By Nick Devor

Michael Selig, the nominee to chair the Commodity Futures Trading Commission, will go before a senate committee for a confirmation hearing on Wednesday. While cryptocurrency regulation will likely take up much of the hearing, senators are also sure to question Selig on prediction markets, whose event contracts fall under the purview of the CFTC.

Selig currently serves as the chief counsel of the SEC's Crypto Task Force. He is President Donald Trump's second nominee to lead the CFTC this year, after the White House pulled its previous nominee, Brian Quintenz, a former CFTC commissioner, after his hearing was held in June. Crypto industry stalwarts Cameron and Tyler Winklevoss, the brothers behind the cryptocurrency exchange Gemini Space Station (ticker: GEMI), had opposed Quintenz's nomination, according to the Wall Street Journal.

Prediction markets could get more attention from U.S. senators during this hearing. The platforms for trading so-called event contracts have exploded in popularity since Quintenz's hearing. The U.S. online sports betting duopoly of DraftKings and Flutter Entertainment's FanDuel have both announced plans to offer contracts based on sporting events in states that haven't legalized sports betting.

Selig's nomination hearing will take place before the Senate Committee on Agriculture, Nutrition, and Forestry, and the questions he'll face signal just how far the CFTC's regulatory scope has expanded beyond crop futures.

Senators whose work on the committee this year has largely centered on farm subsidies and wildfire mitigation will be contending with the regulatory complexities of cryptocurrency and financial instruments that effectively enable nationwide sports betting.

Event contracts are financial products built around yes/no questions such as "will the Yankees win?" Since they are regulated by the CFTC at the federal level, event contracts are available on prediction markets nationwide and circumvent the state taxes and regulations that traditional sports betting falls under.

As outside counsel for venture-capital firm Paradigm Operations, Selig advised on a letter Paradigm sent to the CFTC that argued for the regulator to allow prediction market firm Kalshi to offer event contracts based on election outcomes. "The CFTC's characterization of political contests, awards contests, and sporting events as forms of 'gaming' is arbitrary and capricious," the letter said.

Much turns on the definition of "gaming" as outlined in the Commodities Exchange Act, or CEA, the 1936 law that established the regulatory responsibilities of the CFTC. A section of the CEA known as the "Special Rule" grants the CFTC the power to pull certain event contracts from prediction markets if it deems that the contracts are "contrary to the public interest" and involve "gaming."

Since the second Trump inauguration, the CFTC has been helmed by an acting-director and has not intervened to stop prediction markets expansion into event contracts closely resembling sports betting, such as Kalshi's so-called event contract "combo" feature that replicates parlay bets. A narrow interpretation of what constitutes "gaming" would keep those contracts on the market.

"The CFTC should view the act of banning a contract from trading on a regulated exchange as an extreme action that warrants considerable review," the Paradigm letter continued.

It isn't yet clear how close that opinion hews to Selig's own. "I'm a firm believer that what you write for your clients doesn't necessarily reflect your personal views," says Andrew Kim, a partner at the law firm Goodwin focused on gambling and prediction markets. Still, Kim says, "I tend to think that someone coming from the crypto policy sphere is generally going to be very supportive of prediction markets."

"The question is whether he continues with a more laissez-faire approach in terms of prediction market innovation or whether there is a more comprehensive framework in the back of his mind," Kim says.

Trading volume on prediction markets has soared and upended the gambling industry under the laissez-faire status quo.

"The more the CFTC gives permanence to prediction markets and event contracts by creating a comprehensive framework, the better off the event contract industry is and the harder it is for the next administration to undo," Kim told Barron's.

Republicans who hold a majority of the U.S. Senate, and the Agriculture Committee, didn't press the issue of prediction markets during Quintenz's June hearing, but some Democrats expressed caution.

"I am very concerned that these event contracts, which seem pretty indistinguishable -- at least from the consumer point of view -- from gaming, violate tribal sovereignty, undermine state and tribal gaming compacts, and conflict with the Indian Gaming Regulatory Act," Sen. Adam Schiff (D, Calif.) said.

"This is an area that needs regulation," Sen. Cory Booker (D. N.J.) added. Booker called for an independent CFTC in the face of the Trump family's growing business interests in prediction markets.

Donald Trump, Jr., is an advisor to two leading prediction market firms, Kalshi and Polymarket, and his hedge fund has invested in the latter; President Donald Trump's social-media platform, Truth Social, recently announced plans to offer event contracts of its own.

Write to Nick Devor at nicholas.devor@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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November 19, 2025 03:30 ET (08:30 GMT)

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