predictionmarketscftcbacking

#PredictionMarketsCFTCBacking As of February 2026, the regulatory landscape for prediction markets has undergone a drastic shift.

Under the new chairmanship of Michael Selig, the Commodity Futures Trading Commission (CFTC) has effectively pivoted from trying to ban prediction markets to **backing them against state-level bans.**

The CFTC is now asserting "exclusive federal jurisdiction" over these markets, arguing that they are federally regulated financial derivatives, not "gambling" subject to state laws.

### **The Core Shift: From Ban to Backing**

Previously (2023–2024), the CFTC attempted to block election betting, arguing it was contrary to the public interest. However, following key court losses and a change in leadership, the agency has reversed course.

* **Federal Preemption:** The CFTC is now intervening in court cases (filing "amicus briefs") to support platforms like **Kalshi** and **Crypto.com**. They are arguing that individual states (like Nevada or New Jersey) cannot ban these platforms because federal law (the Commodity Exchange Act) preempts state gambling laws.
* **Rule Withdrawal:** In early February 2026, the CFTC formally withdrew a 2024 proposed rule that would have explicitly banned political and sports-related event contracts.

### **Status of Key Platforms**

| Platform | Current Status (Feb 2026) |
| --- | --- |
| **Kalshi** | **Fully Operational & CFTC-Regulated.**

After winning its landmark court case *KalshiEX LLC v. CFTC* (which legalized election betting), Kalshi is now the primary beneficiary of the CFTC's new "federal preemption" defense against state regulators. |
| **Polymarket** | **Regulated US Return.**

Previously banned in the US, Polymarket received an "Amended Order of Designation" from the CFTC in late 2025. This allows it to operate as a fully regulated, intermediated exchange in the US, ending its "offshore-only" status. |
| **PredictIt** | **Operational.**

Continues to operate, now benefiting from the broader regulatory shield being constructed by the CFTC for the entire industry. |

### **Why Is the CFTC Doing This?**

The "backing" is rooted in a desire to expand regulatory territory.

1. **Jurisdiction:** By classifying these contracts as "event derivatives" rather than "bets," the CFTC gains authority over a massive, high-volume market.
2. **Consumer Protection:** The CFTC argues that bringing these markets under federal oversight (clearinghouses, anti-fraud rules) is safer for consumers than letting them operate in gray markets or offshore.
3. **Legal Reality:** The courts have already ruled (in the *Kalshi* case) that the CFTC cannot arbitrarily ban these contracts just because they "feel" like gambling. The agency is now leaning into that ruling rather than fighting it.

### **Summary of Recent Events (Feb 2026)**

* **Feb 17, 2026:** CFTC Chairman Selig publishes an op-ed stating the agency "will no longer sit idly by" while states undermine federal authority, signaling a direct fight against state gaming commissions.
* **Feb 6, 2026:** The CFTC withdraws the "Event Contracts" rule proposal that would have banned political betting.
* **Ongoing:** The CFTC is actively supporting Crypto.com in a lawsuit against the Nevada Gaming Control Board, a move seen as a proxy war for the entire industry's right to operate in all 50 states.

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