The CLARITY Act May Empower the CFTC to Regulate Prediction Markets

Odaily Planet Daily report: The Subcommittee on Commodity Markets, Digital Assets, and Rural Development under the U.S. House Committee on Agriculture held a hearing on how the Commodity Futures Trading Commission (CFTC) regulates prediction markets. Carl Kennedy, partner at Katten Muchin Rosenman, stated that the CFTC may be understaffed and unable to adequately oversee and enforce regulations on platforms such as Kalshi and Polymarket. Kennedy believes that the CLARITY Act currently under consideration in the Senate could grant the CFTC expanded authority, applicable both to digital assets and to address the growth of prediction markets. He noted that to regulate new asset classes such as cash markets and crypto assets, the CFTC requires additional resources. CFTC Chair Michael Selig, confirmed by the Senate in December, has consistently argued that the agency holds exclusive jurisdiction over relevant companies and considers event contracts on these platforms as swaps within the CFTC’s regulatory scope. Several U.S. states have already filed lawsuits against Kalshi and Polymarket over sports betting-related disputes, and these cases may ultimately reach the U.S. Supreme Court.