The U.S. Commodity Futures Trading Commission proposed its first prediction markets regulation on Wednesday, offering an approach to how it could comprehensively evaluate whether contracts trip the federal standard for off-limits.
The US derivatives regulating agency has been a defender of prediction markets operated by Kalshi, Polymarket and Crypto.com, with Chairman Mike Selig making them a top legal and regulatory priority for the CFTC. He is promising a new, tailored regulatory regime for the industry, and the new proposal could be part of a number of rules adopted by the regulator.
“The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation,” Selig said in a statement. “This proposal gives the Commission a durable, transparent framework to identify the contracts that Congress directed us to investigate, while allowing legitimate markets to thrive.”
Federal law holds that contracts involving war, terrorism, murder, illegal activity, and gaming may be considered outside the public interest and are not permitted. In practice and in adopting data-sharing agreements with professional sports leagues, the CFTC has embraced the massively growing field of sports betting as a clear public interest.
The platforms on which event contracts are traded are exchanges regulated under the CFTC, and the agency has said that exchanges are the first line of defense in determining whether contracts are legal and not manipulated or abused in the markets.
The proposal emphasizes a 90-day review process on public-interest determinations for individual contracts.
President Donald Trump has recently expressed support for Selig’s track, saying in a social-media post that “Other countries are behind this new form of financial market, and we want to stay on top.”