CFTC Proposes First-Ever Prediction Markets Rulebook, Would Ban War and Assassination Contracts

The U.S. Commodity Futures Trading Commission (CFTC) has proposed its first-ever rulebook for prediction markets, aiming to regulate the growing sector. The rules, detailed in a 267-page document, would ban contracts involving war, assassination, and certain sports prop bets like player injuries. The framework establishes a multi-factor test to determine if contracts are in the public interest, while generally protecting wagers on overall sports outcomes.

CFTC prediction markets rulebook

• ▪The U.S. Commodity Futures Trading Commission (CFTC) proposed amendments to its existing event contract rules for prediction markets on June 10, 2026
• ▪The proposal is open for a 45-day public comment period before it can be revised and finalized
• ▪The proposed CFTC rules for prediction markets are detailed in a 267-page document
• ▪President Donald Trump has expressed support for CFTC Chairman Mike Selig's approach to regulating new financial markets
• ▪The new rules are set to go into effect within 60 days of their completion

Contract prohibition categories

• ▪The proposal would bar certain sports-related prop bets, including those on player injuries, referee calls, specific plays, or physical altercations
• ▪The proposed rules would ban wagers on a political leader's removal from office if the outcome could involve war or assassination
• ▪The rules would permit markets on a leader's ouster only if they specify non-violent outcomes like electoral defeat, resignation, or natural death
• ▪Federal law allows the CFTC to prohibit contracts involving war, terrorism, assassination, or illegal activity if they are deemed outside the public interest

Public interest determination framework

• ▪The CFTC views regulated exchanges as the first line of defense in determining if contracts are legal and markets are not manipulated
• ▪The CFTC proposal uses a three-part test and a 90-day review process to determine if individual contracts are in the public interest
• ▪The CFTC will use a multi-factor approach to weigh a contract's potential harm against its public benefit, such as hedging or price-basing utility

Sports betting protection

• ▪Multiple states have filed federal lawsuits arguing that sports-related prediction markets are a form of betting that should be regulated at the state level
• ▪The CFTC has indicated that contracts based on overall sporting event outcomes, like final scores or win-loss results, are likely in the public interest
• ▪The CFTC believes sports event markets can serve price discovery functions and provide meaningful information

Commission vacancy concerns

• ▪Legal observers have suggested the CFTC's policy work could be legally challenged because the commission is not at full strength
• ▪The five-member CFTC is currently operating with only one chairman, Mike Selig, and four vacant commissioner seats