CFTC Signals Green Light for Sports and Election Prediction Markets in Landmark Rule Proposal
- The CFTC issued its first prediction-market rule proposal on June 10, presumptively permitting sports contracts tied to final scores, win-loss records, and season-long outcomes.
- Contracts on player injuries, officiating decisions, and single plays would be restricted as too manipulable, while election contracts were clarified as not constituting “gaming.”
- The proposal could strengthen the regulatory footing of platforms such as Kalshi and Polymarket, though it remains open to a public comment period before being finalised.
The US Commodity Futures Trading Commission proposed its first set of rules for prediction markets on June 10, signalling it would broadly permit sports event contracts while drawing a clear line against wagers on outcomes it considers vulnerable to manipulation.
Under the notice of proposed rulemaking, sports contracts that settle on aggregate outcomes would be presumptively permissible. Moreover, contracts tied to granular, manipulable events, such as a single play by a named player, player injuries, or officiating decisions, would be unlikely to meet the regulator’s public-interest test.
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Election Contracts Cleared
The proposal also clarified that election prediction contracts are not considered “gaming” under federal law, a distinction that strengthens the legal standing of political markets that have faced years of regulatory uncertainty.
CFTC Chairman Mike Selig framed the move as a balance between oversight and growth. “The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation,” Selig stated.
However, Gary Kalbaugh, partner at Cahill Gordon & Reindel LLP, noted that “‘gaming’ is defined more broadly than anticipated and sweeps in sports events,” signalling that the scope of permitted contracts could still be contested during review.
The rules are not yet final and remain open to a public comment period, during which a group of Democratic lawmakers has separately urged the CFTC to curb insider trading and prohibit certain event contracts.
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