It appears that the U.S. Senate is having buyer’s remorse. Or at least buyer’s concern.
Senate Agriculture Chair John Boozman Wednesday called prediction markets the “wild west” in an interview with Semafor. He said his committee would be meeting with new Commodity Futures Trading Commission (CFTC) Chair Michael Selig, who oversees what has become a divisive force in the gambling world.
“This is an area that just caught fire; I don’t think anybody expected it to grow at the rate that it has,” Boozman said. “But there is concern; it’s the Wild West. There’s not much regulation.”
Those in the gambling industry are likely lauding Boozman’s comments. After all, prediction markets, led by Kalshi and Polymarket, now offer sports event contracts, which to the average consumer, look like just another kind of sports betting. But those companies aren’t subject to state regulation and don’t pay state taxes. The companies are in court across the U.S. with states in cases that essentially pit federalism against states’ rights.
Boozman’s comments come on the heels of Nevada Sen. Catherine Cortez Masto saying Selig “lied” during his confirmation hearing, and 23 Senate Democrats sending a letter to the CFTC demanding that it back off of sports event contracts, which they believe the Commodity Exchange Act (CEA) prohibits. During the confirmation hearing, Selig he said he would let the “courts decide” whether or not sports event contracts are gambling.
Since stepping into the chairman’s seat, Selig has already said he will direct his agency to craft rules around sports event contracts and file amicus briefs in some lawsuits — the first CFTC brief was filed Tuesday in the Ninth Circuit in Kalshi’s case against Nevada. In addition, Selig is withdrawing a 2024 proposal that would have banned sports and political contracts.
Cortez Masto: Selig ‘is profoundly wrong’
Cortez Masto told Indy Gaming last week: “He is profoundly wrong. Prediction markets are facilitating illegal sports gaming across the country, and it’s past time for the CFTC to do its job and enforce both its own rules and the will of Congress.”
The Democrats also wrote that Selig’s actions are in conflict with the intent of Congress.
“Your recent comments instead suggest that you view the prohibitions Congress enacted
in 7 U.S.C. § 7a-2(c)(5)(C)(i)(I) through (VI) as subject to reinterpretation through regulatory
posture or litigation strategy,” the senators wrote. “That approach converts a statutory prohibition into case-by-case policy judgments. It also places the Commission in direct conflict with state and tribal governments whose gambling laws Congress expressly chose not to preempt.”
On Feb. 10, Nevada Rep. Dina Titus filed HB 7477, which would ban prediction market contracts on sports or casino-style gaming. Full text of the bill isn’t yet available.
Boozman second Republican to sound off
Boozman, an Arkansas Republican, appears to be the first senator from his party to publicly stand up against the CFTC on this issue, though he is not the first GOP politician to do, as Utah Gov. Spencer Cox beat him to it on Tuesday:
In standing up to the CFTC, these Republican officials are also standing up to the Trump Administration. The president has embraced and facilitated the proliferation of prediction markets and the new contracts platforms are offering.
Considered financial tools traditionally used by farmers and other commodity businesses to hedge against bad conditions, the platforms in the last year have offered markets on sports and war, both explicitly banned by the CEA. In addition, they have offered other markets in which it appears insider information has been readily available.
“Probably at some point, either from a regulatory standpoint or Congress stepping in and passing some sort of law, it does need to be cleaned up,” Boozman said.
It’s not clear what happens next, though it is clear that Washington as a whole is not as enthusiastic about these new markets as the Trump Administration and family, which is financially entangled with the products. Selig is Trump’s appointee, and appears to have his blessing to expand prediction offerings and for the CFTC to take an active role in court cases. Donald Trump, Jr. is an advisor to Kalshi and Polymarket, as well as being heavily involved with cryptocurrency.
