The One-Commissioner CFTC
The agency that oversees a $40 billion industry has one commissioner, four empty seats, and no nominees. The regulatory vacuum is not a gap in regulation. It is the regulation.
The Commodity Futures Trading Commission has five commissioner seats. One is occupied. Four are empty. No nominees have been announced. The enforcement division numbers fewer than 100 staff. This is the regulator for an industry that processed $40 billion in volume last year, is on pace for $100 billion this year, and is party to 19 active federal lawsuits.
The single commissioner is Michael Selig. Confirmed by the Senate on December 18, 2025, by a party-line vote of 53-43, he was sworn in four days later. Acting Chair Caroline Pham departed the same day. The four other seats had emptied across 2025 in a cascade: Rostin Behnam after the presidential transition, Christy Goldsmith Romero in May, Summer Mersinger at midyear, Kristin Johnson in September. Each departure narrowed the Commission. Selig's arrival did not widen it.
The legal mechanism is Section 2(a)(3) of the Commodity Exchange Act. Unlike the SEC, which has codified quorum requirements, the CFTC has none. The statute provides that “a vacancy in the Commission shall not impair the right of the remaining Commissioners to exercise all the powers of the Commission.” One commissioner retains the authority of five.
This arrangement — designed as a temporary provision, now functioning as a governance model — is what makes everything that follows possible.
Six weeks, one signature
On January 20, in his first public remarks as chairman, Selig declared “an end to policymaking through enforcement” and launched the “Future-Proof” initiative, a comprehensive review of existing regulations. He called prediction markets tools for “price discovery” and “information aggregation.” He described the CFTC's mandate as delivering “the minimum effective dose of regulation — nothing more and nothing less.”
Nine days later, on January 29, he issued what may be the most consequential directive in the agency's recent history. In a single action, Selig:
1.Withdrew the 2024 proposed rulemaking — advanced under Chairman Behnam in a 3-2 vote — that would have prohibited political and sports-related event contracts as involving “gaming” contrary to the public interest.
2.Withdrew Staff Advisory No. 25-36, which had cautioned prediction market participants against offering sports contracts in states with ongoing litigation.
3.Directed staff to draft new event contracts rulemaking — a comprehensive framework, not piecemeal guidance.
4.Directed staff to reassess the Commission's participation in pending federal litigation on jurisdictional issues, signaling the CFTC may intervene in court to defend exclusive federal authority over event contracts.
The fourth point has received the least attention and matters most. Selig is not merely allowing prediction markets to exist. He is asserting that the CFTC has exclusive jurisdiction — that event contracts are commodity derivatives under the Commodity Exchange Act, and that state gambling laws are preempted. He stated directly: “Where jurisdictional questions are at issue, the Commission has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives.”
A single individual, running a skeleton agency, is attempting to settle by executive directive a jurisdictional question that 38 state attorneys general, more than 60 tribal nations, the NFL, the American Gaming Association, and at least three federal circuit courts disagree about.
The advisory committee
Among his first acts, Selig renamed the Technology Advisory Committee to the Innovation Advisory Committee and appointed its charter members: Shayne Coplan of Polymarket, Tarek Mansour of Kalshi, Tyler Winklevoss of Gemini, Kris Marszalek of Crypto.com, Arjun Sethi of Kraken, alongside Jeff Sprecher of ICE, Craig Donohue of Cboe, and Adena Friedman of Nasdaq.
Bloomberg Law noted what should be obvious: the committee is “populated with the heads of companies that have pending business before the CFTC.” These executives have a direct advisory channel to the sole person with regulatory authority over their industry. The standard check on this — dissenting commissioners, public deliberation, minority opinions — does not exist. There are no other commissioners to provide it.
A five-member commission exists to prevent exactly this. Independent agencies derive legitimacy from deliberation among members with different views, different political affiliations, different institutional incentives. One commissioner, no dissent, no nominees announced for four vacancies — this is not a temporary gap. It is a structural condition with no announced end date.
The opposition
The states are not standing down.
On January 20, a Massachusetts court granted the first injunction against a prediction market platform, ruling that Kalshi cannot offer sports contracts to Massachusetts residents without a state wagering license. Judge Christopher Barry-Smith rejected the federal preemption argument, concluding that Congress did not intend the Commodity Exchange Act to override state authority over gambling.
