The US derivatives watchdog is preparing a new rulebook for prediction markets, as platforms such as Polymarket and Kalshi pull in billions in activity by letting traders bet yes or no on everything from politics to pop culture.
In his first public remarks as chairman of the Commodity Futures Trading Commission on Thursday, Michael Selig said the agency will move toward clearer standards for event contracts, a category the CFTC has overseen for more than two decades.
“It is time for clear rules and a clear understanding that the CFTC supports lawful innovation in these markets,” Selig said in prepared remarks. “Consistent with my commitment to fostering responsible innovation in crypto asset markets, I will continue to support the responsible development of event contract markets.”
Polymarket Emerges As A Liquidity Hub For Politics And Real-Time Events
Prediction markets have surged in visibility as crypto-native venues and regulated US firms compete for traders seeking round-the-clock exposure to headlines.
Polymarket, in particular, has built deep liquidity in politics and current events, with some markets drawing tens to hundreds of millions in volume.
Selig framed his broader agenda as a push for regulatory clarity and inter-agency coordination, positioning the CFTC as a forward-looking regulator that can adapt rules without freezing innovation.
He also used the speech to set a pro-innovation tone for crypto market oversight, calling the moment a generational opportunity to modernize how the US regulates digital finance.
“Today marks the beginning of a new chapter for the CFTC,” he said, adding the agency will sharpen its focus on “regulatory clarity, inter-agency coordination, and permissionless innovation.”
Event Contracts Move Closer To A Formal Rulebook
He said he is partnering with the Securities and Exchange Commission on Project Crypto, an effort he described as a way to bring coherence to federal oversight by clarifying jurisdictional lines, reducing fragmentation, and developing a clearer taxonomy for crypto assets.
“And thanks to the leadership of President Trump, “Operation Chokepoint 2.0” is history, regulation by enforcement is dead, the GENIUS Act is law, Congress is on the cusp of passing market structure legislation, and the U.S. is now the crypto capital of the world,” Selig said.
On prediction markets specifically, he laid out immediate steps before the larger rewrite. He said he has directed staff to withdraw the 2024 event contracts rule proposal that would prohibit political and sports-related event contracts, along with a 2025 staff advisory that cautioned registrants about offering sports-related event contracts amid litigation.
“Second, looking ahead, and in the spirit of markets that trade on expectations, I have directed CFTC staff to move forward with drafting an event contracts rulemaking,” he said, arguing the current framework has proven difficult to apply and has left market participants operating with too little certainty.
He also said the agency will reassess its participation in pending court matters and work with the SEC on a joint interpretation tied to Title VII definitions, aiming to draw clearer lines between commodity and security options, CFTC-regulated swaps, and SEC-regulated security-based swaps.
The moves land as activity rises even as some state gaming regulators push back on the spread of event-based trading. For the CFTC, Selig’s message was that prediction markets are no longer niche products, and the next phase will hinge on whether Washington can deliver rules that keep these contracts onshore, lawful, and easier to navigate.
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