Digital Chamber Launches Initiative for Prediction Markets Regulation Clarity

The Digital Chamber, a blockchain advocacy group, has introduced a new initiative aimed at supporting prediction markets and clarifying regulatory frameworks for the sector in the United States. According to Cointelegraph, the group announced the formation of the Prediction Markets Working Group on Tuesday, outlining a comprehensive multi-year strategy to address what it describes as a "misunderstood segment of finance." The initial step involves sending a letter to Commodity Futures Trading Commission (CFTC) Chairman Mike Selig, commending his efforts to maintain federal oversight of prediction markets while advocating for an end to regulation through enforcement. The Digital Chamber expressed appreciation for Chair Selig’s recent statements about the CFTC staff's intent to provide specific rulemaking and guidance for this rapidly expanding segment of the financial and digital asset industries. The group highlighted the challenges operators face due to regulatory ambiguity and overlapping jurisdictions between federal and state regulators. Looking ahead, the Digital Chamber plans to continue its engagement with the CFTC, develop policy principles, submit policy recommendations, publish research, and build a coalition of industry stakeholders. Additionally, the group intends to participate in litigation through friend-of-the-court briefings to educate courts on the CFTC’s historical regulatory exclusivity over the sector. The initiative comes amid heightened scrutiny from state governments and regulators. Kalshi, a prominent prediction market platform, recently faced a civil enforcement action by the Nevada Gaming Control Board, which seeks to halt Kalshi from offering "unlicensed wagering" in the state. Both Kalshi and competitor Polymarket have encountered resistance from state regulators, who argue that these platforms are offering unlicensed gambling products. In response, Polymarket filed a federal lawsuit against Massachusetts to preemptively block potential enforcement actions, asserting that the CFTC holds primary oversight over the sector. CFTC Chair Selig has reiterated the agency's long-standing regulatory role, urging state governments to respect the CFTC’s authority or face legal challenges. Utah Governor Spencer Cox, however, criticized prediction markets as a form of gambling, arguing they are detrimental to Americans' lives. The ongoing debate underscores the complex regulatory landscape surrounding prediction markets in the U.S.