- SEC Chair Paul Atkins identified prediction markets as a major regulatory priority due to “overlapping jurisdiction” between the SEC and the CFTC.
- Atkins asserted the SEC already has the authority to regulate these contracts, stating that a product remains a security regardless of its format or how it is described.
- The regulatory focus comes as platforms like Kalshi and Polymarket face both rapid growth and legal challenges from states claiming they violate gambling laws.
SEC Chair Paul Atkins told the Senate Banking Committee on Thursday that prediction markets have become a major regulatory priority and could fall under both SEC and Commodity Futures Trading Commission oversight.
In response to a question from Sen. Dave McCormick (R-PA), Atkins said the fast-growing sector raises “overlapping jurisdiction” issues, and that he and CFTC Chair Michael Selig are working to align their approach.
Prediction markets are exactly one thing where there’s overlapping jurisdiction potentially. That is a huge issue we’re focused on.
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SEC Could Step In Soon
While prediction markets have largely been treated as a CFTC matter so far, Atkins signaled the SEC may step in soon, depending on how specific contracts are structured and described.
It’s mostly, at least currently, on the CFTC side. But we need to be harmonized in the way we’re addressing these markets.
Paul Atkins, SEC Chair. When asked by Sen. McCormick whether the SEC would need new legislation to regulate prediction markets, Atkins said he believes the agency already has authority, arguing that if a product meets the legal definition of a security, it remains a security regardless of the format:
I think we have enough authority. A security is a security regardless of how it is, and some of the nuance with prediction markets and the products depends on wording and what exactly is being done.
Paul Atkins, SEC Chair. The regulatory debate is intensifying as platforms such as Kalshi and Polymarket have expanded rapidly, especially after the 2024 election cycle. Operators generally argue that event contracts are derivatives exclusively regulated at the federal level by the CFTC under the Commodity Exchange Act.
At the same time, some states are suing or threatening action against Kalshi and Polymarket, claiming certain offerings, especially sports-related contracts, violate state gambling laws.
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