BlockBeats reported on July 22 that the U.S. House Agriculture Committee’s Subcommittee on Commodity Markets, Digital Assets, and Rural Development held a hearing on how the Commodity Futures Trading Commission, or CFTC, could strengthen oversight of prediction market platforms such as Kalshi and Polymarket, and on the role the Digital Asset Market Clarity Act, known as the CLARITY Act, could play.
Lawyer says the CFTC lacks sufficient staffing
At the hearing, Carl Kennedy, a partner at New York law firm Katten Muchin Rosenman, said the CFTC does not currently have enough staff to effectively regulate the rapidly expanding prediction market and digital asset sectors. He said that if the CLARITY Act is passed, it would give the CFTC more regulatory authority and help the agency cope with what he described as the “explosive growth” of prediction markets.
Jurisdiction dispute centers on event contracts
CFTC Chair Michael Selig has argued that event contracts listed on prediction markets fall within the scope of the Commodity Exchange Act as swap products, which would place them under the CFTC’s exclusive authority.
That stance has led to a jurisdictional dispute between federal and state regulators. Several states have previously filed lawsuits against Kalshi and Polymarket over sports event prediction markets. Market participants expect the cases could eventually reach the U.S. Supreme Court to clarify how authority over prediction market regulation should be divided between the federal government and state governments.
Republicans aim for a vote before the August recess
Republican lawmakers said they plan to push for a vote on the CLARITY Act before Congress begins its August recess, and said the bill text will be released soon.
In June this year, a U.S. gambling industry organization called for the CLARITY Act to explicitly prohibit event contracts tied to sports contests and casino gambling.