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A House subcommittee hearing this week put a spotlight on a basic question for U.S. prediction markets: whether the Commodity Futures Trading Commission has enough staff and authority to oversee a fast-growing sector that now includes sports event contracts.
At the July 21 hearing, former CFTC lawyer Carl Kennedy said the agency may be too "short-staffed" to supervise platforms such as Kalshi and Polymarket while also taking on broader responsibilities under the Digital Asset Market Clarity Act, or CLARITY Act. He said the CFTC could handle both with additional resources.
The staffing issue matters because prediction markets have grown quickly. According to the hearing record cited by crypto.news, trading volume across CFTC-registered prediction markets topped $25 billion in 2025. On one major platform, average daily event-contract listings reportedly climbed from about 1,600 in April 2025 to roughly 162,000 in April 2026.
Kennedy said the Commodity Exchange Act already provides a framework for regulating event contracts on registered exchanges. But the broader legal fight is not settled. The central dispute is whether sports event contracts should be treated as federally regulated derivatives or as gambling products that states can restrict under their own laws.
That conflict is already playing out in court. The CFTC blocked Kalshi from unwinding certain Michigan sports event trades after a state court ordered the platform to stop offering the contracts. In Washington, a state judge granted a preliminary injunction on July 20, finding the state was likely to succeed in its claim that Kalshi’s sports contracts violate state gambling laws. The order is set to take effect no earlier than Aug. 5.
Federal officials and former regulators are also split on the legal theory. CFTC Chair Michael Selig has defended the agency’s "exclusive jurisdiction" over federally regulated prediction markets. Former CFTC Chair Gary Gensler argued in a court filing that sports prediction contracts do not fit the federal definition of swaps because "sports bets are very rarely, if ever, about hedging."
The CLARITY Act itself is mainly a digital asset market structure bill, but it would give the CFTC a larger role in supervising digital commodity markets. The bill cleared the Senate Banking Committee in May on a 15-9 vote, though the Senate had not published final text or scheduled a floor vote at the time of reporting. The legislation would still need enough bipartisan support to clear the Senate’s 60-vote threshold.
For prediction market users, the immediate takeaway is that the rules remain unsettled. What happens next will likely depend on both Congress and the courts, including whether lawmakers give the CFTC more resources and how judges ultimately classify sports event contracts under state gambling laws.
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Source: As reported by crypto.news.