Four days earlier, Nevada's Gaming Control Board filed a civil enforcement action against Polymarket — the first state to take Polymarket to court. Tennessee's Sports Wagering Council sent cease-and-desist letters to Kalshi, Polymarket, and Crypto.com simultaneously. New York's attorney general warned publicly about prediction markets days before the Super Bowl, calling them platforms operating “without the same consumer protections as regulated platforms.”
Ten states have issued cease-and-desist orders against Kalshi alone. A coalition of 38 state attorneys general plus the District of Columbia filed amicus briefs opposing federal preemption. More than 60 tribal nations joined legal briefs. The NFL banned prediction market advertising from its broadcasts — alongside tobacco, pornography, and firearms.
The February 12 hearing in Connecticut will test whether a federal court endorses Selig's assertion of exclusive jurisdiction. The Ninth Circuit hears oral arguments in April. A circuit split appears increasingly probable, which would place the question before the Supreme Court.
And the CFTC, under one commissioner with a reduced staff, is preparing to intervene in these cases to assert its authority. The distance between institutional capacity and institutional ambition has never been wider.
The reflexive structure
Most coverage of the one-commissioner CFTC presents it as a staffing problem or a political choice. It is both. But it is also a market condition — and it is generating a feedback loop.
The regulatory vacuum is not an absence of market-shaping force. It is the most powerful market-shaping force in the industry right now.
Since Selig's confirmation: Gemini launched its prediction market product after a five-year application process. PredictIt completed its transformation into a fully regulated designated contract market and derivatives clearing organization, eliminated its 5,000-trader cap, and quadrupled its individual wager limit. Xchange Alpha received DCM approval in 204 days. Robinhood deepened its Kalshi integration. Crypto.com launched its own prediction market product. DraftKings, FanDuel, and Fanatics entered the space. Every major financial platform in America now either offers prediction markets or is building toward them.
None of these moves were made on the assumption that the regulatory environment is permanent. They were made to establish facts on the ground — volume records, self-certification history, user adoption, institutional partnerships — before the window potentially closes. The logic: the more embedded prediction markets become in American financial infrastructure before a court or Congress imposes constraints, the harder those constraints become to enforce.
This is reflexivity in its institutional form. The absence of regulation accelerates industry growth. Industry growth establishes facts: $40 billion in volume, 91 percent sports concentration, Robinhood integration, Super Bowl contracts traded by millions. Those facts become the strongest argument against future regulation. Who dismantles an industry that millions of Americans already use?
But the same growth generates the opposition that threatens the framework. Thirty-eight attorneys general did not organize a bipartisan coalition because prediction markets were small. The NFL did not ban advertising for a niche product. State regulators did not file civil complaints against companies nobody had heard of. The industry's scale is both its best defense and the source of the challenge it needs defending from.
The regulatory vacuum accelerates the industry. The industry's acceleration fills the vacuum with opposition. The opposition, if it prevails, threatens the legal framework that enabled the acceleration. Growth and threat are not separate dynamics. They are the same dynamic, running on the same loop.
What the vacancy means
The four empty seats are not a neutral condition. They are a compounding one.
Every day with one commissioner is a day in which major policy decisions are made without deliberation, dissent, or the institutional friction designed to slow bad outcomes. It is also a day in which the industry extends its operational baseline — more volume, more users, more institutional integration, more precedent established through self-certification and no-action letters rather than through formal rulemaking with public comment and full commission debate.
Selig can act faster because he acts alone. Platforms can expand faster because one sympathetic regulator operates without internal opposition. But the durability of the regulatory foundation being constructed right now is weaker precisely because it was built without the deliberative process that gives regulatory frameworks their staying power.
When the vacant seats are eventually filled — whether in months or years — the new commissioners will inherit an industry that was shaped during their absence. The regulatory framework will have been designed by one person's directives. The precedents will have been set. The volume records established. The brokerage integrations completed. It will be a fait accompli.
Whether that fait accompli holds is the question that will define this industry for the next five years. Regulatory frameworks built during vacuums tend to be contested once the vacuum fills. If a future commission — with different political composition, different views on federal preemption, different tolerance for the sports-betting question — revisits Selig's directives, every platform that built during this window will learn whether they built on a foundation or on a gap.
The prediction market industry is valued at over $20 billion. Its growth trajectory assumes the regulatory environment continues on its current path. That path is determined by a single person, running an agency with four empty seats, whose sole authority derives from a statutory provision designed for temporary vacancies.
The vacancy is not a gap in the system. It is the system.