SEC Chair Says Agency May Get Involved in Regulating Prediction Markets

Currently, prediction markets are classified as futures exchanges and are regulated by the Commodities Futures Trading Commission (CFTC), which oversees futures markets. The markets allow users to wager on the future outcome of events, typically on a binary, yes-or-no basis, by purchasing contracts that pay off if the event goes the contract’s way.  But, Atkins said, some of those contracts are starting to resemble securities, which would fall under his agencies jurisdiction.

“A security is a security regardless how it is and some of the nuance with prediction markets and the products depends on wording,” he told the committee. “Prediction markets are exactly one thing where there’s overlapping jurisdiction potentially,” between CFTC and SEC.

We’d love to be your preferred source for news.

Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!

Add as Preferred Source

The two agencies recently launched Project Crypto, a joint initiative aimed at clarifying and harmonizing crypto regulations. “Rather than running a parallel initiative with the SEC, I am pleased to announce that the CFTC is partnering with the SEC on Project Crypto — bringing coordination, coherence, and a unified approach to the federal oversight of crypto asset markets,” CFTC chairman Michael Selig said last month.

The prediction industry has exploded over the past two years, hitting $63.5 billion in trading volume in 2025, more than four times the total for 2023. That rapid growth has given urgency to questions over how the markets should be regulated and by whom. Several states have accused the operators of the markets of running unlicensed gambling operations, especially with respect to contracts on the outcome of sporting events. Some states have moved to try to ban access to the markets by state residents or to bring them under the jurisdiction of state gaming authorities.

Related: SEC: Tokenized Securities Are Still Securities

Those efforts have triggered clashes between state and federal regulators. Both Polymarket and Kalshi have clashed with state authorities in court over efforts to restrict their operations. Polymarket and Kalshi are each registered futures exchanges with CFTC and maintain that federal oversight preempts any state regulations or classifications.

The markets have also recently drawn scrutiny over the potential for insider trading. An account on Polymarket recently netted $400,000 from a wager on when Venezuelan president Nicolás Maduro would be ousted place on the eve of the U.S. military raid to seize him, suggesting someone with knowledge of the plans for the raid acted on non-public information. That prompted calls to ban elected officials from participating in the markets.

In Thursday’s hearing, Atkins told lawmakers that prediction markets need closer attention because they mix finance and betting, making them harder to regulate.

Speaking on a Bloomberg podcast Thursday, CFTC’s Selig said, “We are certainly taking on that task and making sure that we don’t let these markets languish, where we don’t push them offshore, but we develop the right rules and regulations to develop the best protections and make sure that the markets are flourishing here in the United States.”