CFTC Prediction Market Actions Called Feeble Attempt to Counter Legal Losses

The Commodity Futures Trading Commission’s recent documents on sports prediction markets represent “a feeble attempt to shore up an area that they are sorely losing in court,” Amanda Fischer, COO and Policy Director at Better Markets, stated during a webinar. Fischer joined Indian Gaming Association Chair David Bean and host Victor Rocha one day after prediction market representatives were disinvited from a White House innovation summit.

Fischer stressed that courts, not CFTC filings, will determine the legality of sports event contracts. Kalshi and the CFTC are litigating against more than 20 state and tribal groups. The trend in these cases has favored states and tribes on whether state gaming laws and the Indian Gaming Regulatory Act apply, according to reporting by InGame.

Legal Exposure and Potential Penalties

Prediction markets have generated hundreds of millions, if not billions of dollars by exploiting a temporary opening. Fischer observed that even an eventual Supreme Court loss would leave them with “a good run” of unregulated sports betting. The calculus shifts sharply, however, if states impose disgorgements or penalties for past operations.

Nevada seeks a $120,000 per day fine against Kalshi over geofencing. Other states have requested similar daily or per-transaction penalties in briefs. In New York, a July federal ruling allowed the state to ban Kalshi contracts; the attorney general then sued for $36 billion in damages. The CFTC responded with a memorandum invoking emergency powers to override the ban, prompting Fischer to note the unusual alignment: “It is obvious that the CFTC and the prediction markets have their lawyers working in concert. They are coordinating.”

Congressional Questions on CFTC Leadership

Michael Selig, confirmed as sole CFTC commissioner in December, initially told lawmakers courts should decide these matters but then directed the agency to draft event contract rules and participate in litigation. Those proposed rules drew 1,500 comments. House and Senate panels have since pressed Selig, with members citing concerns over tribal revenue losses and possible overreach.

Fischer indicated lawmakers are now weighing whether Selig’s actions on prediction markets reflect the judgment needed to lead the agency, especially as the CLARITY Act could expand its authority. The combination of state suits, congressional skepticism, and apparent agency-market coordination turns up the litigation pressure. Operators in this space face a narrowing window before court outcomes and potential penalties clarify the true cost of their current model.

Reporting: InGame

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