The chair of the Commodity Futures Trading Commission (CFTC), Michael Selig, is being pressed by Senate Democrats on prediction markets.
Senators Adam B. Schiff, Catherine Cortez Masto, Richard Blumenthal, Cory A. Booker, Tim Kaine, and Jacky Rosen all signed the letter, which expresses concern over the direction of the sector.
Worries center around “incentivizing physical injury or death”
The lawmakers used strong language to outline their concerns, citing markets centered around the capture of Venezuelan president Nicolás Maduro, the explosion of spaceflight mission Artemis II, and the capturing of Myrnohad by Russia.
In the letter, dated February 23, 2026, they write: “We are writing to express strong concern with prediction contracts that incentivize physical injury or death, and the grave and perverse moral and geopolitical implications of these contracts.
“These contracts present dangerous national security risks, including creating incentives to incite violence, foment geopolitical conflicts, and disclose classified information. These concerns have already been realized in recent months as these contracts proliferate on exchanges.
“Under 17 CFR 40.11, the CFTC categorically prohibits contracts that involve, relate to, or reference terrorism, assassination, war, or similar activity contrary to the public interest from being listed.”
Markets against public interest are prohibited, senators argue
In their letter, the senators argue that the under section 5c(c)(5)(C)(i), the Commodity Exchange Act expressly bars contracts that are “contrary to the public interest,” including those involving war, terrorism and assassination, and contend that several prediction markets appear to fall squarely within those prohibited categories.
They cite several recent examples as evidence of potential harm. On January 20, Polymarket listed a contract titled “Artemis II explodes?” with “yes” shares trading as high as 8% before it was renamed and ultimately withdrawn amid public backlash. The senators argue the contract effectively incentivized mission failure and even potential insider sabotage tied to astronaut deaths.
They also reference a January 5, 2026 report by The Wall Street Journal detailing how a trader placed $20,000 on a Polymarket contract titled “Maduro out by…,” which would pay out if Venezuelan President Nicolás Maduro was removed from power by Jan. 31, 2026.
The senators point out that at the time, shares were trading at 8 cents. Roughly two hours later, President Donald Trump ordered a military strike on Venezuela. When the contract was resolved about 12 hours later, the trader reportedly cleared more than $400,000 in profit.
In another case, the senators highlighted a November 2025 contract predicting whether the Ukrainian town of Myrnohad would be captured by Russian forces by November 15.
Bettors who wagered “yes” reportedly saw gains of up to 33,000%. Subsequent reporting found that a staffer at the Institute for the Study of War had edited a map to show Russian control of a key intersection despite no clear evidence of such an advance. The senators argue the contract plainly “involves, relates to, or references” war and demonstrates the risks of listing such markets.
Taken together, the senators say these examples underscore what they describe as a regulatory gap and the urgent need for the CFTC to determine whether contracts tied to violent conflict, political instability or loss of life violate federal law and the public interest.
Selig bullish in support of prediction markets
A recent opinion piece by Selig for the Wall Street Journal outlined his bullish backing of prediction markets in the face of legal opposition by governors.
He wrote: “The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products.”
At the center of the dispute are companies such as Polymarket and Kalshi, which argue that they operate under the exclusive jurisdiction of the CFTC. State regulators, however, have contended that certain contracts resemble unlicensed gambling or otherwise violate state law, particularly when tied to elections or sensitive geopolitical events.
In recent months, some governors and state gaming authorities have sought to block or limit access to prediction contracts within their borders, prompting legal challenges from the companies. Industry advocates say a patchwork of state-level prohibitions would undermine what they view as a federally regulated financial product.
The result is a two-front battle, with mounting scrutiny from Capitol Hill over the morality and public safety implications of some contracts, and parallel courtroom fights over whether states can restrict platforms that the CFTC has permitted to operate.
