A Legal Battle Over Prediction Markets Is Brewing. The CFTC Fired It Up Today

_Utah’s governor suggested that the CFTC shouldn’t regulate markets created to track LeBron James’s rebounds. _

Ronald Martinez / Getty Images

Crystal Kim

Wed, February 18, 2026 at 5:40 AM GMT+9 3 min read

Key Takeaways

A message Tuesday from CFTC Chair Mike Selig prompted both fans and critics of prediction to sound off on the agency's defending the burgeoning business.

The debate around which regulators have jurisdiction over prediction markets pivots around events contracts related to sports events.

A federal regulator just jumped into the turf war over prediction markets.

Commodity Futures Trading Commission Chair Mike Selig in a series of social media posts said that the regulatory agency would defend its jurisdiction around prediction markets, and that it filed a legal brief supporting one such company—Crypto.com—in federal court. The agency, he said in an op-ed published by The Wall Street Journal, would not let"overzealous state governments" undermine its authority over “exciting products.”

Selig was referencing what are called events contracts, trading instruments with mostly binary outcomes tied to everything from sporting events like the Super Bowl to more controversial geopolitical happenings that have raised concerns about misappropriated information. Selig’s message to state regulators—“We’ll see you in court,” he said in a video message on social media— prompted reactions from both critics and fans.

WHY IT MATTERS TO YOU

Prediction markets are gearing up to make themselves more known to the masses through marketing efforts, including free groceries, to ratchet up their recent business ventures.

Pennsylvania Sen. Dave McCormick said prediction markets “offer tremendous benefits” to both businesses and regular people. Utah Gov. Spencer Cox, whose state bans all forms of gambling—quipped: “I don’t remember the CFTC having authority over the ‘derivative market’ of LeBron James rebounds.” He also said that prediction markets were “destroying the lives of families and countless Americans, especially young men.”

Crypto.com partners with Trump Media & Technology (DJT) on prediction markets and crypto ventures. Donald Trump Jr. is an advisor to Kalshi and, through his VC firm, is invested in Polymarket.

Prediction markets are a fast-growing service—and business—that has quickly captured national attention. Central to the legal debate surrounding them, and to the question of whose regulatory authority they are subject to, is sports: State gambling regulators argue that they are little more than illegal forms of sports betting, which they should oversee, while prediction markets and their supporters say they are derivatives that fall under the CFTC’s jurisdiction.

Story Continues  

Polymarket and Kalshi are the two biggest players in prediction markets, though a host of other companies, including CME Group (CME), Robinhood (HOOD), Coinbase Global (COIN) and DraftKings (DKNG) have waded into the space lately. Robinhood chief Vlad Tenev last week said that its venture was “the fastest growing” in the firm’s history, according to transcripts provided by AlphaSense.

But big business opportunities come with big risks some are less willing to take. Terrence Duffy, chief of derivatives giant CME Group, said during its earnings call at the top of the month that “the last thing I’m going to have CME Group do is get tied up in a bunch of legal battles in court over sports.”

Selig’s statement, and the reactions to it, signal that those battles are just heating up.

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