CFTC shifts stance on prediction markets

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CFTC rethinks oversight of event markets

CFTC withdraws event contracts proposal

The CFTC said it has withdrawn its June 10, 2024 notice of proposed rulemaking on “Event Contracts” and confirmed it does not intend to issue final rules under that proposal. The agency also rescinded CFTC Staff Letter 25-36, a September 2025 advisory that addressed sports-related event contracts.

“Today’s actions reflect the CFTC’s commitment to lawful innovation in our markets,” CFTC Chairman Michael S. Selig said. “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.”

The withdrawn proposal had drawn criticism from market participants who argued it went beyond the CFTC’s statutory mandate by effectively banning certain contracts based on their subject matter rather than market integrity risks. By abandoning the initiative, the commission is signaling a departure from that approach.

Political and sports markets back in focus

Chairman Selig said the commission will pursue a new rulemaking rooted in the Commodity Exchange Act and aligned with congressional intent. “The Commission is withdrawing that proposal and will advance a new rulemaking grounded in a rational and coherent interpretation of the Commodity Exchange Act that promotes responsible innovation in our derivatives markets,” he said.

The staff advisory on sports event contracts was also withdrawn after regulators acknowledged it had unintended consequences. “While intended to highlight litigation considerations, the advisory inadvertently created confusion and uncertainty for our market participants,” Selig said.

In a separate statement, Selig characterized the abandoned framework more bluntly: “The Biden era prediction markets rulemaking was a frolic into merit regulation with an outright ban on political contracts ahead of the 2024 presidential election.”

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Implications for prediction markets

The withdrawals remove two major regulatory obstacles that had constrained platforms offering contracts tied to elections, sports, and other real-world events. Market participants have argued such contracts serve legitimate hedging and price-discovery functions when properly supervised.

The CFTC said further engagement with staff and stakeholders will shape the next phase of rulemaking, though no timeline has been announced. The outcome will determine how far U.S. markets can expand offerings in a sector that has grown rapidly alongside crypto and fintech innovation.

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