CFTC Proposes First U.S. Rule Framework for Prediction Markets
The CFTC has proposed its first rulemaking focused on prediction markets, outlining how it would review event contracts against the federal public-interest standard. The proposal could shape how platforms such as Kalshi, Polymarket and Crypto.com list contracts tied to sports, politics and other real-world outcomes.
What happened?
The CFTC has proposed its first rulemaking focused on prediction markets, outlining how it would review event contracts against the federal public-interest standard. The proposal could shape how platforms such as Kalshi, Polymarket and Crypto.com list contracts tied to sports, politics and other real-world outcomes.
Why it matters
The U.S. Commodity Futures Trading Commission has proposed its first regulation aimed specifically at prediction markets, opening a public comment process on how the agency should review whether event contracts meet the federal public-interest standard. The proposal would create a framework for evaluating contracts before deciding whether they should be allowed or barred.
The U.S. Commodity Futures Trading Commission has proposed its first regulation aimed specifically at prediction markets, opening a public comment process on how the agency should review whether event contracts meet the federal public-interest standard. The proposal would create a framework for evaluating contracts before deciding whether they should be allowed or barred.
The move matters because prediction markets have been growing around sports, politics and other event-based trading, while companies such as Kalshi, Polymarket and Crypto.com operate in a regulatory area that has drawn increasing attention. CFTC Chairman Mike Selig has made prediction markets a priority and has said the agency wants to support responsible innovation while maintaining oversight of regulated markets.
Under federal law, contracts tied to areas such as war, terrorism, assassination, illegal activity and gaming can be deemed contrary to the public interest. The CFTC’s proposal would use a three-part review: the contract must be based on an occurrence, involve one of the covered categories, and then be formally judged by the commission as outside the public interest.
The proposal also weighs a 90-day review process for individual contracts and suggests the agency would use multiple factors rather than a simple bright-line test. Those factors could include whether a contract has hedging or price-discovery value, whether it could encourage illicit activity, and whether it can inform economic, commercial or financial decisions.
Sports contracts receive notable attention in the proposal. The CFTC indicated that contracts settling on outcomes such as final scores, win-loss results, tournament advancement or player and team statistics may weigh against a finding that they are contrary to the public interest, because they may provide information or price discovery.
The rulemaking is not final and remains subject to public comment, revision and commission approval. CoinDesk noted that the CFTC is currently operating with only its chairman in place, a situation that legal observers have suggested could invite challenges to policy work and that has also become part of wider Senate discussions around crypto market structure legislation.