Trump regulator proposes new rules on what’s allowed on prediction markets
The Commodity Futures Trading Commission (CFTC) is proposing new rules to regulate prediction markets, aiming to block wagers deemed manipulative or not in the public interest, including bets on player injuries, war, and terrorism. The proposal follows a push by platforms like Kalshi and Polymarket, which have expanded under regulatory uncertainty, while states resist what they call an end-run around gambling laws.
The Commodity Futures Trading Commission (CFTC) will propose new rules on Wednesday to govern prediction markets, targeting wagers it deems manipulative or contrary to public interest. According to people familiar with the matter, the rules would block bets like those on player injuries, first-pitch gambling, and war or terrorism, which could rely on classified information. The CFTC will review event contracts case-by-case rather than outright banning specific categories. Kalshi, a leading prediction platform, plans to require users to disclose their employers, aligning with the CFTC’s evolving stance. The agency, under Trump-appointed Chair Michael Selig, has shifted toward permitting prediction markets, including sports-related bets, despite opposition from states with their own gambling laws. The CFTC previously blocked listings for election and sports contracts but has since taken legal action to prevent states from restricting platforms like Kalshi. Prediction markets have grown rapidly since Trump’s re-election, offering bets on elections, corporate earnings, and even the Super Bowl halftime show. The Trump family has ties to the industry, with one of Trump’s sons advising Kalshi and its competitor, Polymarket, which operates an unregulated offshore platform. Polymarket also has a data partnership with Dow Jones. The CFTC classifies prediction bets as ‘swaps’ trading, a category it originally regulated for commodities and derivatives. Lawmakers have proposed banning war-related bets after a U.S. soldier was charged for trades tied to Venezuela’s former president Nicolás Maduro’s arrest. Meanwhile, some sports leagues remain cautious about prediction markets despite embracing sports gambling. The rules aim to balance growth with oversight, though the CFTC has clashed with states attempting to block prediction platforms. Kalshi and others have proactively adjusted to avoid regulatory conflicts, reflecting the industry’s rapid expansion in a previously unregulated space.
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