What the CFTC actually proposed
The Commodity Futures Trading Commission (CFTC) published a Notice of Proposed Rulemaking on Wednesday. It proposes its first formal rule for evaluating prediction-market event contracts.
The target is specific. The proposal would amend CFTC Regulation 40.11 and add a new Appendix F to Part 40. It aims to create a structured way to determine whether a particular event contract involves activities listed in Section 5c(c)(5)(C) of the Commodity Exchange Act.
Those enumerated activities include terrorism, assassination, war, gaming, or conduct that is unlawful under federal or state law. If the contract fits, the CFTC would then assess whether it is contrary to the public interest.
The CFTC also frames this as a market integrity move, not a blanket shutdown. CFTC Chairman Michael Selig said, “The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation,” and added that the proposal gives the Commission “a durable, transparent framework” to identify contracts Congress told it to scrutinize.
How the review would work
The proposed rule lays out a 90-day review process. It includes procedural protections, and it applies on a contract-by-contract basis.
Rather than treating all prediction-market contracts the same, the CFTC proposes a set of public-interest factors. Those factors would guide the Commission’s decision-making when evaluating an individual contract under the statutory carveouts.
The proposal also does what regulators usually do when they want fewer future fights. It defines key statutory terms, including “involve” and “gaming.” In regulatory language, definitions are often where the real power sits. They shape what exchanges can list and how the CFTC interprets borderline cases.
Why this rule now
The CFTC points to the “rapid growth in the number and variety” of event contracts listed by CFTC-registered exchanges. The source notes that the expansion includes contracts referencing sporting events.
That growth matters because the Commission is responding to a policy gap it has been trying to plug for a while. The proposal “narrows one aspect” of a broader Advance Notice of Proposed Rulemaking the CFTC published in March. That earlier guidance flagged that prediction markets with certain risk profiles might be vulnerable to manipulation or insider trading.
The source specifically mentions examples of event contracts exchanges should consult regulators on, including bets tied to specific athlete injuries.
So the new NPRM is a more formal follow-up. It tells exchanges how the CFTC plans to evaluate the contracts that sit closest to the lines Congress drew.
Where this fits into the wider CFTC push
This NPRM lands during what the source describes as “unusually active” CFTC engagement with crypto and event-contract markets.
Earlier this month, the CFTC “opened the door” to US crypto perpetual futures, with first approvals at Kalshi and Coinbase. That broader crypto agenda sits alongside this narrower event-contract agenda, and the connective tissue is oversight.
The source adds that prediction-market platforms including Kalshi and Polymarket have drawn record volumes. Against that backdrop, the CFTC’s proposed framework would give the agency a clearer statutory basis to police the event contracts that trigger the Section 5c(c)(5)(C) scrutiny.
Key facts from the NPRM
| Item | What the CFTC proposes | Source detail |
|---|---|---|
| Document | Notice of Proposed Rulemaking | Published Wednesday in the NPRM |
| Rule changes | Amend CFTC Regulation 40.11 and add new Appendix F to Part 40 | Straight from the proposal description |
| What it evaluates | Whether event contracts involve activities in Section 5c(c)(5)(C) and then whether they are contrary to public interest | Includes terrorism, assassination, war, gaming, and unlawful conduct |
| Review timeline | 90-day review process | Listed in the source |
| Method | Contract-by-contract framework with procedural protections and public-interest factors | Included in the proposal |
| Defined terms | “involve” and “gaming” | The NPRM defines key statutory terms |
The deadline readers should watch
The source does not provide the exact comment deadline date. It does emphasize that the CFTC is seeking public comment on the NPRM and that the review process and framework would guide future evaluations.
The immediate action for market operators is straightforward. If you list or plan to list prediction-market event contracts, Appendix F and its definitions of “involve” and “gaming” will likely influence how the CFTC screens contracts tied to war, unlawful conduct, and related categories.
For investors in assets exposed to these markets, the practical risk is not a single ruling. It is uncertainty. Rules that define contested terms and add review procedures tend to change listing decisions first, and liquidity patterns second.