CFTC Chairman Selig Backs Prediction Markets With New Case-by-Case Framework

The determination replaces an attack that anterior CFTC enactment had tried and failed to advance. In 2024, the bureau projected sweeping amendments to Regulation 40.11 that would person defined “gaming” broadly capable to efficaciously prohibition astir sports and governmental lawsuit contracts from CFTC-registered platforms. That connection drew crisp disapproval for overreach and was withdrawn successful February 2026.

The June 10 rulemaking, formally designated Release No. 9249-26, amends Regulation 40.11 and adds a caller Appendix F to Part 40. It is narrowly tailored to code 1 facet of a broader Advance Notice of Proposed Rulemaking connected prediction markets the Commission published successful March 2026.

What the New Framework Does

Instead of categorical prohibitions, the CFTC is proposing a defined valuation process. When a registered speech submits an lawsuit declaration that mightiness autumn nether Section 5c(c)(5)(C) of the Commodity Exchange Act, the Commission volition use a 90-day reappraisal process and a acceptable of nationalist involvement factors to find 2 things: whether the declaration “involves” 1 of the enumerated activities, and whether it is contrary to the nationalist interest.

The connection besides defines cardinal statutory terms, including “involve” and “gaming,” which person been contested successful anterior rulemakings.

“The CFTC volition support the integrity of our regulated markets without lasting successful the mode of liable innovation,” said CFTC Chairman Michael S. Selig. “This connection gives the Commission a durable, transparent model to place the contracts Congress directed america to scrutinize portion letting morganatic markets determination forward.”

Why Congress Restricted Certain Event Contracts

Section 5c(c)(5)(C) was added to the Commodity Exchange Act done the 2010 Dodd-Frank Act. Lawmakers focused connected 5 categories: terrorism, assassination, war, gaming, and enactment unlawful nether national oregon authorities law.

In a Senate level colloquy astatine the time, Sen. Blanche Lincoln, who helped writer the provision, explained the interest directly. The goal, she said, was to forestall the instauration of futures and swaps markets that would let citizens to nett from devastating events and to forestall gambling done futures markets. Sen. Lincoln specifically cited sporting events, stating that contracts tied to outcomes similar the Super Bowl oregon Kentucky Derby would service nary existent commercialized intent and would beryllium utilized solely for gambling.

That legislative past shapes the existent rulemaking. The caller model operationalizes those archetypal concerns with defined presumption and procedural guardrails.

What It Means for Kalshi and Polymarket

For CFTC-registered platforms similar Kalshi, the caller model offers long-sought clarity. Exchanges present person a predictable submission and reappraisal process alternatively of facing enforcement uncertainty. Standard sports result contracts, specified arsenic crippled victor markets tied to large events, look apt to find a viable support way nether the framework. More speculative micro-bet contracts, specified arsenic those tied to circumstantial in-game events with higher manipulation risk, look greater scrutiny.

For crypto-native and offshore platforms similar Polymarket, the interaction is indirect but to immoderate opinions, directionally positive. These platforms run extracurricular nonstop CFTC registration and person faced questions astir jurisdiction, suspicious trading patterns, and insider information. The NPRM signals the agency’s penchant for gathering a legitimate, federally supervised prediction market ecosystem alternatively than pushing for prohibition. That posture could trim ineligible overhang and enactment volume growth.

War, terrorism, and assassination contracts stay the clearest candidates for prohibition nether the framework.

What Comes Next

The NPRM opens a nationalist remark period, expected to tally 30 to 90 days per the Federal Register notice. Industry participants, ineligible teams, and academics are expected to measurement successful heavy connected the definitions of “gaming” and “involve,” arsenic good arsenic connected the nationalist involvement factors the Commission volition apply.

Further rulemaking stemming from the broader March 2026 Advance NPRM connected prediction markets is besides expected. Once the model is finalized, registered exchanges volition trial it done caller declaration filings.

Washington Aims to Tighten the Gate

For free-market advocates, however, the deeper interest is not whether the CFTC has created a much transparent reappraisal process, but whether national regulators should beryllium deciding which voluntary contracts merit a spot connected regulated markets successful the archetypal place. It tin beryllium argued that each regularisation connected lawsuit contracts limits state of exchange, narrows opportunities for terms discovery, and substitutes bureaucratic judgement for the corporate decisions of consenting buyers and sellers.

In their view, markets relation champion erstwhile participants, not regulators, find which risks, probabilities, and outcomes are worthy pricing. That statement is improbable to vanish arsenic prediction markets proceed to expand. While the June 2026 connection offers greater clarity than anterior efforts, it inactive leaves the authorities successful the presumption of drafting boundaries astir permissible accusation markets.

Regulation supporters spot that arsenic prudent oversight; opponents of stifling regularisation spot it arsenic state-directed marketplace plan that pushes enactment toward offshore venues and decentralized alternatives. As regulated prediction markets mature, the hostility betwixt fiscal supervision and free-market prime volition stay astatine the halfway of the conversation.