Published on: June 10, 2026, 12:02h.
Updated on: June 10, 2026, 12:02h.
- This marks the first regulatory proposal by the commission focused on prediction markets.
- A 45-day period for public feedback has been initiated.
- President Trump has indicated that the commission will develop more extensive regulations for prediction markets.
In a significant move for the rapidly expanding prediction markets sector, the Commodity Futures Trading Commission (CFTC) has unveiled its inaugural proposed regulation aimed specifically at certain contentious event contracts provided by yes/no exchanges.
Utilizing the Commodities Exchange Act (CEA), the CFTC aims to investigate and possibly restrict or prohibit prediction markets from offering event contracts linked to “activities that are illegal under federal or state regulations.” This encompasses a wide range of topics, particularly derivatives associated with terrorism, warfare, and other issues deemed detrimental to public interests.
The Commission has observed continued growth in the number and diversity of event contracts available for trading by CFTC-registered entities, particularly those related to sports events,” stated the commission in a press release. “In light of these trends, the proposal seeks to create a systematic framework to assess whether such contracts pertain to an activity specified in Section 5c(c)(5)(C) of the Commodity Exchange Act — that is, involving terrorism, assassination, war, gaming, or activities that violate federal or state law — and if such a contract is against the public interest.”
The CFTC’s proposal has now entered a 45-day window for public commentary.
A Potential Step Forward for CFTC’s Regulatory Authority
The CFTC plays a crucial role as the federal authority governing prediction markets and is keen to reinforce its position amidst numerous legal challenges at the state level. The move targeting the most contentious event contracts illustrates the commission’s dedication to confirming its jurisdiction over prediction markets rather than allowing states to dictate terms.
The rule proposal released today by the CFTC is likely part of broader regulation plans promised by President Trump, intended to clarify to states that federal regulations govern yes/no exchanges.
Trump, who appointed CFTC Chairman Michael Selig, has criticized Democratic administrations in certain states that are either challenging prediction markets legally or outright prohibiting event contracts, like in Minnesota.
“The CFTC will ensure the integrity of our regulated markets while fostering responsible innovation,” Selig expressed in the announcement. “This proposal provides the Commission with a robust and transparent structure to identify the contracts that Congress has mandated us to evaluate, allowing legitimate markets to thrive.”
Impact of CFTC Regulation on Sports Event Contracts
In March, the CFTC published a Notice of Proposed Rulemaking (NPRM), proposing a process for the commission to clarify what it classifies as “key statutory terms” like “gaming” and “involve.”
A notable point is the potential impact on sports event contracts, which are key derivatives that brought prediction markets into the limelight. Currently, it seems that the CFTC supports prediction market operators providing derivatives similar to traditional sports betting, though they have indicated they’re keeping an eye on certain segments of the sports event contract marketplace.
“In the realm of gaming, the Commission aims to allow contracts settled based on aggregate sporting outcomes with rigorous data integrity standards, while forbidding purely chance-based games and high-risk sports-adjacent scenarios (e.g., injuries, officiating situations, isolated actions, altercations, pre-collegiate events),” the proposed regulation states.