CFTC's Selig warns states: don't jail prediction market executives

CFTC Chair Michael Selig wants state prosecutors to stop threatening prediction market founders with jail time. He argued the dispute over whether event contracts count as gambling or derivatives is a definitional fight that belongs in courts and regulatory filings, not criminal dockets. His sharpest words landed on Utah, which has brought criminal action against Kalshi and its executives.

The split is basic. Event contracts let traders take positions on real-world outcomes like elections or sports results; the CFTC treats them as derivatives under federal oversight, while a number of states see sports betting they have traditionally policed themselves. Selig frames the stakes as larger than one company, saying a patchwork of state laws threatens the operational integrity of major exchanges, and he named the NYSE and CME as examples.

He is backing the talk with litigation. Since taking over the agency in December 2025, Selig has led lawsuits against at least 10 states on the argument that federal authority over event contracts and prediction markets is exclusive, a campaign that could reach the Supreme Court. In July 2026 the CFTC invoked emergency authority to order Kalshi to honor trades in Michigan even as court orders pointed the other way.

Then came the guidance. On November 5, 2026, Selig issued interpretive guidance requiring designated contract markets to strip out geographic access restrictions within 30 days. Geofencing, the practice of blocking users by location, conflicts with impartial-access rules that require regulated exchanges to treat participants evenly, according to the CFTC. The guidance cuts against state court orders in Michigan and Nevada.

That window is the near-term test: platforms must pick between a federal regulator telling them to open the gates and state judges telling them to keep them shut. Utah's case against Kalshi and its executives marks the furthest escalation so far, moving from civil disputes and cease-and-desist letters to personal legal jeopardy for the people running the platforms.