The Commodity Futures Trading Commission has unveiled a proposed regulatory framework that could reshape how prediction market contracts are assessed in the United States, particularly those linked to sports and other activities covered by federal law.
Published on June 10, the Notice of Proposed Rulemakingseeks public feedback on amendments to Regulation 40.11 and the addition of Appendix F to Part 40. The proposal comes as the regulator reports continued growth in both the volume and variety of event contracts listed by CFTC-regulated entities, including contracts tied to sporting events.
Under the proposal, the Commission would establish a structured process for determining whether an event contract falls within categories identified in Section 5c(c)(5)(C) of the Commodity Exchange Act.
Those categories include terrorism, assassination, war, gaming and activities that violate federal or state law. If a contract falls into one of those groups, the Commission would then evaluate whether it conflicts with the public interest.
CFTC Chairman Michael S. Selig said: “The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation. This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward.”
New Definition Proposed for Gaming
One of the most closely watched aspects of the proposal is the Commission’s attempt to define the term “gaming,”an issue that has become central to ongoing legal disputes surrounding sports-related prediction markets.
The proposed definition describes gaming as an activity typically undertaken for recreation or entertainment, governed by rules and involving measurable outcomes influenced by luck, skill or athletic performance. The Commission also proposes defining when a contract “involves” a covered activity, stating that settlement must depend on the occurrence or extent of that activity.
The Commission also clarified that elections and awards would be considered contests rather than gaming activities under the proposed framework.
Sports Markets Receive Conditional Support
The document suggests that many sports-related event contracts could continue operating because they may provide useful information and are generally less vulnerable to integrity concerns.
The Commission said contracts based on final scores, tournament advancement and broader performance metrics may serve price-discovery functions and generally present fewer integrity concerns.
The proposal raises concerns about contracts tied to player injuries, officiating decisions and individual plays because of potential manipulation and information-sharing risks.
Review Process and Industry Response
The proposed rules would establish a 90-day review process and require a three-step analysis before a contract could be prohibited. Regulators would first determine whether the underlying event occurred, then assess whether it falls into an enumerated category and finally evaluate whether it is affirmatively against the public interest.
The proposal follows an Advanced Notice of Proposed Rulemaking issued in March. More than 3,500 submissions were received, although the Commission stated that roughly 300 contained detailed recommendations.
Reaction remains divided. Industry groups representing prediction markets welcomed the proposal, while gaming stakeholders continued to argue that sports-event contractsfunction as sports betting. Several legal disputes between states, prediction market operators and the Commission remain active as the rulemaking process continues.
Source:
“CFTC Seeks Public Comment on Notice of Proposed Rulemaking Concerning Event Contracts Involving Enumerated Activities”, cftc.gov, Jun 10, 2026
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