In a video statement released on his X account this morning, CFTC Chairman Mike Selig said that American prediction markets have been hit with an “onslaught of state-led litigation” over the past year.

He further announced he had filed a Friend of the court brief to defend its exclusive jurisdiction over prediction markets.

“To those that seek to challenge our authority in this space — let me be clear. We will see you in court.”

Defending the industry directly, he said that [Prediction markets] “provide useful functions for society, allowing everyday Americans to hedge commercial risks like increases in temperature and energy price spikes.”

“They provide a useful check on our news media and our information ecosystem,” he added.

Friend-of-the-court Brief

The CFTC backed up the rhetoric with action, filing a friend-of-the-court brief in the Ninth U.S. Circuit Court of Appeals supporting Crypto.com against state regulators.

This seeks to defend the CFTC’s exclusive jurisdiction over Prediction Markets

Writing in the Wall Street Journal on Monday, Selig argued prediction market contracts are federally regulated swaps under the Commodity Exchange Act — not gambling. “These exchanges aren’t the Wild West,” he wrote.

Why Is This Happening?

Nearly 50 active state lawsuits are targeting CFTC-registered exchanges including Kalshi, Polymarket, Coinbase (NASDAQ:COIN) and Crypto.com.

Massachusetts already ordered Kalshi to cease offering sports betting in January.

Polymarket responded by suing Massachusetts Attorney General Andrea Joy Campbell in federal court last week.

Nevada has issued a temporary restraining order against Kalshi, with challenges active in at least eight states.

Why Traders Should Care

Prediction markets are booming. Kalshi alone saw Super Bowl LX volume surge 2,700% year-over-year, with over $1 billion wagered on the game.

A federal win in the Ninth Circuit could nullify state gambling claims wholesale, which could be bad news for DraftKings (NASDAQ:DKNG) and Flutter Entertainment (NYSE:FLUT), which have already seen their stocks hammered by prediction market competition and are now scrambling to launch their own event contract products.

A state win likely means fragmented licensing and product pullbacks for Coinbase and Robinhood (NASDAQ:HOOD), both of which integrated Kalshi.

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