Michael Selig Confirmed as New CFTC Chair: What Does it Mean for Prediction Markets?

Michael Selig has been confirmed as the new chair of the Commodity Futures Trading Commission (CFTC), the organization that regulates prediction markets in the US.

The Senate approved Selig’s appointment on Thursday night, following his nomination by President Donald Trump at the end of October. Selig had previously served as chief counsel for the SEC’s Crypto Task Force and says he will work to make the US “the Crypto Capital of the World.”

During his confirmation process, Selig was noncommittal on how exactly the CFTC will regulate prediction markets, particularly sports event contracts. Rather than offering a definitive framework, he indicated that this is essentially a matter for the courts to decide.

Selig Favors Free Market, Vows to Fight Fraud

Selig argued that focusing on minor technical violations can consume agency resources and encourage legitimate firms to relocate their operations offshore, without significantly improving market integrity. This suggests he will not immediately restrict platforms from doing business in sports or other markets.

He has long ties with the CFTC; he first joined the agency in 2014, serving as a law clerk to then-Commissioner Christopher Giancarlo, who later became chairman.

While indicating he will not take an active stance in opposing platforms from offering certain markets, such as sports, he has also emphasized that the CFTC must remain active in preventing fraud, manipulation, and abusive conduct.

Kalshi and other platforms formed their own trade group, the Coalition for Prediction Markets (CPM), which claims to aim to tackle insider trading and advocate for the legal status of prediction markets.

Selig’s vow to fight against market manipulation could see stricter rules around certain trading that appears to have allowed those with insider information to profit. In one case, a user has been accused of using insider knowledge of Google’s search results to generate millions of dollars.

CFTC Faces Several Key Questions

Selig will have a backlog of issues to work through, as several state regulators and sports leagues have contacted the CFTC over concerns about the continued expansion of sports prediction markets.

Additionally, Arizona Congressman Abe Hamadeh sent a letter to the CFTC this week, asking the organization to explain how it will ensure market integrity as CNN partners with Kalshi.

The organization has been without a permanent leader since February, when its former chair, Rostin Behnam, stepped down from the post. Behnam, appointed under the Biden administration, had taken a tougher stance on prediction markets and initiated legal action against Kalshi over the platform’s presidential election markets.

Kalshi, however, won that battle, as courts ruled that the markets were legal under the Commodity Exchange Act (CEA). Under the new administration, the CFTC dropped its appeal to the verdict in May, leaving platforms to offer a wide range of election and political markets.

In the wake of that ruling, platforms have entered the sports market, despite many states claiming they violate state laws and a stipulation in the CEA that forbids contracts related to gaming.

Platforms Expand With Little Oversight

Caroline Pham has been leading the organization as acting chair since Behnam departed, and during this time, the CFTC has taken a hands-off approach to regulating markets.

Kalshi has expanded its sports markets through self-certification with no opposition from the CFTC. It now offers parlays, prop bets, moneylines, and several other markets on a wide range of sporting contests.

Polymarket, a platform that the CFTC fined $1.4 million in 2022 when Behnam was chair, has also managed to re-enter the US. The CFTC ended its investigation of the company earlier this year, paving the way for it to acquire the CFTC-licensed QCEX. It then issued a no-action letter regarding Polymarket’s acceptance of US customers.

Other companies sensed an opportunity and scrambled to launch their own platforms. Several sports betting and DFS operators now have their own versions or have partnered with established companies such as Crypto.com, Kalshi, and Polymarket.

Arizona took the first definitive action against prediction markets this week, revoking Underdog’s DFS license due to its ties to Crypto.com. As a result, Crypto.com has withdrawn from Arizona, as well as several other states that have voiced opposition to sports prediction markets.

Whatever the future of prediction markets holds, Selig will be busy over the coming months as states and companies continue to do battle over the controversial expansion of sports markets.