The agency is suing at least 10 states and says its exclusive authority over derivatives markets is worth defending at the highest level
Commodity Futures Trading Commission Chair Michael Selig has drawn a line in the sand. The agency, he said, will fight state challenges to its exclusive authority over derivatives markets all the way to the Supreme Court.
“We’re prepared to fight these challenges all the way up to the Supreme Court.” — Michael Selig, CFTC Chair
Selig made the remark on October 30, 2026. It lands in the middle of a legal campaign that has the federal regulator squaring off against a growing list of state governments.
A federal regulator versus the states
The CFTC has launched legal actions against at least 10 states. The list includes Arizona, Connecticut, Illinois and Utah.
The first lawsuits were filed in April 2026. By late October, the tally had grown to 10 federal cases.
The core of the dispute is prediction markets and event contracts. These are products that let people trade on the outcome of real-world events, from elections to economic data releases.
States have increasingly treated these products as gambling. Some have pursued enforcement actions, while others have moved legislation aimed at reining them in.
The CFTC sees things differently. Its position is that when these contracts trade on federally registered exchanges, Washington is in charge, not the state capitols.
The legal argument and the scorecard so far
The agency rests its case on the Commodity Exchange Act, specifically 7 U.S.C. § 2(a)(1)(A). Selig argues the law grants the CFTC exclusive jurisdiction over swaps and futures traded on designated contract markets, or DCMs.
DCMs are exchanges that have registered with and are supervised by the CFTC. The agency’s view is that federal preemption should override conflicting state rules that target those venues.
Beyond its own lawsuits, the CFTC has filed amicus briefs in four federal appeals courts and one state supreme court as of late October 2026.
Early rulings have leaned in the agency’s favor. Preliminary injunctions supporting the CFTC were granted in initial rulings in cases from Arizona and Illinois.
The platforms caught up in the litigation include Kalshi, Polymarket and Crypto.com/Nadex.
How we got here
Selig was sworn in on December 22, 2025, after being nominated by President Trump. Defending the agency’s turf against state gambling laws became an early priority.
What this means for prediction markets
The most immediate consequence is that the regulatory question will not be settled quickly. Selig’s Supreme Court pledge suggests the agency is willing to see this through multiple rounds of appeals rather than accept a split outcome.
For platforms like Kalshi, Polymarket and Crypto.com/Nadex, the stakes are existential in a practical sense. A national framework would let them operate under one rulebook. A loss for the CFTC could force them to navigate a different set of restrictions in each state that objects.
The early preliminary injunctions in Arizona and Illinois give the CFTC some momentum. The appeals courts where the agency has filed amicus briefs will carry significant weight.
There is also a broader institutional question in play. If the CFTC’s reading of the Commodity Exchange Act holds, it would confirm a wide scope for federal oversight of event contracts. If states prevail, it could invite more local intervention in products the agency considers its responsibility.
For now, the things to watch are rulings in the 10 federal cases, decisions in the appeals where the CFTC has weighed in, and whether any of these disputes produces a circuit split.
