Congress weighs its role as fight over sports betting prediction market oversight forges on

As state and federal regulators continue to clash over who should oversee sports-related prediction markets, lawmakers in Washington are considering whether Congress should step in.

During a House Agriculture Committee digital assets subcommittee hearing Tuesday on sports betting through prediction markets, lawmakers questioned whether existing laws and the Commodity Futures Trading Commission's resources are adequate to oversee the rapidly growing sector.

Rep. Dusty Johnson, R-S.D., said derivative products have changed dramatically over the past few decades.

"As with many emerging technologies, our laws are being asked to answer questions that we had never really contemplated when we wrote the laws years ago," Johnson said in his opening remarks.

Over the past year, Commodity Futures Trading Commission Chair Michael Selig has taken an aggressive stance that his agency should regulate sports betting on prediction markets like Kalshi and Polymarket, in part through bringing lawsuits against several states.

The main crux of those filings has been that the CFTC has "exclusive jurisdiction" over prediction markets and that states are overreaching. However, states have pushed back, saying that the platforms are violating local gaming and gambling laws, particularly related to sports-related bets.

The issue has gained urgency as the industry has expanded rapidly. Kalshi and Polymarket are now valued at roughly $22 billion and $15 billion, respectively, while the CFTC in March launched a rulemaking process aimed at developing a broader regulatory framework for prediction markets.

Resources

During the hearing, lawmakers also raised concerns about the CFTC's resources.

For the fiscal year 2027, the CFTC has asked Congress for a budget of $410 million, an increase of about 12.3% from the previous year. In comparison, the SEC is asking for $1.908 billion, a decrease from fiscal year 2026. In terms of staff, the SEC is much larger, with over 4,000 employees, compared to about 550 employees at the CFTC, for reference.

"Where the commission's authority is found to be insufficient to meet its mandate to support responsible innovation and protect market participants, we will consider legislation as may be appropriate," said House Agriculture Committee Chair Rep. Glenn "GT" Thompson, R-Penn. "But first, the committee must understand if such gaps exist."

Rep. Austin Scott, R-Ga., echoed concerns about the CFTC's lack of resources and said that the agency is being asked to oversee complex products with limited resources.

"If we continue to expand the agency's responsibilities without expanding its capacity, something inevitably will get left behind," Scott said.

Later in the hearing, Johnson pointed to potentially more resources for the agency.

"It [the CFTC] is used to doing more with less — resource adequacy is a legitimate question the committee should continue to explore," Johnson said.

Johnson also alluded to the possibility of Congress stepping in.

"Courts are acting in this space," he said. "The commission is acting in this space. I do not believe that the committee, that Congress should be silent. I do think there is work for us to do here."