US Federal Commission To Allow Sports Trading On Prediction Markets? What We Know

A federal commission moved to formalise rules regarding prediction markets, allowing the platforms to offer the equivalent of sports betting throughout the US.

The Commodity Futures Trading Commission (CFTC)  has released a 267-page notice of proposed rulemaking regarding prediction markets.

The commission would allow sports event contracts including on "final scores, point differentials, win-loss results, tournament advancement, individual or team statistical performance or season long performance metrics," Axios reported.

Some trades such as a “specific play called for or executed by a specific player or team” have been disallowed.

The CFTC would also forbid trades on injuries, officiating decisions, physical fights during games, or "pre-collegiate sports events" like high school games.

Betting on casino-style games that involve just luck, like roulette, would not be allowed. However, trades on games of chance that may be “significantly affected” by the skill level of the participants might be approved.

The commission would forbid event contracts "involving terrorism, assassination, or war," as those trades "can present significant national security risks and therefore raise public interest concerns."

The commission will accept comments for 90 days before finalising rules related to prediction markets.

The new rules are an attempt by the CFTC to keep up with the boom in prediction markets, which have started introducing a range of new types of event contracts, Wall Street Journal reported.

US President Donald Trump's family has also taken a financial interest in the sector, with one of the Republican leader's sons serving as an adviser to Kalshi as well its rival, Polymarket.

CFTC's chair, Michael Selig was appointed by Trump and is seen as being broadly permissive to prediction markets.

The Commission, in a series of legal actions, moved to block states that have tried to restrict Kalshi as well as other prediction markets from operating in their jurisdiction.

The American Gaming Association, representing the casino industry, says prediction markets offer gambling "outside the state and tribal regulatory frameworks that protect consumers,” Axios reported.

Many experts believe that the Supreme Court will eventually decide the dispute over the regulation of prediction markets, the outlet said.

The CFTC considers bets placed on prediction markets as a form of “swaps” trading. Under previous administrations, the commission had blocked Polymarket, Kalshi and other platforms from listing broad categories of events contracts, such as those related to elections and sports.

The CFTC is also weighing other rules, including those geared toward protecting retail traders.