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Prediction markets are under attack. While critics are quick to point these out as a sports gambling alternative, they're kind of missing the regulatory point, David writes in today's essay. Thanks for being a free subscriber,
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. . . OPINION A First-Principles Defense of Prediction Markets This week, the new CFTC Chairman and friend-of-the-pod Mike Selig made a loud and public jurisdictional claim over prediction markets by the CFTC. “Prediction Markets aren’t new… the CFTC has regulated these markets for over two decades” This has triggered a very loud negative response from across the country. Elizabeth Warren, Chris Christie, Senators and congressional representatives all expressed vitriol at the idea of prediction markets being regulated only at the level of the CFTC. “Prediction Markets are rogue cowboys.” - Chris Christie
“Trump’s CFTC is trying to strip states' authority to regulate gambling within their borders and protect Americans from getting ripped off.” - Liz Warren
“Mike, I appreciate you attempting this with a straight face, but I don’t remember the CFTC having authority over the “derivative market” of LeBron James rebounds.” - Utah Governor Spencer J. Cox
“Sports bets account for 90% of the trading volumes on these platforms. Congress never intended for the CFTC to oversee what is effectively nationwide sports betting.” - Illinois Rep Sean Casten
The bulk of the criticism of Mike Selig's jurisdictional claim over prediction markets is that these platforms represent sports gambling platforms more than anything else. It’s worth highlighting that this is uniquely a Kalshi problem – Polymarket volume is distributed across a wide set of categories, with politics and elections-related markets still dominant. Regardless, the subject matter of prediction markets is not a relevant detail in how these things get regulated. The reason why prediction markets belong under the CFTC is because... . . . WHAT YOU MISSED L2 Migration 📈 The Asset🏛️ The Protocol📱 The Apps🤫 The Privacy Stack🐸 The Culture💽 The Tech . . . WEEKLY ROLLUP Prediction Market War A legal war over prediction markets just went public. Ryan and David break down the CFTC’s claim of exclusive authority, the backlash from state officials and lawmakers, and why this fight is really about whether markets or politics get to define truth. They explore why AI-powered prediction markets may be crypto’s strongest product-market fit yet, and why that scares regulators. Plus: Harvard rotates from Bitcoin into Ethereum, Base breaks from Optimism, Zora expands to Solana, the Ethereum Foundation leadership reshuffles, signs of life for the Clarity Act, institutions buying DeFi tokens, Europe’s unrealized-gains wealth tax, autonomous “life” on Ethereum, OpenAI’s EVMbench, and what ETHDenver says about where crypto goes next. Tune into this week’s Rollup! 👇 FRIEND & SPONSOR: READY (FORMERLY ARGENT) Ready makes going bankless simple. Pay with USDC worldwide with zero FX fees and earn up to 3% cashback. Start spending instantly with a virtual card and choose between a free or paid plan. Keep control of your assets. Bankless readers get 20% off Metal with code BANKLESS20 | 
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