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Derivatives lawyer Carl Kennedy said pending crypto market-structure legislation could strengthen the Commodity Futures Trading Commission’s case for more authority and resources as prediction markets expand.
Kennedy raised the issue during a July 21 House Agriculture subcommittee hearing on customer protection and market integrity in sports event markets. His remarks focused on CFTC capacity, not on a confirmed CLARITY Act provision specifically regulating prediction platforms.
CFTC Staffing Fell 25% as Event Markets Expanded
Kennedy said the agency appears too short-staffed to supervise its existing derivatives mandate while taking responsibility for new digital asset markets and fast-growing platforms such as Kalshi and Polymarket.
The CFTC’s workforce has fallen about 25% since the beginning of 2025, according to Senator Elizabeth Warren, who asked the Government Accountability Office to review the reductions. The agency has said it expects to increase staffing and can use artificial intelligence to improve efficiency.
Prediction-Market Volume Exceeded $25B in 2025
Kennedy’s written testimony said trading volume across CFTC-registered prediction markets exceeded $25 billion in 2025.
One large platform increased its average daily number of listed event contracts from about 1,600 in April 2025 to about 162,000 one year later.
Kennedy cited that growth as part of the pressure on the CFTC’s surveillance, enforcement, and market-integrity functions.
Existing Law Gives CFTC Authority Over Event Contracts
CFTC Chair Michael Selig maintains that event contracts traded on federally registered exchanges fall under the agency’s exclusive jurisdiction. Registered markets must conduct surveillance, prevent fraud and manipulation, identify customers and comply with anti-money laundering requirements.
That position remains contested by state and tribal authorities, especially where sports contracts operate in jurisdictions that restrict conventional sports betting. House lawmakers said the central question is whether the existing framework gives the CFTC enough tools to distinguish regulated derivatives from gambling products.
June Proposal Adds Standards for Reviewing Event Markets
The CFTC proposed amendments in June explaining how it would assess event contracts involving gaming, war, terrorism, assassination and unlawful activity. The framework would consider settlement clarity, manipulation risks, surveillance controls and protections against trading on nonpublic information.
A statutory limitation remains. The agency can request that a platform suspend a contract during review, but current law does not require the platform to comply.
Unpublished Senate Text Leaves CLARITY Impact Unclear
Revised CLARITY Act language had not been released after the hearing. Publication of the Senate text is the next step needed to determine whether the bill provides funding, staffing support or direct changes affecting prediction markets.
Until then, the CLARITY link remains a capacity argument raised during the hearing rather than a confirmed prediction-market provision in the bill.
