Lawmakers on the U.S. House of Representatives’ Agriculture Subcommittee on Commodity Markets, Digital Assets and Rural Development held a hearing on how the Commodity Futures Trading Commission (CFTC) could address oversight of forecasting companies, including discussions on pending regulations on cryptocurrency market structure.

During Tuesday’s hearing on “Examining Customer Protection and Market Integrity in Sports Forecasting Markets,” Carl Kennedy, a partner at the New York law firm Katten Muchin Rosenman, he said that the CFTC was likely understaffed to fully address the regulation and enforcement of prediction market platforms such as Kalshi and Polymarket. The Digital Asset Market Clarity (CLARITY) Act being considered in the U.S. Senate could give the commodities regulator additional powers not only to address digital assets but also the “explosive growth of forecast markets,” according to a lawyer.

“I think that with additional resources – perhaps they will soon receive additional authority under the CLARITY Act – with additional resources to address these new asset classes in the cash and cryptocurrency markets, as well as deal with the explosive growth of the forecast markets, I think the CFTC should certainly be given additional resources,” Kennedy said.

Carl Kennedy at Tuesday’s hearing. Source: House Committee on Agriculture

Kennedy’s remarks were just one example of legal and regulatory experts speaking out about the CFTC’s approach to operating prediction markets under Michael Selig. Since the Senate’s confirmation in December, the chair has unilaterally taken the position that the agency has “exclusive jurisdiction” over the companies, arguing that platform event deals are classified as “swaps” under the CFTC’s purview. Selig is the only Senate-confirmed member to lead the CFTC on a leadership panel typically composed of five commissioners.

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The CFTC chairman’s position has led to what many Democratic senators are calling an “attack” on state governments trying to regulate prediction market platforms, which has resulted in some U.S. states filing lawsuits against Kalshi and Polymarket over sports betting. Last week, it ordered Kalshi to ignore a Michigan court ruling that the company said “put [it] in an impossible situation” between state and federal authorities.

Some legal experts expect that one or more cases involving prediction markets could ultimately reach the U.S. Supreme Court, which will hear a dispute between state and federal regulators.

The text of the CLARITY Act is expected to be published soon

Republican senators pushing for a congressional vote on the CLARITY Act before the chamber recesses for the August state work periods say they expect to release the text of the bill soon. Details on how the bill might address prediction markets, ethics and other legal concerns were not made public Tuesday.

In June, gaming industry groups asked the U.S. Senate to add language to CLARITY that “explicitly prohibits contracts related to sports-related events and casino gaming.” The White House also confirmed reports that the Trump administration “agreed to the most comprehensive and sweeping ethics provisions in history” and “leaned to accommodate [Democrats’] worries.”

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