CFTC Opens Public Consultation on a New Rulebook for Prediction Markets

The U.S. Commodity Futures Trading Commission (CFTC) is reassessing how prediction markets should be regulated and has asked the public to weigh in. On March 12, the agency issued an Advance Notice of Proposed Rulemaking (ANPRM) seeking input on a framework that could redefine how event contracts are reviewed, approved and supervised. The push comes as trading activity accelerates. Kalshi reported weekly volumes rising from $300 million to $3 billion between September 2025 and March 2026, a tenfold increase in roughly six months. The ANPRM, published in the Federal Register on March 16, outlines six core areas for comment: baseline regulatory principles, public-interest considerations, risks of manipulation, exposure to insider trading, and the potential role of blockchain technology in prediction-market infrastructure. Event contracts are typically binary instruments tied to a specific outcome. Traders buy a contract that settles at a fixed value of $1 if the event occurs; if it does not, the contract pays $0. The CFTC has overseen event contracts for more than two decades, but the market structure has shifted. Blockchain-based venues have introduced new methods for trading, settlement and clearing, raising questions that existing rules—written without decentralized ledger technology in mind—do not fully address. The public comment window ended April 30 and drew significant engagement. The CFTC received more than 1,500 comment letters from exchanges, sportsbooks and blockchain firms. By late May, the agency advanced the process by sending its notice of proposed rulemaking to the White House Office of Information and Regulatory Affairs for review. Alongside the ANPRM, the CFTC also issued Advisory Letter No. 2608, underscoring that current prohibitions on fraud, manipulation and insider trading apply to event contracts. The advisory highlights sports-related event contracts in particular, an area under growing scrutiny as the boundary between regulated prediction markets and sports betting becomes less distinct. For market participants and investors, the agency's focus on insider-trading controls could be especially difficult for blockchain-based platforms, where pseudonymous participation is a built-in feature. Sports-linked contracts are another potential fault line: an overly broad definition could sweep in instruments that resemble sports betting more than financial products, potentially creating conflicts with state gaming regulators. The White House review adds uncertainty, as proposals can change materially during interagency evaluation and the timeline for final rules remains unclear. Still, the volume of feedback—more than 1,500 submissions—signals broad recognition across traditional exchanges, crypto-native protocols and Las Vegas sportsbooks that the next rule set will shape the trajectory of a multibillion-dollar market.