. Circuit Court of Appeals backing Crypto.com in its dispute with the Nevada Gaming Control Board. The filing is a tactical escalation designed to preempt a patchwork of state-level bans. In a video statement, CFTC Chairman Mike Selig said the agency “will no longer sit idly by” as “overzealous state governments” try to undermine what he called the CFTC’s exclusive jurisdiction. The posture signals a more assertive federal playbook as litigation accelerates. For operators, it tightens cycles on compliance, product scope, and timing.
The CFTC’s intervention comes as Kalshi, a CFTC-regulated prediction marketplace, faces legal action from the New York Gaming Commission over allegations it is operating illegally in the state. State regulators are testing the perimeter by treating event contracts like gambling, even when platforms cite federal registration. The New York matter is described as one of multiple state cases, including Nevada’s, pressuring the business model. Complicating the competitive landscape, established sportsbook brands such as DraftKings and FanDuel are expanding into prediction markets, blurring boundaries between sports betting, exchange-style trading, and consumer finance rails in real time.
At the center is a definitional fight over what prediction contracts are. The dispute is ultimately about classification: derivatives under the CFTC, or gambling under state law. The platforms, and now the CFTC, argue the contracts should be treated as derivatives and supervised federally, while state gaming authorities say they are gambling markets best handled locally. Kalshi co-founder Luana Lopes Lara pushed back on the narrative, saying “entrenched interests” are “seeding false narratives” to discredit prediction markets, comparing it to banks attacking crypto. The outcome will shape go-to-market strategy for exchanges, liquidity providers, and consumers.
