Senate Democrats Tell CFTC: Hands Off the States, Wallet Off the Ad Dollars 🎰

A group of 17 Democratic US senators is pressing the Senate Appropriations Subcommittee on Financial Services and General Government to block the Commodity Futures Trading Commission (CFTC) from using federal funds in Chair Michael Selig's legal fights against state gaming authorities. In a Wednesday letter to the subcommittee's chair and ranking member, Senator Richard Blumenthal, Senator Jeff Merkley and 15 other Democrats urged the committee leadership to restrict funding as the CFTC pursues lawsuits in Connecticut, Illinois, Arizona, Kentucky, Wisconsin, New York, Minnesota, Rhode Island and New Mexico as of June. Selig has defended the agency's stance that it holds "exclusive jurisdiction" over prediction markets by classifying the event contracts on platforms such as Kalshi and Polymarket as "swaps" under CFTC purview. "Through engaging in this campaign of litigation and intimidation, the CFTC risks becoming an instrument and enabler of online prediction markets' efforts to bypass states' consumer protections and oversight, creating a race-to-the-bottom in gambling," the senators wrote. Kalshi and Polymarket have filed their own lawsuits backing the CFTC's position, and some legal observers expect one of the cases to reach the US Supreme Court, which in its 2018 ruling in Murphy v. National Collegiate Athletic Association held that individual states have authority to regulate sports betting.

Selig has steered the CFTC unilaterally under US President Donald Trump after the administration did not announce nominees to fill the agency's remaining commissioner seats as of Friday. The CFTC is statutorily structured to operate with a bipartisan group of five commissioners. The legal push comes as the US Senate is expected to vote on the Digital Asset Market Clarity (CLARITY) Act, which would establish separate regulatory roles for the CFTC and Securities and Exchange Commission over digital assets. Last week, gaming organizations petitioned the Senate to add language barring sports event contracts in the CLARITY Act, arguing that the CFTC was not created to regulate such wagers.

Separately, Senators Adam Schiff and John Curtis are pressing the CFTC to investigate Polymarket over allegations of deceptive advertising targeting US users. In a letter to Selig seen by the WSJ, the senators cited a WSJ report alleging that Polymarket paid creators to film trades on simulated trading websites, staged transactions and undisclosed influencer promotions for markets not available to US users, and used fake materials to imply larger winnings. The senators asked the regulator to provide a written response on whether it has begun an investigation, and the CFTC has not publicly commented on the allegations as of publication. The CLARITY Act vote and the pending CFTC funding decisions are expected to shape the regulatory path for prediction market platforms operating in the United States.