CFTC Proposes Rules for Sports Prediction Markets

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Published: Fri Jun 12, 2026, 8:00 am ET

Read Time: 4 minutes

CFTC Proposes Rules for Sports Prediction Markets

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The US Commodity Futures Trading Commission (CFTC) has unveiled a proposed regulatory framework that could reshape the future of prediction markets in the United States.

The proposal would establish formal rules governing event contracts traded on federally regulated exchanges. At the same time, it would largely permit sports-related contracts. This marks a significant development in the ongoing debate between prediction market operators and the traditional gambling industry.

The move could have major implications for companies such as Kalshi, which has faced increasing legal challenges from state regulators. It also raises fresh questions about how prediction markets fit within the broader USA gambling landscape alongside licensed sportsbooks and casino operators.

CFTC Seeks Clearer Framework for Prediction Market Contracts

The proposed rules would create a clearer regulatory structure for event contracts traded on federally regulated exchanges. The CFTC said the framework is designed to distinguish legitimate markets from contracts that may conflict with the public interest.

Under the proposal, exchanges such as Kalshi would receive greater regulatory clarity regarding which contracts can be listed and traded.

CFTC Chair Michael Selig said the proposal balances market integrity with innovation. In a press release, Selig noted,

"The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation."

Selig added,

"This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward."

The proposal follows months of industry debate over the legal status of event contracts tied to elections, sports, and other future outcomes. Supporters argue that prediction markets function as financial instruments, while critics contend they closely resemble wagering products.

CFTC Maintains Support for Sports Event Contracts

One of the proposal's most notable features is its treatment of sports event contracts.

The CFTC appears willing to allow contracts tied to sporting outcomes, provided they meet regulatory standards and do not raise integrity concerns.

However, the proposal would prohibit contracts involving certain sensitive or easily manipulated outcomes. These include player injuries, referee or officiating decisions, individual in-game actions, and high school sports events.

The restrictions suggest regulators want to separate broad outcome-based contracts from markets that could invite manipulation or undermine confidence in sporting competitions.

If finalized, the rules could strengthen the position of prediction market operators that have argued sports contracts fall under federal commodities law rather than state gambling regulations.

AGA Criticizes Proposal as Threat to Regulated Gaming

Not everyone supports the CFTC's approach.

The American Gaming Association (AGA) has emerged as one of the most vocal opponents of the proposal. The organization argues that prediction markets effectively operate as sports betting products while avoiding state licensing requirements.

AGA President and CEO Bill Miller sharply criticized the framework.

"It makes a mockery of congressional intent while going against a bipartisan coalition of 41 Attorneys General, countless legislators across the country, and the 81% of voters who recognise that the so-called 'prediction markets' are backdoor sportsbooks evading state and tribal law," Miller said.

The AGA maintains that sports event contracts should be regulated under the same framework that governs US online sportsbooks. The group argues that licensed operators comply with extensive consumer protection measures, responsible gaming standards, and taxation requirements that prediction market exchanges currently avoid.

The debate also extends beyond sports betting. Industry stakeholders are watching closely to determine whether future regulatory changes could influence other sectors, including US online casinos.

States Continue Pushing Back Against Prediction Markets

The proposal arrives amid growing resistance from several states.

Ohio has recently moved to restrict prediction market advertising and has questioned whether these products violate state gambling laws. Meanwhile, New Mexico has filed legal action against Kalshi, arguing that sports event contracts amount to unauthorized sports wagering.

Minnesota has also enacted SF 3432, which explicitly prohibits prediction market activity within the state.

These actions reflect a broader clash between state regulators and companies that claim federal oversight gives them authority to offer event contracts nationwide.

Broader Legal and Political Implications Remain Uncertain

The CFTC's proposal could become a defining moment for the future of prediction markets in the United States.

If adopted, the rules would strengthen the argument that sports event contracts belong under federal commodities regulation rather than state gaming oversight. Such a shift could alter the balance of power between federal regulators and state gambling authorities.

The proposal is also likely to intensify lobbying efforts from gaming companies, tribal operators, lawmakers, and prediction market exchanges.

For now, the public comment process will determine how much support the framework receives. Regardless of the outcome, the debate highlights the growing intersection between financial markets, sports wagering, and the evolving USA gambling industry.

As regulators weigh their next steps, both prediction market operators and traditional gaming companies will be watching closely.

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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