In November, before he was confirmed as chairman of the regulator that oversees prediction markets, Mike Selig assured lawmakers he would defer to the courts on the issue of sports event contracts.

Selig’s tune has changed dramatically since he was approved as chairman of the Commodity Futures Trading Commission (CFTC) in December. On Feb. 4, he withdrew a proposed rule from the Biden-era CFTC that would have prohibited sports and political event contracts. On Tuesday, two months after his confirmation, Selig weighed in directly, saying he is filing an amicus brief in a lawsuit that has reached the U.S. Court of Appeals for the Ninth Circuit that will say prediction markets fall exclusively under his agency’s jurisdiction. (Amicus briefs are filings made by non-parties to a lawsuit to offer their perspective on how the case should be decided; Selig’s filing is notable, although legal experts say it shouldn’t hold more weight than any other amicus briefs filed in the case.)

Before his filing hit the docket, Selig made clear in a Wall Street Journal op-ed and video posted to social media that the CFTC is not dipping its toe into the fight—it’s diving in head first. (The filing became available early Tuesday evening).

“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 wrote in the op-ed.

“To those who seek to challenge our authority in this space, let me be clear: we will see you in court,” he said in the video.

Multiple states are among those who seek to challenge the CTFC’s authority, including state gaming regulators in Massachusetts and Nevada that have sued platforms.

Where’s the Word Sports?

Selig did not mention the word “sports” in his op-ed or video, although he did say the word in a separate interview with Fox News. Controversy over prediction markets is focused mostly around sports event contracts, which account for the majority of the volume on platforms. The administration’s newly aggressive stance comes as President Donald Trump’s social media company, Truth Social, plans to launch its own prediction-market platform. The president’s son, meanwhile, Donald Trump Jr., is an investor in Polymarket and an advisor to Kalshi.

Gaming attorney Dan Wallach tells Front Office Sports that the lack of focus on sports in Selig’s public statements indicates he’s “trying to falsely suggest it’s an attack on the trillion-dollar derivatives market. This is only about sports gambling.”

In the 41-page amicus brief, which was written by Anne Stukes, a senior lawyer for the CFTC, sports is mentioned many times. The filing argues sports event contracts should be treated as swaps. A swap is a contract where two parties exchange money based on how something else changes—in the sports context, for example, the result of a game. Swaps generally fall under the CFTC’s authority rather than the SEC’s.

The brief argues that if the court determines sports event contracts shouldn’t be treated as swaps, it would “redraw the statutory boundary Congress established” to ensure federal oversight of derivative markets and open the door for other event contracts to be considered out of the CFTC’s reach. The brief also argues that federal law preempts state gambling laws. 

Prediction-market controversy is mostly about sports, although it’s not restricted to that topic. Authorities in Israel recently arrested several people over suspicions they traded on Polymarket using classified information related to military operations, while Rep. Ritchie Torres (D., N.Y.) in January introduced federal legislation aimed at stopping insider trading by elected officials.

On a recent episode of Bloomberg’s Odd Lots podcast, Selig said the agency has been using technology, including artificial intelligence, to help it assess when enforcement is warranted, as well as to track potential insider trading issues—even as some prediction-market proponents argue that trading on insider information is, in certain cases, effectively the point of these platforms, and distinct from trading on “material” nonpublic information in traditional securities markets.

“Everybody thinks it’s strange,” a former CFTC attorney tells FOS. “When members of the CFTC bar talk to each other, it’s like ‘can you believe this shit?’”

Opposition Rises

Lawmaker resistance to the rise of prediction markets has cut across party lines. Utah governor Spencer Cox, a Republican, responded to Selig’s video saying: “I don’t remember the CFTC having authority over the ‘derivative market’ of LeBron James rebounds. These prediction markets you are breathlessly defending are gambling—pure and simple.”

Former New Jersey governor Chris Christie, who ran for president in 2016 as a Republican, posted on social media that prediction-market platforms are “violating the rights of states who have been regulating sports betting” as well as the rights of states that oppose sports betting.

The CFTC’s staff count has been reduced significantly since Trump’s second term began. The Office of the Inspector General reported in December that the agency had experienced a roughly 21.5% reduction in full-time employees since the end of fiscal year 2024. Barron’s reported this month that the CFTC’s Chicago office—a major enforcement hub for the regulator that once employed 20 enforcement attorneys—had lost all of them, some due to layoffs while others resigned. Still, Selig maintains that the CFTC is the right regulator for the fast-growing prediction-market industry.

“Chicago is an epicenter of the derivatives industry,” the former CFTC attorney tells FOS. “There’s still quite a lot going on there.”

