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The Securities and Exchange Commission is considering whether prediction markets should fall under its authority after the sector expanded to $63.5 billion. SEC Chair Paul Atkins told lawmakers that the quick growth of these platforms has raised “significant legal and regulatory questions” about how they operate.
Speaking before the Senate Banking Committee, Atkins explained that prediction markets may not be the responsibility of a single regulator. Instead, he said, these markets fall under both the SEC and CFTC, so the agencies could help regulate the industry.
“Prediction markets are exactly one thing where there’s overlapping jurisdiction potentially,” Atkins said, replying to Sen. Dave McCormick (R-PA). “That is a huge issue we’re focused on.”
Some prediction contracts are starting to look like securities, SEC says
Atkins told lawmakers that prediction markets deserve closer scrutiny because they blur the line between finance and betting. He explained that people use these platforms in different ways, some trade based on what they expect in the economy or financial markets, while others place wagers on elections, sports, or public events.
“The SEC can’t just sit on the sidelines and leave all the regulation to the Commodity Futures Trading Commission because some prediction contracts are starting to look like securities,” he said.
Atkins stressed that the agency already has authority to act when contracts resemble investments tied to regulated assets, without waiting for new laws. “I think we have enough authority,” he stated. “A security is a security regardless of how it is, and some of the nuance with prediction markets and the products depends on wording and what exactly is being done.”
He encouraged cooperation between the SEC and CFTC, warning that regulators must avoid pulling in different directions and leaving gaps. “It’s mostly, at least currently, on the CFTC side,” the SEC chair said. “But we need to be harmonized in the way we’re addressing these markets.”
He added that each contract will be reviewed to determine its proper category, noting that a market could fall under SEC jurisdiction if its contract tracks the price of a stock.
Prediction markets sector quadrupled value in 2025
Prediction markets grew so quickly in 2025 that regulators and lawmakers could no longer ignore them. Millions of users joined these platforms, and billions of dollars flowed in.
Certik reported that the industry’s value more than quadrupled during the year, reaching $63.5 billion. This is a huge leap for a market that only started operating in the United States less than two years ago.
Kalshi and Polymarket became the biggest names, with valuations of about $11 billion and $9 billion. Much of this rise came during the 2024 election season, when political events drove heavy activity. But the growth also brought problems. Several states filed lawsuits, saying many contracts looked like unlicensed sports betting and should be treated under gambling laws.
Reports of insider trading added to the concerns, and regulators began proposing limits on certain bets, especially those tied to politics.
CFTC Chair Michael Selig said predictions can still help measure public expectations and guide risk decisions. But he also stressed that strong rules are needed to keep the industry safe, legitimate, and based in the United States, rather than moving to countries with weaker oversight.
Source: CryptoRank
