CFTC proposes first formal prediction market rules, allows sports bets and bans war wagers
The Commodity Futures Trading Commission on Wednesday proposed its first formal regulatory framework for prediction markets, opening a 45-day comment period. The rules would allow most sports-related event contracts to continue while banning wagers on war, terrorism, the ouster of U.S. adversaries, player injuries, officiating decisions, and pre-collegiate events. The proposal marks the agency's most significant effort to define permissible boundaries for platforms including Kalshi and Polymarket. A prior Yahoo Finance headline had framed the restrictions as a response to a U.S. soldier's arrest for betting with classified intelligence, but that framing was not supported by coverage of the proposal itself.
Kalshi and Polymarket must audit every active contract against the new permitted and prohibited categories before the 45-day comment period closes. Any market that fails the classification test faces enforcement risk once final rules take effect.