#PredictionMarketsCFTCBacking That is correct. This represents a massive pivot in U.S. financial policy. Under **Chair Michael Selig**, who was confirmed in late 2025, the CFTC has transitioned from a stance of restriction to one of federal legitimation for prediction markets.
## Summary of the Policy Shift
On **January 29, 2026**, Chairman Selig announced several major directives that effectively "planted the flag" for federal oversight of these markets:
* **Withdrawal of the 2024 Rule:** The agency officially scrapped a proposed rule from the previous administration that would have classified sports, politics, and "controversial" events (like war) as "gaming" and thus contrary to the public interest.
* **Rescinding Staff Guidance:** Selig directed the withdrawal of a **2025 staff advisory** that had cautioned exchanges against offering sports-related contracts due to legal risks.
* **Asserting "Exclusive Jurisdiction":** In a direct challenge to state gaming commissions (such as those in Nevada and Massachusetts), Selig asserted that these contracts are **commodity derivatives**, placing them under the CFTC’s sole regulatory remit rather than state gambling laws.
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### The New Regulatory Strategy
Rather than banning the contracts, the CFTC is now drafting a **unified federal framework** aimed at three pillars:
1. **Market Integrity:** Developing standards to prevent "insider trading" on event contracts (e.g., government employees trading on non-public policy shifts).
2. **Innovation Support:** Promoting the role of these markets in "price discovery" and information aggregation.
3. **Judicial Intervention:** The CFTC has begun filing **amicus briefs** (such as in the Ninth Circuit) to defend platforms like Crypto.com and Kalshi against state-level enforcement actions.
### Impact on Major Platforms
The shift has immediate implications for several key players:
* **Kalshi & Polymarket:** These platforms now have a powerful federal ally in their ongoing battles with state regulators.
* **Coinbase & Robinhood:** Both companies are actively preparing to expand their offerings in the prediction market space, viewing the new framework as a "green light" for institutional entry.
> **Note on Congressional Response:** While the industry is celebrating, the move has met resistance. Senators like Catherine Cortez Masto have criticized the pivot, arguing it undermines state sovereignty and tribal gaming rights.