CLARITY Act Could Help CFTC Deal with Prediction Markets: Lawyer

On Tuesday, a US House subcommittee held a hearing to discuss the CFTC’s role in overseeing prediction markets, including how the agency could be impacted by the CLARITY Act.

CLARITY Act Could Help CFTC Deal with Prediction Markets: Lawyer

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Written by

Turner Wright

staff writer

Reviewed by

Sam Bourgi

staff writer

Written by

Turner Wright

staff writer

Reviewed by

Sam Bourgi

staff writer

CLARITY Act could help CFTC deal with prediction markets: Lawyer

Latest News

Published

Jul 21, 2026

According to one lawyer testifying before a House subcommittee hearing, the CLARITY Act could grant the CFTC the authority it needs to address the “explosive growth of prediction markets.”

Lawmakers in the US House Committee on Agriculture’s Subcommittee on Commodity Markets, Digital Assets, and Rural Development held a hearing on how the Commodity Futures Trading Commission (CFTC) could address oversight of prediction market companies, including discussions of pending crypto market structure legislation.

In a Tuesday hearing on “Examining Customer Protections and Market Integrity in Sports Event Prediction Markets,” Carl Kennedy, a partner at New York law firm Katten Muchin Rosenman,

said

that the CFTC was likely too “short-staffed” to fully deal with the regulation and enforcement of prediction market platforms like Kalshi and Polymarket. According to the lawyer, the Digital Asset Market Clarity (CLARITY) Act under consideration in the US Senate could grant the commodities regulator additional authority not only to address digital assets but also the “explosive growth of prediction markets.”

“I do believe that with additional resources — they’re about to perhaps receive additional authorities under the CLARITY Act — with additional resources to address these new asset classes in the cash markets and crypto, as well as to deal with the explosive growth of prediction markets, I think that the CFTC certainly should receive additional resources,” said Kennedy.

Carl Kennedy at Tuesday hearing. Source:

House Committee on Agriculture

Kennedy’s remarks were just one example of legal and regulatory experts chiming in on the CFTC’s approach to handling prediction markets under Chair Michael Selig. Since being confirmed by the Senate in December, the chair has unilaterally taken the position that the agency has “exclusive jurisdiction” over the companies, arguing that event contracts on the platforms are classified as “swaps” under the CFTC’s purview. Selig is the only Senate-confirmed member heading the CFTC in a leadership panel normally consisting of five commissioners.

Related:

Trump claims he can ‘future proof’ crypto regulation with CLARITY Act

The CFTC chair’s position has

led to what many Democratic senators

call an “assault” on state authorities trying to regulate prediction market platforms, with some US states filing lawsuits against Kalshi and Polymarket over sports betting. Last week, he

ordered Kalshi to ignore a ruling

from a Michigan court, which the company said “put [it] in an impossible position” between state and federal authorities.

Some legal experts

expect that one or more of the prediction markets cases

could eventually reach the US Supreme Court to address the clash between state and federal regulators.

Text of CLARITY Act expected to be released soon

Republican senators pushing for a vote on the CLARITY Act in Congress before the chamber breaks for August state work periods say they expect to release the bill’s text soon. Details on how the bill could address prediction markets, ethics and other concerns from lawyers were not made public as of Tuesday.

In June, gambling industry groups

petitioned the US Senate

to add language to CLARITY “that explicitly prohibits event contracts tied to sports and casino-style gaming.” The White House also

confirmed reports that the Trump administration

“agreed to the most comprehensive and wide-ranging ethics provision in history“ and it had “bent over backward to accommodate [Democrats’] concerns.“

Magazine:

Peter Brandt predicts the exact day Bitcoin’s bear market will be over

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