CFTC Takes a Side: Selig Shows Support for Sports Contracts
The Commodity Futures Trading Commission (CFTC) has finally taken a public stance on sports contracts, and the agency is all in.
At the joint SEC-CFTC conference on Thursday, CFTC Chairman Michael Selig ended his remarks by speaking about event contracts. He listed actions he had taken to clarify his agency’s approach to controversial products like sports contracts. Selig said:
“I have directed CFTC staff to withdraw the 2024 event contracts rule proposal that would prohibit political and sports-related event contracts[4] and the 2025 staff advisory,[5] which cautioned registrants about offering access to sports-related event contracts due to ongoing litigation. While the advisory was issued at the staff level with the intent of bringing awareness to the litigation, it has instead contributed to uncertainty in our markets.”
The proposed rule was never finalized, but it left the possibility of the CFTC opposing sports or election contracts in the future open. Selig’s decision to withdraw the 2025 staff advisory letter was more substantive.
Staff letter cited in Kalshi case
On Sept. 30, 2025, one day before the government shutdown, the CFTC issued an advisory letter addressing litigation over sports contracts between states and prediction markets. It read in part:
“FCMs, IBs, DCMs, and DCOs should provide customers, market participants, and clearing members with regularly updated information, including information based on any States in which they operate or engage in activity, to ensure that such customers, market participants, and clearing members understand the possible effects should State regulatory actions or ongoing or new litigation, including enforcement actions, result in termination of sports-related event contract positions.”
The Commonwealth of Massachusetts cited this advisory letter in its lawsuit against Kalshi. Massachusetts argued that this letter was proof that the CFTC was open to state enforcement of sports contracts, which are sufficiently similar to sports wagers that the state believes its gaming regulators should oversee them.
Selig has sent a powerful message by withdrawing that letter.
The CFTC getting into court
While prediction market platforms and brokers have engaged in lawsuits with state gaming regulators, the CFTC has remained on the sidelines. The CFTC didn’t file an amicus brief in support of the platforms it regulates under Acting Chair Caroline Pham, nor has it done so under Selig — yet.
Selig, however, has called for the CFTC to “reassess” its involvement in federal litigation. The agency could argue for its exclusive jurisdiction over sports contracts and respond to objections about contract integrity.
Former CFTC General Counsel Rob Schwartz has noted that CFTC rulemaking protecting sports contracts could become the subject of Administrative Procedures Act (APA) lawsuits.
This is huge. I’m interested to see if the CFTC takes the same tack as the private litigants in defending its exclusive jurisdiction over on-exchange swaps. And then I’ll be interested in who might sue them to invalidate the coming rulemaking. pic.twitter.com/mBu3OXoOqu
— Rob Schwartz (@FormerCFTCGC) January 29, 2026
The CFTC’s support marks the next phase of the prediction market industry’s legal saga. That phase could see a greater focus on the CFTC rather than solely the platforms.