Lead: On Feb. 17, 2026 the Commodity Futures Trading Commission signaled it would assert federal authority over prediction markets as states press enforcement actions. New CFTC chairman Michael Selig said the agency filed an amicus brief in federal court and will act to block state-level bans on event contracts. The move follows wide litigation targeting platforms such as Kalshi and Polymarket and aims to preserve the agency’s exclusive jurisdiction. The statement sets the stage for courtroom fights over whether event contracts are regulated swaps or state-prohibited gambling.
Key Takeaways
- The CFTC announced it has filed an amicus brief in federal court and said it will defend its authority over prediction markets, according to chairman Michael Selig.
- Nearly 50 active legal cases related to prediction markets are pending nationwide, reflecting widespread state challenges to event contracts.
- Platforms named in recent disputes include Kalshi, Polymarket and Crypto.com; Nevada regulatory action is highlighted in a Ninth Circuit dispute.
- Selig wrote a Wall Street Journal op-ed arguing event contracts function as swaps and have legitimate economic use rather than constituting gambling.
- The chairman said the agency will draft clearer rules for prediction markets and intervene in federal and circuit court cases where jurisdiction is at issue.
- Selig posted a video to X emphasizing litigation readiness, saying the agency will defend its jurisdiction in court.
Background
Prediction markets allow users to buy and sell contracts tied to the outcome of future events across pop culture, sports, public policy and finance. Firms such as Kalshi and Polymarket have expanded offerings in recent years, drawing regulatory attention as states interpret event contracts through gambling statutes. The CFTC has historically regulated derivatives and swaps, and the agency now argues that certain event contracts fit within that regulatory framework.
The legal landscape has become fragmented as state authorities brought enforcement actions or sought prohibitions, and platform operators challenged those moves as preempted by federal law. Michael Selig, President Donald Trump’s nominee to chair the CFTC, took public testimony during a Senate Agriculture Committee hearing on Nov. 19, 2025, and has since emphasized a proactive regulatory stance. Industry proponents say prediction markets deliver price discovery and hedging benefits; critics contend some offerings resemble gambling and merit stricter controls.
Main Event
The CFTC announced that it filed an amicus brief in federal court on Feb. 17, 2026 to assert its authority to govern prediction markets and to limit state encroachment, according to statements from chairman Michael Selig. Selig argued in a Wall Street Journal op-ed that the Commission has long had jurisdiction over these products and that event contracts should be treated as swaps under federal rules. He framed the agency’s intervention as necessary to prevent a patchwork of state prohibitions.
Selig called out nearly 50 ongoing legal actions targeting prediction markets and said the agency would no longer allow overreaching state measures to restrict nationwide market activity. He also announced plans to draft clearer CFTC rules for event contracts, signaling regulatory rulemaking as a complementary approach to litigation. The CFTC said the amicus brief will be filed in the Ninth U.S. Circuit Court of Appeals in a dispute involving Crypto.com and the Nevada Gaming Control Board.
Platforms under scrutiny deny wrongdoing and emphasize compliance with applicable rules. Kalshi, for example, has maintained that its listings comply with federal oversight and contested characterizations that deem event contracts as mere gambling. The debate over classification affects both consumer protections and market structure, with consequences for how platforms operate across state lines.
Analysis & Implications
Legally, the conflict centers on preemption and who has primary authority to regulate event contracts. If courts accept the CFTC’s position that many event contracts are swaps, federal oversight could displace state restrictions and create a uniform regulatory regime. That outcome would benefit platforms by reducing compliance fragmentation but may provoke state regulators and legislators seeking to protect local policy priorities.
Economically, prediction markets can provide aggregated information and allow participants to express views or hedge risks tied to discrete outcomes. The CFTC’s framing of event contracts as having legitimate economic functions supports arguments for permitting trading under a structured federal regime. However, regulators must balance market utility against consumer protection, problem gambling risks and market manipulation concerns.
The agency’s promise to draft clearer rules signals a shift from reactive enforcement to proactive standard-setting. New rules could define permissible contract terms, venue responsibilities, surveillance expectations and consumer safeguards. The timetable for rulemaking and the outcome of key appellate cases will determine whether platforms face a durable federal framework or continued state-by-state legal battles.
Comparison & Data
| Metric | Reported Figure or Example |
|---|---|
| Active legal cases | Nearly 50 cases reported |
| Platforms frequently named | Kalshi, Polymarket, Crypto.com |
| Notable court | Ninth U.S. Circuit Court of Appeals (Crypto.com v Nevada) |
The table summarizes the public tally of litigation and the principal platforms and forum cited in recent statements. The single largest immediate effect of a federal preemption decision would be to limit state-level prohibitions and centralize enforcement under the CFTC, reducing divergent compliance costs for platforms operating in multiple states.
Reactions & Quotes
The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products
Michael Selig, CFTC chairman (op-ed)
We will see you in court
Michael Selig, CFTC chairman (video posted to X)
Kalshi says it follows federal rules and views its event contracts as compliant with relevant oversight
Kalshi, company statement (paraphrase)
Unconfirmed
- CFTC assertion that an amicus brief was filed in the Ninth Circuit was stated by the agency; independent verification of the brief filing was not available at the time of reporting.
- The figure of nearly 50 active cases is the reported aggregate and may change as new filings are added or resolved.
- Specific procedural details about forthcoming CFTC rule proposals, including timing and exact rule text, have not been publicly released.
Bottom Line
The CFTC’s public pledge to defend federal jurisdiction over prediction markets sets up a legal and regulatory confrontation with states that view some event contracts as gambling. A court verdict favoring the agency or successful federal rulemaking would standardize oversight but will likely prompt political and legal pushback from states and advocacy groups.
For market participants and platforms, the near-term outlook is increased litigation risk and regulatory uncertainty, followed by either a clearer federal rulebook or a continuation of state-level restrictions. Observers should watch Ninth Circuit filings, the CFTC’s planned rulemaking timetable and any legislative responses at the state or federal level.
Sources
- CNBC (news report; includes disclosure of a commercial relationship with Kalshi)