CFTC Tightens Rules on Prediction Markets
CFTC Sends White House New Rules to Cement Its Grip on Prediction Markets
The U.S. Commodity Futures Trading Commission has sent a proposal to the White House for review that would set clearer federal rules for prediction markets such as Kalshi and Polymarket, according to a filing posted Tuesday.
The filing shows the proposal is under review at the Office of Management and Budget, a standard step in the federal rulemaking process. The text of the proposal is not visible in the public listing, and the CFTC has not publicly released details tied to that specific submission.
The move comes as the CFTC has increasingly argued—in public statements and in court filings—that it has exclusive authority to regulate prediction markets, rather than individual states. Several states have sought to treat some event-based trading products as gambling and to assert their own jurisdiction over operators.
On the same day as the White House filing, President Donald Trump wrote in a social media post that it is “critically important” the CFTC’s exclusive authority over prediction markets is maintained “and that they will thrive.” Kalshi declined to comment on the filing, and Polymarket did not immediately respond to a request for comment, according to published reports.
What the CFTC is trying to define
Separately from the White House review process, reporting and public materials around the CFTC’s prediction-market initiative indicate the agency has been working on rules that would clarify what kinds of event contracts can be listed and which are prohibited.
One focus is the CFTC’s “public interest” authority. The framework discussed in connection with the agency’s efforts would involve a list of event contracts the CFTC deems “contrary to the public interest,” including those that “involve” illegal activity and certain categories of harmful events such as terrorism, assassination, war, or gaming.
Another element described in snippets of the proposals is an attempt to define event contracts as “swaps” while excluding “casino-style gambling products,” a positioning that would reinforce the CFTC’s claim of primary federal jurisdiction as states pursue gambling-based challenges.
Why timing and process matter
The CFTC has historically taken a limited approach to reviewing event contracts before they are listed, initiating only three “public interest” reviews since 2012, according to the information provided. The proposed approach described in the source material would keep that hands-off posture while also setting procedural boundaries around when and how the agency initiates reviews.
Critics of that structure argue it could make future enforcement more difficult. The concern raised in the provided text is that adding a review-trigger deadline could allow platforms to claim “justifiable” reliance once a short window passes without the agency initiating a review, potentially increasing the CFTC’s burden if it later challenges a contract. The material also suggests the proposal may be designed to prevent a future CFTC from revisiting past listings where the agency took no action.
Broader context: growth, sports, and enforcement
Prediction markets let users trade on outcomes of real-world events, including elections, sporting events, and economic indicators. The sector has expanded in visibility, including through partnerships tied to professional sports.
Polymarket has announced sponsorship and data-sharing deals with Major League Baseball and the NHL, and the leagues have also reached agreements with the CFTC related to potential insider trading and market manipulation concerns that could affect sports integrity.
The CFTC has also highlighted enforcement risks. In February 2026, the agency’s Division of Enforcement issued an advisory after two enforcement cases involving misuse of nonpublic information and fraud related to certain prediction markets traded on KalshiEX, a CFTC-regulated designated contract market.
Earlier in the year, CFTC Chairman Michael Selig said the agency planned to write rules governing prediction markets, after scrapping a proposed rule that would have prohibited trades on sports and politics.
What comes next
With the proposal now at the White House for review, the next steps will depend on the administration’s regulatory process and any subsequent public release by the CFTC. The outcome could shape how prediction markets are regulated nationally, especially as state-level challenges continue and as the CFTC seeks to define which event contracts are permitted and which are off-limits.
