CFTC called "short-staffed" for prediction-market rodeo as CLARITY Act looms 🎯

A lawyer told US lawmakers on Tuesday that the Commodity Futures Trading Commission lacks the personnel to oversee the rapidly expanding prediction-market industry, and that pending crypto legislation could help close that gap. Carl Kennedy, a partner at New York law firm Katten Muchin Rosenman, testified before the House Committee on Agriculture's Subcommittee on Commodity Markets, Digital Assets, and Rural Development at a hearing titled "Examining Customer Protections and Market Integrity in Sports Event Prediction Markets."

Kennedy said the CFTC was likely too "short-staffed" to fully regulate and enforce oversight of platforms such as Kalshi and Polymarket, and that the Digital Asset Market Clarity (CLARITY) Act under consideration in the US Senate could give the agency additional authority over digital assets and the "explosive growth of prediction markets." "I do believe that with additional resources — they're about to perhaps receive additional authorities under the CLARITY Act — with additional resources to address these new asset classes in the cash markets and crypto, as well as to deal with the explosive growth of prediction markets, I think that the CFTC certainly should receive additional resources," Kennedy said.

CFTC Chair Michael Selig has taken the position that the agency has "exclusive jurisdiction" over prediction-market operators, arguing that event contracts on the platforms qualify as "swaps" under the regulator's authority. Selig was confirmed by the Senate in December and currently serves as the only Senate-confirmed member on a commission panel normally consisting of five commissioners. That stance has drawn criticism from some Democratic senators, who have characterized it as an "assault" on state regulators; several US states have filed lawsuits against Kalshi and Polymarket over sports betting, and last week Selig ordered Kalshi to ignore a Michigan court ruling, a directive the company said "put [it] in an impossible position" between state and federal authorities. Some legal experts expect that one or more of the prediction-market cases could eventually reach the US Supreme Court to resolve the federal-state clash.

Republican senators pushing for a Senate vote on the CLARITY Act before the chamber's August state work period said they expect to release the bill's text soon. As of Tuesday, details on how the bill could address prediction markets and related legal concerns had not been made public. In June, gambling industry groups petitioned the US Senate to address the regulatory treatment of event contracts, and President Donald Trump has separately said he can "future proof" crypto regulation with the CLARITY Act.