The Commodity Futures Trading Commission (CFTC) released its rules proposal for governing prediction markets Wednesday morning after the White House approved the document.
This Notice of Proposed Rulemaking (NPRM) is the penultimate step before the suggested rule is enacted. It defines key terms the CFTC uses to classify bets—such as whether an event constitutes “gaming”—and clarifies some of the potential boundaries the agency will set for prediction markets. As the CFTC argues in court that prediction markets should remain under its watch amid pushback from state gaming officials and tribal groups, it can lean on the final rule as a comprehensive public framework for its policies.
The NPRM stops short of hard bans on specific sports wagers but advises that areas such as player injuries and officiating are “likely” impermissible because they are contrary to the public’s interest. It calls casino games “highly unlikely” to be allowed.
U.S. gambling stakeholders, including sports leagues and companies in competition with prediction markets, have waited more than a year for any specifics on what federal oversight of exchange betting will entail. Prediction markets began offering wagers on sports just before the start of President Donald Trump’s second term, but to date, CFTC chairman Michael Selig has ad-libbed prediction market regulation using financial derivatives rules that are not specific to those bets.
