CFTC eases stance on prediction markets

The US commodities regulator said it will roll back warnings on prediction markets, signalling a softer regulatory approach as legal battles with state gambling authorities intensify.

Michael Selig, chair of the Commodity Futures Trading Commission, said the agency will rescind a 2025 staff memo that warned prediction platforms to prepare for courts blocking sports-related contracts, calling it a source of market uncertainty.

“For too long, the CFTC’s existing framework has proven difficult to apply and has failed our market participants,”

Selig said, adding that the regulator will establish clearer standards for event contracts.

Selig also said the commission is abandoning an earlier rulemaking effort that would have limited prediction markets and is starting a fresh process that could take years to complete.

The shift comes as platforms such as Kalshi argue that only the CFTC has authority over their products, while states including New Jersey and Nevada claim the markets violate local gambling laws.

Industry groups welcomed the comments, saying the regulator appears more willing to assert its jurisdiction in court as states challenge contracts tied to sports and other real-world events.

The change in tone aligns with the Trump administration’s broader support for prediction markets, after the CFTC last year dropped a lawsuit against Kalshi and signalled greater openness to the sector.