What is the CFTC proposing for prediction markets?

The US Commodity Futures Trading Commission (CFTC) has proposed rules that would generally allow sports event contracts based on outcomes such as final scores and win-loss records. The proposal would also restrict contracts linked to events that could be manipulated, such as player injuries or officiating decisions.

Why does the CFTC proposal matter for prediction markets?

The proposal could provide clearer rules for a fast-growing industry that has faced regulatory uncertainty. More clarity may help prediction market operators, investors and institutional participants better understand which types of contracts are likely to be permitted.

What did the CFTC say about election prediction markets?

The draft rules state that election contracts are not considered gambling under the relevant federal laws. This could reduce regulatory uncertainty for platforms such as Kalshi and Polymarket, which gained significant attention during recent US elections.

How could Kalshi benefit from the proposed CFTC rules?

Kalshi could benefit if clearer regulations encourage broader participation in prediction markets. The company has been expanding its offerings and recently partnered with Nasdaq to launch markets tied to private company valuations ahead of IPOs.

How could Polymarket benefit from the proposed CFTC rules?

Polymarket could see greater legitimacy and adoption if regulatory uncertainty declines. The platform has already expanded its reach through a partnership with Dow Jones that brings prediction market data into major media brands.

What types of sports prediction contracts would likely be allowed?

According to the proposal, contracts based on aggregate outcomes such as final scores, season records and win-loss results would generally be considered acceptable. However, each contract would still be reviewed under a public interest test rather than receiving automatic approval.

Which prediction market contracts could face restrictions?

Contracts linked to outcomes that could encourage manipulation are less likely to be approved. Examples include markets tied to player injuries, referee decisions or other events where participants might have incentives to influence the result.

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CFTC proposal favors sports contracts over gambling

Written by Brie CarterPublished Jun 10, 2026, 11:29 PM

The US Commodity Futures Trading Commission has proposed a new regulatory framework for prediction markets that would generally permit sports event contracts while restricting contracts tied to outcomes that could be manipulated.

The draft rules, released on Wednesday, distinguish sports contracts based on final scores and win-loss records from games of pure chance, while confirming that election contracts are not considered gambling under relevant federal statutes.

“‘Gaming’ is defined more broadly than anticipated and sweeps in sports events,”

Said Cahill Gordon & Reindel partner, Gary Kalbaugh.

Kalbaugh said contracts settling on aggregate outcomes such as final scores, win-loss records and season statistics would be “presumptively permissible,” although each market would still face an individual public interest assessment.

The proposal will remain open for public comment for 45 days and could shape the future regulatory framework for US prediction markets, while Reuters reported the clarification around election markets may further reduce uncertainty for platforms including Kalshi and Polymarket.

The draft rules arrive as prediction markets continue to expand rapidly, with both Kalshi and Polymarket reaching multibillion-dollar valuations amid growing interest from retail traders, institutions and traditional financial firms.

Kalshi recently partnered with Nasdaq to launch prediction markets linked to private company valuations ahead of initial public offerings, while Polymarket signed an agreement with Dow Jones to integrate prediction market data into media brands including The Wall Street Journal.

“The prediction markets continue to become more mainstream, with newly formed partnerships with news organisations and more firms moving quickly into this space,”

Said Melinda Roth.

Roth said the key unresolved issue remains whether event contracts should ultimately be treated as financial instruments or as a form of gambling, while analysts at Bernstein have argued that institutional investors are increasingly using prediction markets as alternative macro-hedging tools through binary-outcome contracts.