The CFTC is preparing new rules for prediction markets that would outline how platforms can offer contracts on sports, politics, and other real-world events, while setting limits on markets that regulators believe could harm the public interest.
The CFTC is proposing new rules for prediction markets, advancing a regulatory framework that would clarify the event contracts exchanges are allowed to offer.
In a 267-page notice released today, titled “Prediction Markets; Public Interest Determinations” and first reported by the Wall Street Journal, the agency states it is “proposing amendments to further specify the types of event contracts that may be subject to a determination that they are contrary to the public interest.”
Under the proposed rules, while most sports event contracts would still be allowed on the platforms, certain micro-bets vulnerable to manipulation may not be. These could include wagers, for example, on the result of a single pitch in baseball or a “specific shot taken by a specific player.” The document also mentions “player injury contracts,” “officiating outcome contracts,” “physical altercation contracts” and “pre-collegiate sports events” as potentially being against public interest.
Markets related to war, terrorism or assassination will also likely be deemed not in the public interest.
The proposed rules also include parameters on the agency stepping in and shutting a contract down.
The release of the proposal opens a 45-day public comment period.
Introducing a Defined Framework
The rules don’t introduce blanket bans on contract types. Instead, they lay out a series of factors to help the Commission decide if a particular event contract is “contrary to public interest.” If a market is considered to have crossed this line, a CFTC-registered exchange could not list it for trading or accept it for clearing.
CFTC Chairman Mike Selig said in the press announcement that the proposal “gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward.”
The stakes are considerable for an industry that has exploded in size and visibility. Total trading volume across registered contract markets exceeded $25 billion in April, reflecting how quickly platforms like Kalshi and Polymarket have grown into platforms where Americans trade on elections, economic data, cultural trends, and sporting events.
Removing Some Uncertainty
Perhaps the most consequential aspect of the proposal is how it would apply the public interest test to specific categories.
The Commission reasons that prediction markets get their value from information aggregation. When participants can’t meaningfully predict an outcome, the Commission argues that they have no insights to contribute and the resulting prices contain no informational content.
Most sports contracts, in contrast, get a more favorable read. The CFTC believes that contracts settling on the overall outcome of a sporting event, such as final scores, tournament advancement, and season-long statistical performance, have “price discovery functions and provide meaningful information.”
The agency also reasons that such contracts, in contrast to micro-bets, do not face great manipulation risk since they typically depend on the cumulative actions of many participants.
The treatment of politics is also addressed. In the proposal’s analysis, political elections do not qualify as gaming, as voter choices determine their outcomes rather than anyone’s skills or luck during the contest.
The CFTC signalled that event contracts tied to game-show outcomes or reliant on random chance would likely run contrary to public interest.
Sharp Reversal From Prior Approach
The proposal continues a striking turnaround the CFTC has demonstrated under the Trump administration and Selig’s leadership. Previously, the agency acted as a legal adversary of the firms it now seeks to accommodate. The CFTC had challenged certain prediction-market activities as running afoul of derivatives law, including a high-profile 2023 dispute with Kalshi over election contracts.
That posture changed in early 2026, when Selig directed staff to withdraw a 2024 proposed rule drafted by the previous administration that would have effectively banned a wide range of political and sports event contracts.
The agency then issued an advance notice of rulemaking in March 2026 seeking public input, in an attempt to create “clear rules” grounded in what the Commission calls a coherent reading of the Commodity Exchange Act. The forthcoming proposal builds directly on that comment process.
The path forward isn’t without friction, due to escalating action from state gambling regulators and attorneys general. Many observers believe that the subject of which regulatory body should oversee event contracts will end up in the Supreme Court.
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