The Commodity Futures Trading Commission proposed new rules for burgeoning prediction markets that delineate what bets would be allowed under federal law.
On Wednesday, the CFTC introduced a slate of new rules that would still allow overall support for sports betting, despite opposition from state regulators. However, bets on terrorism, assassinations and war would be more limited.
Prediction markets, such as Kalshi and Polymarket, allow people to place bets on real-world events, from tariff rates to which couple will win on Love Island USA. Those marketplaces gained significant traction in the 2024 elections and are now worth tens of billions of dollars each.
"The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation," said CFTC Chair Michael Selig in a statement. "This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward."
Insider trading has become a concern in prediction markets. In April, the Justice Department arrested an active-duty U.S. Army soldier for using confidential information to place bets on the prediction market Polymarket ahead of former Venezuelan President Nicolás Maduro’s capture earlier this year. The DOJ and the CFTC are also reportedly investigating former Rep. George Santos after Kalshi found suspicious trades tied to his attendance at Trump's February State of the Union address.
