CFTC Chair Selig Opposes Jail for Prediction Market Chiefs

• Utah filed felony charges against Kalshi and its two co-founders.
• Louisiana became the 12th state the CFTC sued over its authority.
• New Jersey petitioned the Supreme Court; Kalshi’s response is due December 7.

Commodity Futures Trading Commission Chair Michael Selig said executives should not risk jail while courts decide who regulates prediction markets. In a November 13 CNBC interview, he singled out Utah’s criminal case against Kalshi and its co-founders. Speaking at the Cantor Convergence conference, Selig said he wants the Supreme Court to settle whether states can enforce gambling laws against federally regulated exchanges. 

Why Utah filed criminal charges over prediction markets

Utah prosecutors filed felony charges against Kalshi and its co-founders in October. The state alleges the company promoted illegal gambling. By charging the founders personally, prosecutors put them at risk of penalties beyond any fine the exchange might face. 

The disagreement turns on what customers buy. On prediction markets, a sports contract can pay out when a team wins. States argue that customers are betting on the game, even when they trade through a federally registered exchange. 

Selig argues that the Commodity Exchange Act gives the CFTC exclusive authority over those contracts. In his view, courts can resolve that question without prosecutors seeking jail time for the people running the exchanges. 

Federal lawsuits widen the fight over prediction markets

In Arkansas, Attorney General Tim Griffin sought to stop Kalshi from offering contracts under state gambling law. The Justice Department and the CFTC filed a federal complaint asking a judge to block that enforcement action. 

Louisiana became the 12th state the CFTC sued over its authority. The agency challenged a state court order that directed more than 30 companies to stop operating there. The CFTC said the judge issued the order without notice or a hearing. 

A separate New Jersey case gives the justices a chance to address prediction markets directly. State officials petitioned for review after the Third Circuit sided with Kalshi. The Supreme Court has not agreed to hear the case. Its docket lists December 7 as Kalshi’s deadline to respond.

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