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CLARITY Act could expand CFTC authority over prediction markets
A lawyer testifying in a House hearing said the CFTC is likely short staffed, and additional resources under the CLARITY Act could help it cover both digital assets and prediction platforms like Kalshi and Polymarket.
Lawmakers at a US House Agriculture subcommittee hearing discussed how the Commodity Futures Trading Commission (CFTC) could oversee sports event prediction markets, with legal experts pointing to pending crypto market structure legislation. Cointelegraph reports that attorney Carl Kennedy, a partner at Katten Muchin Rosenman, said the CFTC is likely too short staffed to fully handle regulation and enforcement for prediction market platforms such as Kalshi and Polymarket. He argued that the Digital Asset Market Clarity (CLARITY) Act under consideration in the Senate could give the CFTC additional authority to address not only digital assets but also the “explosive growth of prediction markets.”
The hearing also revisited the CFTC chair’s approach to jurisdiction. Since being confirmed by the Senate in December, Chair Michael Selig has taken the view that the agency has “exclusive jurisdiction” over the companies, saying event contracts on the platforms are classified as “swaps” under the CFTC’s purview.
Cointelegraph notes that Selig’s stance has contributed to a dispute with state authorities, including lawsuits from some US states against Kalshi and Polymarket. The article says Selig last week ordered Kalshi to ignore a Michigan court ruling, which Kalshi said placed it in an “impossible position” between state and federal authorities, and that some legal experts expect the cases could eventually reach the US Supreme Court.