The Subcommittee on Commodity Markets, Digital Assets, and Rural Development of the U.S. House Committee on Agriculture held a hearing on how the CFTC regulates prediction markets, during which Carl Kennedy, partner at Katten Muchin Rosenman, stated that the CFTC is understaffed and struggling to regulate and enforce rules against platforms such as Kalshi and Polymarket. Kennedy suggested that the CLARITY Act could grant the CFTC additional authority and resources to address the growth of prediction markets. CFTC Chair Michael Selig argued that the agency has exclusive jurisdiction over related companies and that event contracts on these platforms qualify as swaps. Several U.S. states have already filed lawsuits against Kalshi and Polymarket over sports betting-related disputes, and these cases may reach the U.S. Supreme Court.
U.S. House Committee Hears Testimony on the CFTC’s Regulatory Role in Prediction Markets
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Summary
The U.S. House Committee on Agriculture held a hearing on the CFTC’s oversight of prediction markets, with experts highlighting regulatory challenges. Carl Kennedy of Katten Muchin Rosenman stated that the CFTC lacks the resources to oversee platforms like Kalshi and Polymarket, where liquidity and crypto markets are rapidly evolving. He supported the CLARITY Act to enhance the agency’s capacity. CFTC Chair Michael Selig asserted exclusive jurisdiction, classifying event contracts as swaps. Meanwhile, states have sued the platforms over sports betting, with cases potentially reaching the Supreme Court. Risk-on assets remain under regulatory scrutiny as the debate continues.
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