Democratic Congress could increase scrutiny of CFTC and prediction markets

Democrats taking control of Congress in January 2027 will have new opportunities to scrutinize US prediction markets and the Commodity Futures Trading Commission, although their ability to change agency policy will face limits, InGame reported.

The party will take control of the Senate by a 55-44 margin and the House by a 255-169 margin, with 11 House seats still undecided, according to InGame. Alaska's Senate race remained undercount, with Democrat Mary Peltola favored.

Democratic chairs of the agriculture committees in both chambers and the Senate banking committee will be able to set agendas, hold hearings and issue subpoenas. Seton Hall law professor Ilya Beylin told InGame that investigations are a relatively weak means of changing agency policy.

Massachusetts Sen. Elizabeth Warren has raised concerns about election-related contracts and what she called “gambling-style event contracts” in communications with the chief executives of Kalshi and Polymarket. InGame also reported that a Warren aide identified prediction markets as one of her top focuses.

The CFTC, the federal regulator overseeing prediction markets, has already put an interim final rule into effect in October that excludes casino-style products from the definition of a swap. Comments on a companion proposal to define sports and other event contracts as swaps close Nov. 18.

State and federal lawsuits are addressing questions about federal preemption, the Commodity Exchange Act and state gambling regulation. The CFTC's rules could also factor into that litigation.

Congress could seek to restrict how the CFTC spends money through an appropriations rider, including by limiting support for exchanges in legal fights with states or barring work on particular rules. Beylin cautioned that the agency could finish much of its rulemaking before the next appropriations cycle.

The federal government's current stopgap spending bill expires Dec. 11. If lawmakers pass full-year spending bills, the new majorities would not write the CFTC's budget until fiscal year 2028, which begins Oct. 1, 2027, InGame reported. Another short-term bill could bring spending decisions before the new Congress earlier.

Congress could also vote to overturn recent agency rules under the Congressional Review Act. But both a spending bill and a resolution disapproving a rule would need President Trump's signature, and Democrats lack the two-thirds majorities needed in each chamber to override a veto.