What Soybeans Have to Do With Online Betting

By Aaron Mak

POLITICO

The Commodity Futures Trading Commission is leaning into a peculiar argument: placing bets in online prediction markets is just another form of commodities investing.

Last week, the CFTC filed an amicus brief for a case in which Nevada is contending that platforms like Kalshi and Crypto.com should be subject to the state’s gambling laws. The CFTC claims it has the sole authority to regulate the platforms as commodities markets.

Prediction markets allow people to stake money on the outcome of events like the Super Bowl or the U.S. military’s intervention in Venezuela. In a Wall Street Journal op-ed explaining the agency’s position in the Nevada suit, CFTC Chair Michael Selig compared these wagers to speculative commodities contracts.

“Farmers can manage risk related to temperature changes that may affect crops, and small-business owners can hedge against tax increases or energy-price spikes,” he wrote.

The idea of using prediction platforms to purchase contracts relating to energy or agricultural commodities is a bit counterintuitive, given that Kalshi and its peers are widely known for sports betting. If the CFTC’s argument wins the day, it would be a radical departure from the traditional understanding of gambling regulation as a state issue, according to legal experts.

“It seems to be at a minimum odd, and at a worse disingenuous, to attempt to stop states from separately regulating this activity as a form of sports betting,” Baruch College gaming law professor Marc Edelman told DFD. “Any notion that federal regulation would preempt state regulation is a bit offputting to me.”

Selig’s recent moves have landed the CFTC in the middle of a clash between prediction markets and regulators that’s playing out in several states. Beyond Nevada, Massachusetts and Tennessee are engaged in similar legal battles with Kalshi, and Republican Utah Gov. Spencer Cox has spoken out against the administration’s attempts to limit states’ oversight of the platforms.

“Look, this is a joke, and I can’t believe [Selig] tried to say this with a straight face,” Cox said of the CFTC’s position at POLITICO’s 2026 Governors Summit last week. He added, “This is not soybeans and natural gas. This is gambling.”

Putting the CFTC in charge of policing prediction markets would likely not only be a boon to prediction platforms, but also to those in the administration’s orbit. Prior to his government service, Selig was a partner at the law firm Willkie Farr & Gallagher, where he represented the crypto capital venture firm Paradigm that led a funding round for Kalshi. As chair, he appointed Polymarket founder Shayne Coplan to the CFTC’s Innovation Advisory Committee in January. Donald Trump Jr. is also currently an adviser to Kalshi and Polymarket, and his VC firm has considerable investments in Polymarket.

“It’s one of the most blatant signs of the corruption of the administration that Trump’s family has so much money at stake in Kalshi continuing to operate, and then Trump appoints Kalshi insiders to be the regulators,” said I. Nelson Rose, a professor emeritus at Whittier College who specializes in gambling law.

Crypto.com said in a statement, “The CFTC has made it clear: U.S. prediction markets are federally regulated, preempting unlawful state actions.” Kalshi, the CFTC and the White House did not respond to DFD’s inquiries. Polymarket declined to comment.

States have been regulating gambling since at least the 1800s, and the U.S. Supreme Court definitively ruled in 2018 that such activity is outside the purview of federal lawmakers under the 10th Amendment. The court decided in 1923, however, that Congress could set rules around commodities markets since they impacted interstate commerce.

So the prediction market cases hinge a lot on how you define what gambling and commodities are. Rose told DFD that one way courts could approach the question is to look at what Congress intended to regulate when it passed commodities trading statutes. Rose says it’s pretty clear that federal lawmakers didn’t have sports betting in mind, since they were primarily concerned with facilitating trading that could protect people from price shocks. “Betting on who will win a football game is not the same as speculating on what the price of corn or wheat is going to be,” he told DFD.

Edelman suggests that the decisions could also involve a common sense “you know it when you see it” determination. “A reasonable person would not look at the prediction markets based upon sport as being an investment,” he said.

While a vast majority of the activity on prediction platforms involve sports, other kinds of wagers happen, too. As Selig noted, you can place bets on what the temperature is going to be in regions across the country — and weather derivatives have been a way for investors to hedge against poor crop yields in traditional exchanges since the 1990s.

Both Rose and Edelman agreed there could conceivably be a world in which states regulate sports betting on the platforms, while the CFTC regulates everything else. Yet Edelman suggests the idea might be risky from a policy perspective, because it could further blur the line between traditional investing and gambling.

“Any efforts to have a federal agency that exists for the purpose of overseeing investments [while] at the same time overseeing sports betting, and then pretending they’re one in the same, is going to be fundamentally confusing to people and against the interest of our next generation that we are trying to teach to invest for the long haul,” Edelman said.