CMC News

Prediction Markets Face Federal Crackdown as SEC Labels Them Major Issue

Federal regulators are turning their attention to the rapidly expanding #prediction markets sector, with #SEC Chair Paul Atkins calling the industry a major concern during Senate testimony Thursday. Both the Securities and Exchange Commission and the Commodity Futures Trading Commission are now actively examining platforms that experienced explosive user growth during the 2024 election cycle.

Atkins told the Senate Banking Committee that prediction markets represent an area where regulatory authority overlaps between the two agencies. The SEC chair confirmed that both watchdogs will hold weekly coordination meetings to address the sector's growth.

Platforms including #Kalshi and #Polymarket have seen substantial expansion over the past year. The regulatory uncertainty centers on whether these markets fall under federal commodity law or state gambling statutes, creating friction between different levels of government.

#CFTC Chair Michael Selig addressed the issue during a Bloomberg podcast appearance on Thursday, stating that proper regulation matters for keeping these markets operating within U.S. borders. Selig said regulators want to develop frameworks that protect participants without driving platforms offshore.

The jurisdictional debate has practical implications. Operators argue that Congress assigned the CFTC exclusive oversight of event contracts through the Commodity Exchange Act. State governments have filed legal challenges claiming the platforms breach local gaming regulations, with sports betting on Kalshi drawing particular scrutiny.