CFTC drafts new rules for prediction markets

The U.S. Commodity Futures Trading Commission (CFTC) on June 10, 2026 released draft regulations proposing new rules to govern online prediction markets. The draft opens a 45-day notice-and-comment period, during which market participants, policymakers and the public can respond before any final rule is adopted. CFTC Chair Michael Selig said the proposed regulations are intended to protect market integrity "without standing in the way of responsible innovation."

Rather than categorically banning broad classes of event contracts, the proposal sets out factors for case-by-case review. Central to this approach is a public-interest analysis that regulators would apply to determine whether a particular contract should be allowed or prohibited. The framework is designed to structure federal oversight of companies offering yes/no event contracts while leaving room for differentiated treatment across contract types.

The draft indicates that some categories of events are unlikely to satisfy the public-interest test. Wagers tied to wars, terrorism and assassinations are cited as examples of contracts that would likely be barred as not in the public interest. This reflects concern that such markets could create perverse incentives or otherwise undermine broader policy objectives, even if they can be structured as event contracts.

Beyond these most sensitive topics, the draft contemplates further restrictions on certain sports-related contracts. Reporting on the proposal notes that bets on player injuries and narrow in-game events such as "first-pitch" outcomes could be subject to limits or prohibitions. These are grouped with other designs viewed as particularly vulnerable to manipulation or integrity issues.

Within the broader category of gaming, the CFTC attempts to distinguish between contracts it is prepared to permit and those it aims to bar. The draft says the Commission seeks to allow contracts that are settled on aggregate sports outcomes and that rely on objective data and appropriate integrity infrastructure. These might include markets where results are determined by publicly verifiable statistics and where safeguards are in place to monitor for misconduct.

At the same time, the draft proposes to prohibit pure-chance games and what it describes as high-risk sports-adjacent designs. Examples in the text include contracts based solely on injuries, officiating-only decisions, discrete in-game actions and pre-collegiate events. The intent is to separate markets seen as contributing to price discovery or risk management from structures that resemble gambling products or raise heightened integrity risks.

The proposal is framed as a response to market-integrity concerns that have emerged as prediction markets have grown. The CFTC highlights risks of fraud, manipulation and insider trading as key reasons for clarifying and tightening the regulatory regime around event contracts. By articulating which types of contracts are more likely to be viewed as in the public interest, the draft seeks to provide greater predictability to market operators and users.

The move also comes amid ongoing legal and political pushback. Some U.S. states and Native American tribes have argued that event contracts tied to sports constitute illegal gambling and have filed lawsuits to block such markets. The CFTC’s draft rules would situate federal oversight within this contested landscape, with the forthcoming comment period likely to surface further arguments over how prediction markets should be classified and constrained.