CFTC Faces Calls for More Resources as Prediction Market Oversight Debated

Lawmakers in the US House Committee on Agriculture’s Subcommittee on Commodity Markets, Digital Assets, and Rural Development held a Tuesday hearing on how the Commodity Futures Trading Commission could oversee prediction market companies, including discussion of pending crypto market structure legislation. Carl Kennedy, a partner at New York law firm Katten Muchin Rosenman, said the agency is likely too short-staffed to fully manage regulation and enforcement for platforms such as Kalshi and Polymarket. According to Cointelegraph, Kennedy said the Digital Asset Market Clarity Act, or CLARITY Act, under consideration in the US Senate could give the CFTC more authority not only over digital assets but also over the rapid growth of prediction markets. Kennedy said the CFTC should receive additional resources if it is to address new asset classes in cash markets and crypto, as well as the growth of prediction markets. His comments came amid broader legal and regulatory debate over the CFTC’s approach under Chair Michael Selig, who has taken the position that the agency has exclusive jurisdiction over the companies and that event contracts on the platforms are swaps under the CFTC’s authority. Selig is the only Senate-confirmed member leading the agency, which normally has five commissioners. The stance has drawn criticism from Democratic senators, who say it amounts to an assault on state authorities seeking to regulate prediction market platforms, and several US states have filed lawsuits against Kalshi and Polymarket over sports betting. Last week, Selig ordered Kalshi to ignore a Michigan court ruling, and the company said it was placed in an impossible position between state and federal authorities. Some legal experts expect one or more of the cases to reach the US Supreme Court. Republican senators pushing for a vote on the CLARITY Act before the chamber breaks for August state work periods said they expect the bill’s text to be released soon. As of Tuesday, details on how the legislation could address prediction markets, ethics, and other issues raised by lawyers had not been made public. In June, gambling industry groups asked the US Senate to add language to CLARITY that would explicitly prohibit event contracts tied to sports and casino-style gaming. The White House also confirmed reports that the Trump administration agreed to what it described as the most comprehensive and wide-ranging ethics provision in history and said it had bent over backward to accommodate Democrats’ concerns.