The US Commodity Futures Trading Commission (CFTC) has launched a proposal that could shape the future of prediction markets in the country. The regulator is seeking public feedback on how event contracts should be reviewed and assessed. The proposal comes as prediction markets continue to expand into areas such as sports, politics and other real-world events.

• The CFTC’s proposal focuses on event contracts that may involve activities specifically listed in the Commodity Exchange Act, including gaming, war, terrorism, assassination and unlawful activity. These contracts have become a growing part of the prediction market landscape in recent years. The regulator said a clearer framework is needed as the market continues to evolve.
• A key part of the proposal is the creation of a formal process for reviewing whether an event contract falls within one of those restricted categories. The framework would also assess whether a contract is contrary to the public interest. This could have direct implications for how prediction markets are structured and approved going forward.
• Sports-related event contracts are among the products attracting increasing regulatory attention. The CFTC noted that the number and variety of contracts listed by regulated exchanges has grown rapidly. Several sports-focused prediction market offerings have already sparked debate between regulators, exchanges and state gaming authorities.
• Under the proposal, the Commission would introduce a 90-day review period for certain event contracts. The regulator would also establish clearer definitions for terms such as “gaming” and “involve,” which have been central to ongoing discussions around prediction markets. Industry participants would gain greater visibility into how decisions are made.
• CFTC Chairman Michael S. Selig said the proposal is designed to provide a transparent framework while allowing legitimate markets to operate. He stated: “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 comments suggest the agency is seeking greater regulatory certainty rather than an outright restriction on prediction markets.
• The proposal is now open for public comment before any final rules are adopted. The consultation is expected to attract submissions from exchanges, market operators, sports stakeholders and gaming industry groups. The outcome could play a major role in determining how prediction markets develop in the US regulatory environment.

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