Federal regulator fights state regulation of prediction markets – a gain for ordinary entrepreneurs and investors
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Today, Commodity Futures Trading Commission Mike Selig announced actions to attempt to block state regulation of prediction markets that offer contracts on sports and political events. In a Wall Street Journal commentary and X post, Selig said that these venues are under the exclusive regulatory jurisdiction of the CFTC. CEI Director of Finance Policy John Berlau praises Selig’s statement and actions, noting that they partially fulfill a request made to the CFTC in a 2025 CEI-led letter from 16 signatories from conservative and free-market groups.
“Chairman Selig is correct that prediction markets ‘provide useful functions for society by allowing everyday Americans to hedge commercial risk.’ He is also right that they belong under the exclusive regulatory jurisdiction of the CFTC as commodities exchanges, rather than regulated as gambling venues by states.
“As CEI and other center-right groups point out in the letter: As in traditional futures exchanges, prices of contracts on prediction markets are set by buyers and sellers. This makes prediction markets fundamentally different from casinos, in which customers bet against a ‘house’ that tilts odds in its favor.
“As shown in prediction market performance in predicting the results of the 2024 election and in decades of scholarship from eminent economists such as George Mason University’s Robin Hanson, prediction markets produce more accurate forecasts by harnessing incentives originating from people who risk their own money on outcomes.
“It’s time to lift regulatory barriers keeping ordinary American entrepreneurs and investors from benefiting from this innovation. Chairman Selig’s announcement is a positive step in this direction.”
Related analysis:
CEI leads coalition letter to end CFTC red tape on prediction markets