New CFTC chair Michael Selig inherits chaos as prediction markets explode

Michael Selig is not easing into his new job as the new chair of the CFTC, because he’s walking into a pile of legal fights, crypto chaos, prediction bets, and staff problems.

The agency was set up to regulate things like oil and wheat, not event contracts or tokens. But that’s what it’s got now. And Congress still hasn’t finished deciding what the CFTC is even supposed to do next.

This is the same regulator that used to just deal with companies like CME Group and ICE.

Selig enters with prediction markets already exploding

Selig was sworn in last month. His first problem is already massive. Prediction markets didn’t even matter before COVID. Now they’re a multibillion-dollar industry. That’s only going to get bigger in 2026. These platforms let people bet on actual events, like whether Chairman Jerome Powell gets charged or whether Donald Trump buys part of Greenland.

The CFTC tried to ban election bets under Rostin Behnam in 2024. They lost. That opened the floodgates. Right now, sports bets make up more than 90% of the trading volume on Kalshi, which is regulated by the CFTC, based on Dune Analytics data.

So far, the agency hasn’t said much about the sports betting side. But Selig might. When he was still at Willkie Farr & Gallagher, he fought against the Biden-era CFTC’s push to limit this type of gambling. Now he’s the one in charge.

Aaron Brogan, founder of Brogan Law, said, “It’s going to be impossible for the CFTC to do nothing.” He pointed at trades on Polymarket related to Nicolás Maduro’s removal that weren’t cleared with the CFTC. The concern now is insider trading.

A CFTC spokesperson said Selig is focused on “market integrity” and will talk with lawmakers and others before deciding what to do next. But nothing will happen fast.

Even with firms like CME and ICE getting involved, big names like Fidelity are waiting. One source said they didn’t want to commit until Selig was in the chair. There’s also talk of tying event bets to things like inflation and jobs, instead of just sports.

Charles Schwab CEO Rick Wurster told the Wall Street Journal, “It’s not currently high on our list.” But he admitted if it becomes necessary, they’ll consider getting in.

CFTC faces legal war with states over sports bets

Selig’s other problem is the states. Regulators in multiple states are going after companies like Crypto.com, Kalshi, and Robinhood. They say sports contracts are just gambling and should be regulated by them, not the CFTC.

Kalshi says it’s the CFTC that decides what it can or can’t offer. That fight could go all the way to the Supreme Court, said Elliott Stein from Bloomberg Intelligence. He expects firms to appeal any rulings that block them from operating.

Peter Malyshev from Cadwalader said the surge in prediction markets and possible new crypto powers could force the CFTC to start watching out for small-time investors. That’s not something it’s used to. “A huge lift,” he called it.

Selig fills gaps left by staff exits and rush approvals

Before Selig does anything else, he has to fix the mess inside. Former acting chair Caroline Pham left in December. She joined MoonPay. Right before that, two senior CFTC officials were put on leave. They had questioned how some of the prediction markets were being monitored. One of them ran the Division of Market Oversight.

Earlier in 2025, Pham also let go of top admin staff. A CFTC spokesperson said it wasn’t personal—it was about efficiency. Still, by October, the agency had lost around 15% of its workforce, leaving it with just 540 employees.

Liz Davis, a partner at Davis Wright Tremaine, said, “The biggest issue will be resources.” She compared the workload to what the agency faced after the 2008 crash. Selig is now hiring his leadership team and reviewing how the agency operates.

Another issue: how Pham’s office handled exchange applications. Some firms went directly to her office instead of following the usual route through career staff. That’s not standard. Typically, exchange approvals involve months of back-and-forth checks; looking at how trading systems handle stress, prevent manipulation, and meet rules.

Pham fast-tracked at least two names. One was Gemini Space Station, founded by Trump donors Tyler and Cameron Winklevoss. They filed for CFTC approval in May and got it by December.

The other was Polymarket, where Donald Trump Jr. is both an adviser and tied to one of the firms that invested. Two analysts who were furloughed during the 2025 shutdown were brought back to process Polymarket data. It’s unclear if they helped with anything else.

After the shutdown, staff were told to sign off on Polymarket’s intermediated trading.

Malyshev said Selig will have to juggle law, politics, and fixing staff problems, none of which are optional.

Right now, Selig is the only commissioner. The CFTC is supposed to have five. Pham ran things using no-action letters and internal memos. That’s it. The White House is working on a bipartisan slate, but nothing has been finalized.

At a House hearing, Goldman Sachs exec Alicia Crighton, speaking for the FIA, said, “The diversity of expertise, the diversity of opinions, the durability of the policy that it will create, is incredibly important for safety and soundness.”

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