CFTC Chair Selig criticizes states for targeting prediction market founders

Selig's sharpest criticism was directed at Utah, which has pursued criminal actions against Kalshi, a leading provider of event contracts, along with its executives. Event contracts allow trading on real-world outcomes like elections or sports results, with the CFTC classifying them as derivatives under federal oversight while many states view them similarly to sports betting.

Federal vs State Authority

Selig maintains that the ambiguity between gambling and derivatives should be resolved through courts and regulators, not criminal prosecution. He has framed the issue as broader than Kalshi alone, warning that a patchwork of state laws threatens major financial exchanges like the NYSE and CME.

CFTC's Regulatory Offensive

Since taking office in December 2025, Selig has led lawsuits against at least 10 states, arguing federal authority over event contracts is exclusive. In July 2026, the CFTC used emergency authority to direct Kalshi to honor trades in Michigan despite conflicting court orders.

On November 5, 2026, Selig issued guidance requiring designated contract markets to remove geographic access restrictions within 30 days, challenging the practice of geofencing that platforms use to block users in states where they face legal trouble.

Legal Crossroads

The CFTC's guidance conflicts with state court orders in Michigan and Nevada, creating a dilemma for platforms that must decide whether to follow federal regulators or state courts. Utah's criminal case against Kalshi executives represents how far states are willing to pursue these disputes.

Prediction market operators now find themselves in an uncomfortable position: federally regulated and defended by the CFTC while still facing potential state prosecution. The outcome of the CFTC's lawsuits and the 30-day geofencing compliance period will determine the future landscape for these platforms.