CFTC Unveils First Federal Rulebook for Sports Betting via Prediction-Market Event Contracts

The Commodity Futures Trading Commission (CFTC) has taken its biggest step yet toward regulating prediction markets. On June 10, the agency released proposed rules that would create the first comprehensive federal framework for “event contracts" traded on registered prediction-market platforms—a category that would clearly encompass sports-related trading. Under the proposal, CFTC-registered platforms could list sports contracts that settle on broad outcomes and measurable results, including winners, final scores, point spreads, and team statistics. Examples include contracts such as "Will the Lakers win Game 7?" or "Will the over/under hit 48.5 in the Super Bowl?". The CFTC would prohibit contracts tied to player injuries and other topics the agency deems inappropriate or especially vulnerable to abuse, including war, terrorism, and assassinations. It also draws a line around what it broadly labels “manipulation-prone" wagers. First-pitch gambling—a small but growing niche in baseball betting—is specifically excluded. The rules would apply to CFTC-designated contract markets (DCMs). Kalshi and Polymarket US are recognized as DCMs, putting them among the platforms most directly in scope. The proposal marks a change from earlier CFTC efforts that leaned toward tighter restrictions on event contracts; those prior drafts were ultimately withdrawn. The new posture is tied to Chairman Michael Selig, confirmed in late 2025, who has framed financial-market innovation as a priority. Under Selig, the agency has shifted from skepticism to a more permissive approach anchored in defined boundaries. The timing also reflects an intensifying jurisdictional fight. Several states have challenged the CFTC's authority over event contracts. Active litigation in Ohio and Arizona is testing whether federal commodities law preempts state gaming rules. The CFTC is asserting preemption under the Commodity Exchange Act, arguing these contracts are financial instruments rather than casino wagers and therefore fall within federal jurisdiction. For investors and traders, a uniform federal framework would lower legal uncertainty for platforms operating across state lines and could reduce the operational friction created by conflicting state regimes. By spelling out what is allowed, the CFTC is effectively handing platforms a product menu: sports contracts tied to outcomes, scores, spreads, and statistics are permitted; injury-based and other restricted categories are not. The impact still hinges on the courts. If Ohio, Arizona, or other jurisdictions determine the CFTC lacks preemption authority over state gaming laws, the proposed federal rules could carry far less practical weight. Attention will also focus on the agency's “manipulation-prone" standard, a subjective concept that platforms may test in practice. Next comes the public comment period. Industry feedback and any resulting revisions will shape whether prediction markets become a regulated component of U.S. financial infrastructure or remain stuck in a jurisdictional gray zone.