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Lawmakers in the US House Committee on Agriculture\u2019s Subcommittee on Commodity Markets, Digital Assets, and Rural Development held a hearing on how the Commodity Futures Trading Commission (CFTC) could address oversight of prediction market companies, including discussions of pending crypto market structure legislation.<\/p>\n
In a Tuesday hearing on \u201cExamining Customer Protections and Market Integrity in Sports Event Prediction Markets,\u201d Carl Kennedy, a partner at New York law firm Katten Muchin Rosenman, said<\/a> that the CFTC was likely too \u201cshort-staffed\u201d to fully deal with the regulation and enforcement of prediction market platforms like Kalshi and Polymarket. According to the lawyer, the Digital Asset Market Clarity (CLARITY) Act under consideration in the US Senate could grant the commodities regulator additional authority not only to address digital assets but also the \u201cexplosive growth of prediction markets.\u201d<\/p>\n \u201cI do believe that with additional resources \u2014 they\u2019re about to perhaps receive additional authorities under the CLARITY Act \u2014 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,\u201d said Kennedy.<\/p>\n Carl Kennedy at Tuesday hearing. Source: <\/em>House Committee on Agriculture<\/em><\/a><\/p>\n Kennedy\u2019s remarks were just one example of legal and regulatory experts chiming in on the CFTC\u2019s approach to handling prediction markets under Chair Michael Selig. Since being confirmed by the Senate in December, the chair has unilaterally taken the position that the agency has \u201cexclusive jurisdiction\u201d over the companies, arguing that event contracts on the platforms are classified as \u201cswaps\u201d under the CFTC\u2019s purview. Selig is the only Senate-confirmed member heading the CFTC in a leadership panel normally consisting of five commissioners.<\/p>\n Related: <\/strong><\/em>Trump claims he can \u2018future proof\u2019 crypto regulation with CLARITY Act<\/strong><\/em><\/a><\/p>\n The CFTC chair\u2019s position has led to what many Democratic senators<\/a> call an \u201cassault\u201d on state authorities trying to regulate prediction market platforms, with some US states filing lawsuits against Kalshi and Polymarket over sports betting. Last week, he ordered Kalshi to ignore a ruling<\/a> from a Michigan court, which the company said \u201cput [it] in an impossible position\u201d between state and federal authorities.\u00a0<\/p>\n Some legal experts expect that one or more of the prediction markets cases<\/a> could eventually reach the US Supreme Court to address the clash between state and federal regulators.<\/p>\n Republican senators pushing for a vote on the CLARITY Act in Congress before the chamber breaks for August state work periods say they expect to release the bill\u2019s text soon. Details on how the bill could address prediction markets, ethics and other concerns from lawyers were not made public as of Tuesday.<\/p>\n In June, gambling industry groups petitioned the US Senate<\/a> to add language to CLARITY \u201cthat explicitly prohibits event contracts tied to sports and casino-style gaming.\u201d The White House also confirmed reports that the Trump administration<\/a> \u201cagreed to the most comprehensive and wide-ranging ethics provision in history\u201c and it had \u201cbent over backward to accommodate [Democrats\u2019] concerns.\u201c<\/p>\nText of CLARITY Act expected to be released soon<\/h2>\n