TheBlock
CFTC Chair Michael Selig accused a group of states of overreach in their legal assault on prediction market platforms, calling the lawsuits "really egregious" and warning that founders are being threatened with prison over products offered under federal jurisdiction. Speaking at the Cantor Convergence conference, he said states are "essentially trying to lock up founders and CEOs of these companies that are offering lawful products under a federal regime."
The remarks land amid a widening fight between the CFTC and roughly a dozen states and cities over whether event contracts on platforms like Kalshi and Polymarket constitute illegal gambling. On Thursday, the Justice Department and CFTC sued Arkansas Attorney General Tim Griffin to block his action against Kalshi, while Louisiana filed a separate suit targeting Kalshi, Polymarket, Robinhood and Coinbase.
Why it matters
The dispute turns on a core regulatory question: is a prediction market contract a derivative under CFTC authority, or gambling under state police power? Selig argues that disagreement belongs in court, not in criminal prosecutions. "Somebody says it's gambling, somebody says it's a derivative," he said. "That's not something that should be at the risk of going to jail."
Rather than litigate venue by venue, Selig wants the question elevated to the Supreme Court to cement federal jurisdiction. "I don't understand whether we're going to have every major CEO of an exchange locked up in a jail cell in Utah, or if we can just go to the Supreme Court and hash this thing out on the merits," he said.
Market impact
The CFTC chair openly siding with Kalshi and Polymarket is a material tailwind for the prediction market sector, which has been operating under legal cloud in multiple states. His pledge that regulators will "continue to defend our jurisdiction" signals federal backing that could accelerate institutional adoption of event contracts and pressure state regulators to stand down.
Frequently asked questions
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Why is the CFTC chair defending prediction market platforms?
Michael Selig holds that event contracts on platforms like Kalshi and Polymarket are derivatives offered under the CFTC's exclusive federal jurisdiction, so he views state criminal actions against their founders as attacks on lawful federal products.
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Which states are suing prediction market companies?
Roughly a dozen states and cities are in conflict with the CFTC over event contracts. On Thursday, Louisiana filed suit naming Kalshi, Polymarket, Robinhood and Coinbase, while Arkansas Attorney General Tim Griffin faced a countersuit from the DOJ and CFTC.
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What did Selig say about the Supreme Court?
Selig said he would rather take the jurisdictional dispute to the Supreme Court than fight it state by state, asking whether every major exchange CEO should risk a jail cell in Utah or whether the issue can be settled "on the merits" at the high court.
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Are prediction markets gambling or derivatives?
That is the core unresolved question. States argue event contracts are illegal gambling under their police powers, while the CFTC classifies them as derivatives under federal commodities law. Selig says the disagreement should be resolved in court, not through criminal charges.
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How does the federal lawsuit against Arkansas affect Kalshi?
The Justice Department and CFTC sued Arkansas AG Tim Griffin to block his enforcement action against Kalshi, signaling that federal regulators are willing to actively defend prediction market platforms against state-level crackdowns.
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