CFTC chair defends federal prediction market shield as state court losses mount
CFTC Chair Michael Selig defended the agency's exclusive jurisdiction over prediction markets in remarks on August 19 at a White House Innovation Meeting, saying federal oversight has shielded platforms from state attorneys general including Letitia James. The agency has filed emergency orders to keep markets open where states seek shutdowns. The posture clashes with a growing state-level offensive: courts in Washington, Wisconsin, and New York have ordered Kalshi to halt or geofence operations, rejecting CFTC preemption claims. Selig and Kalshi co-founder Luana Lopes Lara both testified before a committee hearing on the issue.
The CFTC's jurisdictional claims are colliding with state court rulings that keep rejecting federal preemption. Kalshi faces geofencing orders in Washington, Michigan, and Nevada, with each loss forcing costly state-by-state compliance or contract voiding. The agency's emergency orders cannot outrun the courtroom defeats. Polymarket and Novig face identical exposure.
Brokers clearing these contracts now hold geography-dependent positions they never priced for liability. The split between federal assertions and state rulings pushes the industry toward a Supreme Court test on whether CFTC registration blocks local gambling law. Traders lose contract certainty, platforms lose national scale, and the federal framework itself is at stake.