The head of the U.S. Securities and Exchange Commission has signalled that prediction markets are fast becoming a major regulatory concern in Washington.
Speaking at a Senate Banking Committee hearing on February 12, Paul Atkins described the rapid expansion of these platforms as “a huge issue” for federal authorities, citing legal ambiguity and overlapping oversight.
.@SECPaulSAtkins on coordination with @ChairmanSelig and the @CFTC: “We have two agencies that should be very well knit together so that there are no gaps . . . The more harmonized we are, the better, more efficient.” pic.twitter.com/poveRz0lON
— U.S. Securities and Exchange Commission (@SECGov) February 12, 2026
Prediction markets, which allow users to wager on outcomes ranging from elections to sports and economic data, have surged in popularity since the 2024 U.S. election cycle. Platforms such as Kalshi and Polymarket have reported explosive growth, with total activity now reaching tens of billions of dollars.
Their expansion has placed them squarely in the crosshairs of regulators.
SEC and CFTC face overlapping jurisdiction
Atkins acknowledged that determining who regulates prediction markets is not always straightforward. He pointed to potential jurisdictional overlap between the SEC and the Commodity Futures Trading Commission (CFTC).
“Prediction markets are exactly one thing where there’s overlapping jurisdiction potentially,”
Atkins told lawmakers.
Historically, the CFTC has led oversight of event-based contracts, particularly when structured as derivatives. However, Atkins said the SEC could assert authority in cases where contracts resemble securities.
“A security is a security regardless of how it is,”
he noted, adding that much of the regulatory interpretation depends on how products are worded and structured.
According to Atkins, SEC officials are now holding weekly meetings with their CFTC counterparts to coordinate oversight.
Insider trading fears and state-level challenges
Beyond federal turf questions, prediction markets are also facing scrutiny on other fronts.
Concerns have surfaced about potential insider trading, particularly in politically sensitive markets. Lawmakers are also weighing proposals to restrict betting on political events, arguing that such markets may undermine electoral integrity.
At the same time, some states are pursuing litigation, claiming certain offerings amount to illegal gambling under local laws. CFTC Chair Michael Selig said regulators are seeking a balanced framework, one that safeguards participants without driving innovation offshore.
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