CFTC Chair Michael Selig Grilled Over Prediction Markets

TLDR

• Lawmakers questioned CFTC Chair Michael Selig over oversight of prediction markets tied to political events and deaths.
• Rep. Jim Costa criticized certain contracts and said “This is nuts” during the House hearing.
• The CFTC said it has exclusive jurisdiction and issued a proposed rulemaking notice in March.
• Republican Rep. Austin Scott raised concerns about offshore oil contracts on Hyperliquid.
• Selig said the agency aims to bring offshore markets under U.S. regulatory oversight.

Lawmakers pressed Commodity Futures Trading Commission Chairman Michael Selig over oversight of emerging trading platforms and agency staffing. During a House Agriculture Committee hearing, members questioned contracts tied to political deaths and offshore oil trades. Selig defended the agency’s jurisdiction and said the CFTC continues rulemaking and hiring efforts.

Lawmakers Challenge Oversight of Prediction Markets

Members of the House Agriculture Committee questioned Selig on contracts tied to political outcomes and deaths. One contract allowed bets on Iran’s Supreme Leader Ayatollah Ali Khamenei, and one trade reportedly earned about $500,000. Rep. Jim Costa said, “This is nuts,” and asked, “Do you think this is what was intended?”

Selig said the CFTC operates under a broad statute and has issued an advanced notice of proposed rulemaking. He said the agency seeks to determine how exchanges should list prediction market contracts. Costa replied, “I don’t find that a satisfactory answer,” and rejected claims of market innovation.

The CFTC released the notice in March and requested public comment on listing standards. Platforms such as Kalshi and Polymarket gained users during the 2024 U.S. presidential election cycle. Selig said the CFTC holds “exclusive jurisdiction” despite objections from states citing gaming laws.

Several states argued that certain event contracts violate local gambling rules, including sports-related bets. Selig maintained that federal commodities law grants the agency authority over derivatives contracts. He said the agency must act to protect market integrity and consumers.

Hyperliquid Scrutiny and Offshore Oil Contracts

Republican Rep. Austin Scott questioned Selig about oil-linked contracts on Hyperliquid, a decentralized perpetual futures exchange. Lawmakers raised concerns about offshore platforms operating outside direct U.S. oversight. Scott asked how the CFTC can regulate contracts listed beyond its jurisdiction.

Selig said he monitors those markets and aims to bring activity under U.S. regulatory reach. He said the agency wants to “onshore those markets” to apply domestic rules. Scott warned that reported trading volumes could harm U.S. consumers.

Lawmakers from both parties also examined the CFTC’s staffing capacity. They noted that Congress considers digital asset legislation that could expand CFTC authority. The Securities and Exchange Commission employs about six times more staff than the CFTC.

Former Chair Rostin Behnam and former nominee Brian Quintenz have requested increased funding. Rep. Angie Craig questioned whether enforcement teams can police prediction markets and crypto platforms. Selig said the agency runs “more efficiently and effectively than ever before.”

He said the CFTC continues hiring and uses artificial intelligence for surveillance tasks. Craig asked Selig to avoid finalizing new rules while he serves as sole commissioner. The CFTC currently lacks its full five-member panel, pending presidential nominations.

Selig said he looks forward to working with future nominees chosen by President Donald Trump. He said the agency cannot pause rulemaking given investor and consumer protection mandates. Committee Chair Glenn “GT” Thompson asked Selig to notify lawmakers if staffing needs increase.

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