CFTC Chair Selig proposes industry-friendly update to Rule 40.11 for event contracts
CFTC Chairman Mike Selig released a proposal to modernize Rule 40.11 for event contracts on June 10, framing the update as a way to advance responsible financial innovation and provide clarity for prediction markets. Selig argued that safeguards work best when they offer predictability and transparency in application. Early industry reaction treated the proposal as favorable to prediction market operators, with few limits on sports betting contracts. Former CFTC official Ryan VanGrack praised the rulemaking as a major step forward, though early critiques flagged gaps around public interest considerations and questions about the rule's legal staying power.
Kalshi and Polymarket must now classify every active contract against the new permitted and prohibited categories during the comment period. Any product that fails the test risks enforcement action once final rules take effect, forcing immediate delisting decisions on contested markets.
Selig's rulemaking joins a burst of federal positioning on prediction markets that this week alone has included a DOJ-CFTC insider-trading crackdown, twin preemption suits against Rhode Island and Minnesota, and a White House regulatory framework — all staking competing claims over who controls the market's future.