Michael Selig, prediction markets, and regulatory contradictions

"If there is one thing you can predict with delight these days, it is that Michael S. Selig will write about prediction markets, whether on X or elsewhere, and that something about them will be a bit unpredictable. In his recent Wall Street Journal piece, Selig, the chairman of the U.S. Commodity Futures Trading Commission (CFTC), laments what he portrays as a state-level siege on federally regulated event contracts."

"In his op-ed, prediction markets are not gambling. Instead, they serve a "legitimate economic function," and state objections are framed as cultural and political resistance rather than sound regulatory concern. Selig argues that these markets allow farmers to hedge weather risk and small business owners to manage exposure to taxes or energy prices, presenting a version of event contracts that feels far removed from traditional betting."

"Yet on other public occasions, Selig has sounded far less certain about where the line is drawn between an event contract and a wager. During his Senate confirmation hearing, lawmakers repeatedly pressed him on whether sports-based prediction markets should be considered gambling. Selig declined to draw that line, responding instead that "these are complex issues as to interpretation of what it means to constitute gaming," and stressing that he would defer to judicial decisions rather than make a categorical determination himself."

Michael S. Selig, chairman of the CFTC, portrays prediction markets as federally regulated event contracts that hedge risk, aggregate information and test hypotheses. He warns that some states seek to undermine federal authority over these contracts and supports defending Crypto.com in the Ninth Circuit. Selig characterizes prediction markets as serving legitimate economic functions that help farmers hedge weather risk and small businesses manage exposure to taxes and energy prices. Selig has also expressed uncertainty about the boundary between event contracts and wagers, stating that gaming interpretation is complex and that he will defer to judicial decisions rather than make categorical determinations.

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