There have been no enforcement actions related to prediction markets listed on the CFTC’s website since Trump’s second term. A CFTC spokesperson tells FOS the agency “cannot discuss enforcement matters beyond what is a matter of public record. As a general matter, investigations, which are nonpublic, can often take years to complete.” 

The underlying idea espoused by Selig—that the CFTC has jurisdiction over sports event contracts—is unfounded, according to Wallach. Prediction-market platforms maintain the CFTC is their regulator, and are arguing in multiple legal fights that there is a technical difference between betting and trading. When you place a bet on a prediction-markets site, the companies say, you’re actually investing in a futures contract. 

But Wallach says legislative history shows Congress never intended for prediction markets to be able to offer even contracts on issues like how many rebounds LeBron James will have, despite Selig’s assertion that virtually anything that could be considered a commodity falls under CFTC jurisdiction. He points to the opinion in a 2022 Supreme Court case called West Virginia v. EPA, which states that government agencies “have only those powers given to them by Congress.”

Legal experts expect the issue of sports event contracts will eventually reach the Supreme Court. Wallach says that’s the exact plan for prediction-market proponents, like the Coalition for Prediction Markets, which includes Kalshi, Robinhood, Crypto.com, Coinbase, and Underdog. 

But he says they shouldn’t count on a favorable outcome—he notes that Justice Samuel Alito authored the majority opinion in Murphy v. NCAA, which is the 2018 case in which the Supreme Court struck down the Professional Amateur Sports Protection Act (PASPA) and opened the door to state-by-state regulation of sports betting. It’s unlikely Alito would rule that sports event contracts fall under federal jurisdiction, Wallach says.

“Justices are appointed for life,” Wallach tells FOS. “They are not subject to the dominion of control for whoever happens to be president at the time.”

DraftKings stock is down more than 50% in the past six months. So is FanDuel parent company Flutter. Penn Entertainment is down about 30%, and so is Caesars in that time. 

It isn’t just from the threat of prediction markets like Kalshi and Polymarket—but that’s a big part of it. 

Victor Rocha, conference chair of the Indian Gaming Association advocacy organization, thinks DraftKings and FanDuel have already entered prediction markets in the wrong way. According to Rocha, executives from DraftKings and FanDuel previously expressed to him that they wouldn’t enter California without Native American tribes as partners—but both reneged on that pledge late last year by launching prediction-market platforms that offer sports event contracts in states where online sports betting is not yet legal, like California.

“I think FanDuel and DraftKings have lost their minds,” he told Front Office Sports. “They are so freaked out by Polymarket and Kalshi eating their lunch. It’s like a midlife crisis.”

DraftKings and FanDuel are not the only companies to launch prediction-market platforms, as Kalshi and Polymarket have surged in usage and valuation. Others include Fanatics, Robinhood, Coinbase, and Crypto.com, to name just a few of the many new offerings.

“There’s a real opportunity here, and that’s what you’re seeing,” DraftKings CEO Jason Robins said in a conversation with FOS on Radio Row at the Super Bowl. “We’ll see how big it ultimately can be. … I know just like any competitive market, others are going after it, too. But we like our chances, we think there will be multiple winners. … This is also a product that’s so nascent, particularly the sports side of it, it’s really only a year-and-change old.” 

In the early innings, industry onlookers wondered whether Kalshi or Polymarket could be acquisition targets for larger betting giants. But now their valuations have ballooned to more than $10 billion each as they’ve continued to raise billions in funding. 

“Those companies are raising money at huge valuations, so it would be tough to do a transaction at this point—meanwhile our stock is getting killed,” Robins said. “Which I don’t think is necessarily fair, but such is life. We have to prove it. Which we will do.”

And that was before the company’s earnings miss made the stock go a leg lower. 

Analysts expected DraftKings’s 2026 sales guidance to be roughly $7.3 billion, but DraftKings reported guidance of between $6.5 billion and $6.9 billion. Robins said during the company’s recent earnings call that the lowered expectations were purposeful to make sure it beat expectations next time.

“It kind of went like this: My team came in and showed me a number and said we can hit this. And I said, ‘No, go make it lower.’ They went back, and they said O.K., now really, like, we are sure we can hit this. And I said, ‘I do not care; make it lower again.’ And that is what we got. But you know, for me, missing numbers again is just not acceptable, and so it is not something we are willing to do.”

His story did not convince analysts at J.P. Morgan. In a Tuesday note, J.P. Morgan said investors are interpreting the lowered guidance “more as a tacit admission of industry growth concerns than a beatable target.” 

It added that “uncertainty abounds, and our patience is wearing thin.”