The Commodity Futures Trading Commission has formally withdrawn a 2024 proposal that would have prohibited sports and political prediction markets.
In a statement on Feb. 4, CFTC Chair Michael Selig described the plan as “the prior administration’s frolic into merit regulation with an outright prohibition on political contracts ahead of the 2024 presidential election.”
By rescinding it, the CFTC confirmed it does not intend to move forward with rules based on that framework.
“The 2024 event contracts proposal reflected the prior administration’s frolic into merit regulation with an outright prohibition on political contracts ahead of the 2024 presidential election,” CFTC Chairman Michael Selig
Providing clarity for businesses and participants
The original proposal, issued under the Biden administration, sought to classify prediction markets as “gaming,” effectively preventing them from operating on regulated exchanges. The commission also withdrew a September staff letter that had warned businesses against offering sports-related event contracts due to potential litigation risks.
The agency will now pursue “new rulemaking grounded in a rational and coherent interpretation of the Commodity Exchange Act that promotes responsible innovation in our derivatives markets in line with Congressional intent.”
Selig added the advisory “inadvertently created confusion and uncertainty for our market participants.”
How prediction markets work
Prediction markets allow participants to place bets on a wide range of outcomes, including sports competitions and elections. Platforms such as Polymarket, Kalshi, Crypto.com, and Coinbase have entered the market, providing alternatives to traditional sportsbooks.
Some state regulators, including Nevada, have argued that certain contracts fall under unlicensed gambling laws, creating legal uncertainty for operators. Native American regulators have also objected to federally regulated platforms, maintaining that some wagers fall under their jurisdiction.
The CFTC’s withdrawal of the 2024 proposal and staff letter clears the way for the agency to develop new rules that define the legal framework for these markets under federal oversight.
Selig confirmed that the commission will focus on developing regulations for “event contracts,” providing clear guidance for businesses and market participants while defending the agency’s exclusive jurisdiction over commodity derivatives.
Matvii Diadkov
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