The White House is reviewing a proposal from the Commodity Futures Trading Commission (CFTC) that would establish guidelines for event contracts tied to prediction markets, marking a significant step toward formal federal oversight of the sector.
According to a notice posted on a U.S. government website, the proposal is currently under review by the Office of Management and Budget. The contents of the rule have not yet been released publicly, but the measure is expected to be opened for public comment after the review process.
The move comes as prediction market platforms face increasing scrutiny from state regulators and lawmakers over contracts tied to elections, sports, and geopolitical events.
CFTC moves toward formal event contract framework
The proposal is expected to build on feedback collected during a CFTC consultation earlier this year that received more than 3,000 responses from industry participants, legal experts, and market observers. The consultation focused on issues including insider trading risks, prohibited contracts, consumer protections, and the broader regulatory structure for prediction markets.
If finalized, the framework would represent the first comprehensive federal rule set governing event contracts in the United States. Platforms such as Kalshi and Polymarket could be directly affected by the outcome of the rulemaking process.
States continue challenging prediction platforms
Several U.S. states have argued that certain prediction market contracts resemble gambling products rather than federally regulated derivatives. Nevada, New Jersey, Maryland, Ohio, Montana, and Illinois are among the states that have pursued enforcement actions or legal challenges involving prediction market operators.
The disputes center on whether federal oversight by the CFTC preempts state gambling laws.
Kalshi and similar operators have maintained that their event contracts fall under the Commodity Exchange Act and therefore belong within federal derivatives regulation.
However, state regulators have argued that platforms offering contracts tied to sports outcomes, elections, and other public events should also comply with local gaming and consumer protection rules.
Trump backs federal oversight approach
U.S. President Donald Trump weighed in on the issue earlier this week, saying prediction markets should remain under the exclusive jurisdiction of the CFTC.
In a post on Truth Social, Trump said the U.S. should maintain leadership in both prediction markets and the broader crypto industry, adding that the government was establishing “rules of the road” for the sector. His comments came as debates over federal versus state oversight continue to intensify around prediction market regulation.
Industry faces questions over oversight and compliance
Prediction markets have grown rapidly over the past two years, driven partly by demand for contracts tied to politics, macroeconomic events, and sports outcomes. At the same time, regulators and policymakers have raised concerns about insider trading, market manipulation, and the use of nonpublic information in event-based contracts.
The CFTC’s proposal could become a key test of how the federal government intends to regulate the expanding market while balancing financial oversight with state-level gaming laws.
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