Democratic Senators Clashing With Litigious CFTC
Mike Goodpaster Published 02/07/2026
A group of 17 Democratic senators is challenging the Commodities Futures Trading Commission (CFTC) over the federal organization's recent litigious activities in support of prediction market sites. The CFTC is challenging several states in court in battles over whether prediction markets can fall under state regulation. The CFTC is the federal regulator of all prediction market sites.
However, state gambling regulators are going to court, alleging that the prediction market sports-event contracts are sports betting and should fall under state gaming regulations. The CFTC is counter-suing in support of the prediction market sites, insisting it is the regulator of these sites and thus has the final say.
Democratic senators express concern that the CFTC is using federal funds to sue states
The 17 Democratic senators are all members of the Senate Appropriations Subcommittee on Financial Services and General Government. They are urging the committee leadership to prevent the CFTC from using federal funds in legal battles against state gaming authorities.
CFTC Chai Michael Selig is defending the agency’s position. He argues that the CFTC has “exclusive jurisdiction” over prediction markets. The CFTC maintains the claim that the event contracts on the prediction market platforms qualify as “swaps” under its purview.
The senators also worry that by pursuing this legal action against states, the CFTC is becoming part of the problem. Instead, it should be seeking solutions.
“Through engaging in this campaign of litigation and intimidation, the CFTC risks becoming an instrument and enabler of online prediction markets’ efforts to bypass states’ consumer protections and oversight, creating a race-to-the-bottom in gambling,” the group of senators said in a joint statement.
The CFTC is in court battles in several states
Currently, the CFTC is engaging in legal battles over prediction markets in Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, and Wisconsin. In many of these states, some of the prediction market companies involved in the cases, including Kalshi and Polymarket, have filed their own lawsuits against state authorities, backing the CFTC’s position.
Also of concern to the senators is the fact that Selig is acting unilaterally as CFTC Chair. The CFTC is supposed to operate as a bipartisan five-member commission. Selig, though, is the only appointee currently on staff. He was recently appointed to the role by U.S. President Donald Trump. The President has not indicated that he plans to appoint anyone to fill the vacant CFTC commission seats.
Expectations are that many of these state vs federal legal fights could wind up going all the way to the Supreme Court. In 2018, the Supreme Court opened the door to widespread legal gambling in the USA. As part of that decision, states were given exclusive control over gambling. If the court is asked to revisit this issue, that ruling could end up changing.
Congress is currently addressing the prediction market issue
While these legal fights are ongoing around the country, Congress is working on legislation that could completely alter how prediction market sites operate in the USA.
The US Senate is expecting to vote soon on the Digital Asset Market Clarity (CLARITY) Act. This bill would establish separate regulatory roles for the CFTC and Securities and Exchange Commission over digital assets.
Last week, gaming organizations petitioned the Senate to add language barring sports event contracts in the CLARITY Act. These organizations are arguing that the CFTC's role isn't to be regulating such wagers.