Lawyer: CLARITY Act Could Help CFTC Police Prediction Markets

Chair Michael Selig has taken a unilateral stance since his December Senate confirmation. He argues the CFTC has exclusive jurisdiction over event contracts, classifying them as swaps. Selig is the only Senate-confirmed member leading an agency that normally has five commissioners – a fact that has shaped his aggressive posture toward state regulators. The CFTC has one commissioner and all of crypto.

That position has triggered what several Democratic senators call an assault on state authority. Some states filed lawsuits against Kalshi and Polymarket over sports betting. Last week Selig ordered Kalshi to ignore a ruling from a Michigan court. The company said the order put it “in an impossible position” between state and federal directives.

Legal experts predict one or more of those cases could reach the U.S. Supreme Court to settle the clash between state and federal regulators over prediction markets.

Republican senators pushing for a CLARITY Act vote before the chamber breaks for August state work periods said they expect to release the bill's text soon. Details on how the legislation would address prediction markets, ethics concerns, and other issues remained unavailable as of Tuesday.

In June, gambling industry groups petitioned the Senate to add language to CLARITY “that explicitly prohibits event contracts tied to sports and casino-style gaming.” The White House also confirmed the Trump administration agreed to “the most comprehensive and wide-ranging ethics provision in history” and had “bent over backward to accommodate [Democrats’] concerns.”