The Commodity Futures Trading Commission will unveil a sweeping proposed rule Wednesday that seeks to bring structure to the rapidly expanding prediction-market industry, allowing most sports-related event contracts while blocking those regulators deem easily manipulated or contrary to the public interest.
The agency will for the first time lay out factors it will use to review contracts on a case-by-case basis, according to a copy of the proposed rules viewed by the Wall Street Journal. The framework would likely prohibit bets on war, terrorism, assassinations, player injuries and “first-pitch” gambling — the type that ensnared a Major League Baseball pitcher, according to the proposal.
The CFTC, originally created to regulate commodities and derivatives markets, treats event contracts traded on platforms such as Kalshi and Polymarket as a form of “swaps” trading. Under prior administrations, the agency blocked broad categories of these contracts, including those related to elections and sports.
The new proposal reflects a different approach under Chair Michael Selig, a Trump appointee who has taken a broadly permissive stance toward the industry. In a series of legal actions this year, the CFTC moved to block states that have tried to prevent Kalshi and other prediction platforms from operating in their jurisdiction, according to the Journal.
Washington has tightened scrutiny of prediction markets over geopolitical betting, as MSI previously reported in April. A U.S. soldier was charged in April over trades he allegedly made around the operation that arrested Venezuela’s former President Nicolás Maduro, and lawmakers have proposed legislation to ban such bets outright on U.S.-regulated platforms.
Selig’s permissive approach has drawn opposition from both parties. In March, lawmakers introduced bipartisan legislation to prohibit U.S.-regulated prediction markets from listing contracts related to sporting events and casino-style games such as video poker, blackjack and bingo.
The Trump family has financial interests in the industry. One of Trump’s sons serves as an adviser to Kalshi and to Polymarket, whose large offshore platform is unregulated. Polymarket has a data partnership with Dow Jones, the publisher of the Journal.
Kalshi and other platforms have moved to get ahead of the regulations, with Kalshi announcing plans to require some users to disclose the identity of their employers, the Journal reported.
The proposed rules are unlikely to be the CFTC’s final word on prediction markets, according to people familiar with the matter. The agency is weighing additional rules aimed at protecting retail traders.