BlockBeats News, July 22. The U.S. House Committee on Agriculture's Subcommittee on Commodity Exchanges, Energy, and Credit held a hearing to discuss how the Commodity Futures Trading Commission (CFTC) can strengthen its oversight of prediction market platforms such as Kalshi and Polymarket, as well as the potential impact of the Clarity in Digital Asset Markets Act.

Carl Kennedy, Partner at the New York law firm Katten Muchin Rosenman, stated during the hearing that the CFTC is currently understaffed and struggling to effectively regulate the rapidly expanding prediction markets and digital asset space. He believes that if the CLARITY Act is passed, it will grant the CFTC more regulatory authority and help it address the "explosive growth" of prediction markets.

Currently, CFTC Chairman Michael Selig argues that event contracts in prediction markets are considered swaps under the Commodity Exchange Act and should therefore be under the exclusive regulatory jurisdiction of the CFTC. This stance has sparked jurisdictional disputes between federal and state regulatory agencies, with multiple states previously filing lawsuits against Kalshi and Polymarket over sports event prediction markets.

Market participants anticipate that the related cases may eventually be brought before the U.S. Supreme Court to clarify the division of regulatory authority between federal and state governments in overseeing prediction markets.

Furthermore, Republican lawmakers have announced plans to push for a vote on the CLARITY Act in Congress before the August recess and are set to unveil the text of the bill soon. In June of this year, the American Gaming Association urged for a clear prohibition in the CLARITY Act on event contracts related to sports events and casino gambling.