Agencies Say “Ask Again Later” on Authority Over Prediction Markets

Here’s a question that might be fun to bet on over at Kalshi or Polymarket: which regulator will oversee prediction markets this time next year—the CFTC or the states? Or maybe: will the SEC approve a prediction market-based ETF in 2026? Currently, both of these questions about the nascent prediction market industry appear very much up in the air.

The Commodity Futures Trading Commission, for its part, wants the whole job. A proposal for the agency to regulate prediction markets exclusively is now under White House review, though the details sitting at the Office of Management and Budget aren’t yet public. It’s the latest instance in which CFTC Chairman Michael Selig has suggested his agency’s authority over prediction markets is exclusive.

The states disagree. In May, Minnesota became the first in the country to ban prediction market sites outright. Utah, home to some of the strictest anti-gambling laws in the nation, is mounting its own pushback. Other states have tried to regulate prediction markets as gambling, prompting the CFTC to sue Arizona, Connecticut, Illinois, and New York for intruding on what it calls its exclusive jurisdiction.

The Trump administration has weighed in on the dispute between the states and federal agencies over the industry, suing to block Minnesota’s ban. In addition, on the same day the CFTC’s proposal reached OMB, the president posted that it was “critically important” that the agency’s exclusive authority be maintained. A recent New York Times investigation reported allegations that senior CFTC leadership intervened to assist a prediction market and two other firms with ties to the Trump family in obtaining approvals. According to the report, some career staff raised consumer-protection and fraud concerns and were later placed on leave.

The prediction market industry isn’t getting everything on its wishlist, however. Even as the CFTC asserts its authority over the space, the SEC has delayed 24 prediction market ETFs from Roundhill, Bitwise, and GraniteShares—all filed in February and tied to elections and economic data. Under the SEC’s rules the funds would have gone effective automatically after 75 days. The agency delayed consideration of the filings just before the clock ran out, saying it needed more time. Chairman Paul Atkins has flagged two worries: the overlapping jurisdiction between his agency and the CFTC, and the risk of manipulation or insider trading in the underlying markets.

For the curious, the political funds are all viewable on Intelligize. Roundhill, GraniteShares, and Bitwise have each registered six funds tied to control of the White House, Senate, and House. The rest of the delayed group cover economic data like recession odds and tech-sector layoffs.

Between the CFTC proposal still under wraps, a wave of state restrictions being challenged in the courts, and two dozen ETFs in limbo, the only safe wager is that nobody has a settled answer. Anyone who wants to know what the state of play will be in a year will have to shake their Magic Eight-Ball and ask again later.

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