New York law firm partner Carl Kennedy testified at a U.S. House hearing on July 22, saying the CFTC may be understaffed and unable to fully regulate and enforce oversight of prediction market platforms such as Kalshi and Polymarket. The CLARITY Act may grant the CFTC more authority to cope with the rapid growth of prediction markets.
U.S. House Hearing: Kennedy’s Core Claims and the CFTC Resource Gap
According to the July 22, 2026 hearing record from a subcommittee of the House Agriculture Committee, Carl Kennedy’s testimony highlighted the following key points:
CFTC staffing shortfall: The CFTC may currently lack the capacity to comprehensively regulate and enforce against prediction market platforms such as Kalshi and Polymarket
Potential authority under the CLARITY Act: The bill could give the CFTC more power to regulate digital assets, while also addressing the “explosive growth of prediction markets”
Direct quote: Kennedy said, “As more resources are put in—under the CLARITY Act or through additional authority that may be forthcoming—to address new asset categories in cash markets and crypto, and to address the explosive growth of prediction markets, the CFTC should certainly get more resources.”
CFTC Chair Selig’s Position: Exclusive Jurisdiction Claim
After Michael Selig, chair of the CFTC, received Senate confirmation in December 2025, he has unilaterally insisted that the CFTC has “exclusive jurisdiction” over prediction market companies, arguing that event contracts on these platforms are “swap transactions” that fall within the CFTC’s jurisdiction. Selig is currently the only Senate-confirmed member among a leadership team typically made up of five commissioners.
Last week, Selig ordered Kalshi to ignore a ruling from a Michigan court. Kalshi said the ruling puts it “in a bind between state and federal authorities.” Some legal experts expect that one or more of the final outcomes in prediction market cases may ultimately be submitted to the U.S. Supreme Court to resolve jurisdiction conflicts between state regulators and federal regulators.
CLARITY Act Legislative Progress: Republicans aiming for an August vote, with text expected soon to be released
Based on statements from Republican lawmakers, they are pushing Congress to vote on the CLARITY Act before the start of the August 2026 work period in the states, and said the bill’s text is expected to be released soon. As of Tuesday, details on how the bill would address prediction markets, ethics concerns, and other worries raised by lawyers have not been made public.
Background: In June 2026, a gambling industry group petitioned the U.S. Senate to add a provision to the CLARITY Act that would “clearly prohibit event contracts linked to sports events and casino-style wagering activities.” The White House said the Trump administration “agreed to the most comprehensive and far-reaching ethics provisions in history.”
FAQ
What were Carl Kennedy’s main remarks in the Tuesday hearing?
According to the July 22, 2026 hearing record from a subcommittee of the House Agriculture Committee, Kennedy testified that the CFTC may be understaffed and unable to fully handle prediction market platforms such as Kalshi and Polymarket, and said the CLARITY Act could grant the CFTC more authority to address the “explosive growth of prediction markets.”
What is CFTC Chair Selig’s stance on prediction markets?
According to reports, since taking office in December 2025, CFTC Chair Selig has unilaterally argued that the CFTC has “exclusive jurisdiction” over prediction markets, characterizing event contracts as “swap transactions” that fall under CFTC jurisdiction, and last week ordered Kalshi to ignore a ruling from a Michigan court.
What is the CLARITY Act’s legislative timeline?
Based on statements from Republican lawmakers, they plan to hold a vote before the start of the August 2026 work period in the states, with the bill’s text expected to be released soon; as of Tuesday, the specific details of provisions related to prediction markets have not been made public.
