The new chairman of the U.S. Commodity Futures Trading Commission (CFTC), Michael Selig, stated on Thursday that the Trump administration will not hinder the development of sports event contracts and broader prediction markets. This stance was officially announced in a coordinated event at the CFTC headquarters in Washington with Paul Atkins, chairman of the U.S. Securities and Exchange Commission (SEC), marking the strongest regulatory support for prediction markets to date. In his nearly 20-minute speech, Selig emphasized the necessity of financial market innovation and regulatory reform, while clearly stating that the CFTC will provide clear rules and room for development for prediction markets. Related U.S. financial and gambling regulatory dynamics can be referenced on the PASA official website.
Core Support Measures: Four Actions to Loosen Prediction Markets
Selig proposed four key actions around prediction markets, directly addressing past regulatory pain points and promoting standardized industry development:
Revoke old guidelines: Ordered the withdrawal of the rule proposal to ban political and sports-related event contracts by 2024, as well as the internal prediction market consultation memo released last September, which he said exacerbated market uncertainty;
Draft new regulatory framework: Initiated a plan to establish rules for event contracts, addressing the issues of the existing regulatory framework being "difficult to apply and failing to serve market participants," providing clear compliance standards for the industry;
Review judicial involvement: Instructed staff to reassess the CFTC's participation in pending cases in federal, regional, and circuit courts, defending its exclusive jurisdiction over commodity derivatives;
Enhance inter-agency collaboration: Promoted coordination with the SEC, clarifying the regulatory boundaries between commodities and securities options, and enhancing regulatory efficiency.
Industry Divisions Intensify: Clear Opposition Between Support and Opposition Camps
The supportive attitude of the CFTC further intensifies the internal contradictions within the gambling and financial industries, with clear positions on both sides:
Support Camp: Prediction market-related enterprises respond positively
Core Forces: The Prediction Markets Alliance (including Kalshi, Robinhood, Underdog, etc.) publicly expressed support, stating that revoking vague guidelines and advancing rule-making is a key step in "enhancing market transparency and promoting responsible innovation";
Participation Motives: Some digital gambling operators (such as FanDuel, DraftKings) are involved in this field, aiming to defend their share in unregulated sports gambling markets like California and Texas.
Opposition Camp: Traditional gambling associations join forces to resist
Main Opponents: The American Gaming Association (AGA) and the Indian Gaming Association (IGA) formed an alliance, pointing out that prediction markets have led to losses in state gambling tax revenues, which will soon exceed $400 million;
Specific Actions: The two associations jointly sent a letter to Congress, requesting the inclusion of a clause in the cryptocurrency bill to prohibit sports event contracts; some AGA members (including Sportradar, OpenBet) withdrew from the association due to their association with prediction markets.
Supporting Legislation Advances: CFTC Empowered to Strengthen Digital Commodity Regulation
In response to the change in regulatory attitude, the U.S. Senate Committee on Agriculture, Nutrition, and Forestry recently advanced the "Digital Commodity Brokerage Act," granting the CFTC more regulatory powers:
Clarify the definition of digital commodities, establish consumer protection measures such as conflict of interest safeguards;
Establish a new registration system, fostering a domestically regulated market with strong liquidity and resilience;
Require SEC and CFTC collaboration, protecting software and technology companies, providing new funds for the CFTC to build a spot market regulatory system;
Core content of the bill:
Legislative Process: The bill narrowly passed the committee review with a 12-11 party-line vote, as a companion document to the cryptocurrency market structure bill, and needs to be merged with the latter before being submitted to the full Senate for a vote.
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