The Digital Chamber announced on February 18 a fresh initiative targeting the long-standing regulatory turf war over prediction markets in the United States. The group highlighted that companies operating in this space face legal uncertainty largely due to jurisdictional disputes between federal and state authorities, making resolution a top priority for the industry.
Federal vs. State Oversight: CFTC vs. State Regulators
As a first move, the Chamber sent a letter to CFTC Chair Michael Selig, stressing the need for practical rulemaking. The CFTC, which oversees derivatives at the federal level, has consistently maintained that prediction markets fall under its umbrella — a stance reiterated in recent statements. But state regulators push back.
In Nevada, the state gaming authority sued Kalshi, a derivatives market operator, seeking to block sports-related prediction contracts. Nevada officials argue such products require a gaming license under state law; Kalshi contends CFTC oversight should take precedence. A similar battle unfolds for Polymarket, which filed a federal court case to preempt possible state sanctions. The company argues state-based regimes could undermine national market coherence and calls for a unified federal framework.
Political Reactions and Industry Divisions
Growing scrutiny has sparked political debate. Utah Governor Spencer Cox suggested prediction markets more closely resemble betting platforms than financial derivatives, adding questions about how to classify and regulate them.
The Chamber's initiative aims to improve communication between market participants and regulators and resolve legal disputes collaboratively. "Our Prediction Markets group aims to build a resilient and responsible policy and regulatory environment. We plan to work closely with the CFTC, Congress, and market participants," the group stated.
These legal and political disputes represent a critical test for the future of blockchain and derivatives markets in the US. The industry watches closely as key players push for clearer, more consistent oversight in a rapidly evolving space.