CFTC rulemaking stalls as Selig refuses tribal leaders any answer

Michael Selig sat across from more than a dozen tribal leaders at CFTC headquarters in Washington and said, in effect, nothing. The comment period on the agency's proposed amendments to Regulation 40.11 had closed. The record was public. And still Selig's staff would not discuss the rule. "All they would say was, 'We can't talk about the rule right now,'" Jason Giles, executive director of the Indiana Gaming Association, said in the days following the meeting.

That sentence requires some unpacking. A proposed rulemaking is not a grand jury proceeding. Comment periods exist precisely so that affected parties can engage the agency on the substance. Tribal leaders came with specific concerns — the interaction between event contracts and IGRA exclusivity, prediction market advertising on tribal land, the downstream effects on tribal-state compacts. They left with nothing. Giles said plainly that he could not identify what legal constraint prevented the discussion.

Scott Crowell, of the Crowell Law Office Tribal Advocacy Group, offered one theory when Giles asked what the agency's recent court losses had done to its credibility. "What credibility?" Crowell said, and then kept going. He argued that Selig had told Congress the courts would resolve the sports betting question, then directed legal staff to file an amicus brief in the Ninth Circuit litigation and support actions against states enforcing their own laws. His read on the silence at the Monday meeting: Selig is treating the proposed rule not as a primary strategy but as a fallback, activated precisely because the CLARITY Act failed and the litigation record is deteriorating.

That read is consistent with the structural position the CFTC now occupies. Selig has asserted exclusive federal authority to regulate event contracts on federally licensed prediction markets. The Ninth Circuit has disagreed, at least on tribal land. The agency filed amicus support in that litigation and lost. The CLARITY Act, which would have given the CFTC the statutory foundation it needs to make that assertion durable, did not clear the Senate. What remains is a proposed rule and a chairman who will not discuss it with the people most directly affected by it.

The mechanism design problem here is precise. Selig's authority claim is a preemption argument: federal licensing displaces state and tribal jurisdiction. That argument needs either a statute or a sustained run of favorable court outcomes to hold. It currently has neither. The proposed rule cannot supply the missing statutory authority — a regulation cannot exceed the enabling legislation — and the litigation record is moving against the agency. Crowell's speculation that the rule is a Plan B is plausible, but a Plan B that cannot solve the underlying jurisdictional problem is not really a plan.

What the tribal leaders encountered on Monday was an agency that has committed publicly to a position it cannot currently defend, is losing in court, and has chosen silence over engagement with the parties whose legal rights sit directly in the gap the agency is claiming to fill. Giles said he was at a loss. That is the accurate description of where the CFTC's regulatory process now stands.