The Commodity Futures Trading Commission has filed an amicus brief with the US Court of Appeals for the Ninth Circuit asserting that prediction markets fall under its exclusive authority, as disputes over event-based contracts expand in the United States and abroad.
On February 17, 2026, the agency submitted its brief in North American Derivatives Exchange, Inc. et al v. The State of Nevada on relation of the Nevada Gaming Control Board et al. The filing maintains that commodity derivatives markets, including event contracts often described as prediction markets, sit solely within the CFTC’s jurisdiction.
CFTC Chairman Michael S. Selig said the agency is responding to mounting legal challenges. “CFTC-registered exchanges have faced an onslaught of lawsuits seeking to limit Americans’ access to event contracts and undermine the CFTC’s sole regulatory jurisdiction over prediction markets. This power grab ignores the law and decades of precedent,” he said. He added: “As I’ve said before, the CFTC has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll do.”
Legal Basis and Federal Position
In its brief, the CFTC outlines the history behind its oversight of commodity derivatives. The commission first recognized event contracts in 1992, when it permitted the Iowa Electronic Markets at the University of Iowa to offer contracts tied to political and economic outcomes.
After the 2008 financial crisis, Congress granted the CFTC broad authority over contracts based on commodities, defined widely in statute. The Commodity Exchange Act allows new financial instruments to operate within regulated markets under federal supervision.
Selig recently indicated that the commission may draft clearer rules for event contracts. In a Wall Street Journal opinion piece, he wrote: “The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products.” He also stated publicly: “We will see you in court.”
Platforms such as Kalshi and Polymarket face lawsuits in multiple states, where critics argue the offerings amount to gambling. Selig has said event contracts “serve legitimate economic functions” and operate under CFTC rules as “swaps.” He added: “These exchanges aren’t the Wild West, as some critics claim, but self-regulatory organizations that are examined and supervised by experienced CFTC staff.”
Diverging International Approaches
Regulators outside the United States have taken a different view. In New Zealand, the Department of Internal Affairs determined that platforms including Polymarket and Kalshi fall within the country’s gambling laws. Gambling director Vicki Scott said: “We consider platforms such as Kalshi and Polymarket to be gambling under New Zealand law.”
Australia’s communications regulator reached a similar conclusion last year. In a decision document, it wrote: “It is the Australian Communications and Media Authority’s view that what is being purchased is not something which itself manages financial risk, or something which makes a non-cash payment […]. Neither can the user’s participation in the service be described as making a financial investment.”
The differing regulatory interpretations underscore an ongoing debate over whether prediction markets constitute federally regulated derivatives or unlicensed gambling products.
Source:
“CFTC Reaffirms Exclusive Jurisdiction over Prediction Markets in U.S. Circuit Court Filing”, cftc.gov, February 17, 2026
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