CFTC Reverses Decision on Prediction Market Rule

The CFTC has withdrawn a proposed rule banning prediction markets for political and sports events. Chairman Michael S. Selig criticized the former rule as inadequate, emphasizing CFTC’s authority over such contracts and committing to clearer regulations.

Michael S. Selig, Chairman of the CFTC, announced the withdrawal of a proposed 2024 rule that aimed to ban political and sports-related prediction market contracts.

The decision is significant because it shifts regulatory oversight and supports continued use of prediction markets, impacting platforms such as Kalshi and Polymarket.

Michael S. Selig criticized the previous framework for failing market participants, asserting CFTC’s exclusive jurisdiction. The 2024 proposal and 2025 advisory have been withdrawn, with plans for new standards. Polymarket and Kalshi have faced regulatory challenges, with the CFTC now clarifying jurisdiction to support event contracts. The halting of the 2024 rule favors prediction markets, strengthening platforms like Kalshi.

The financial impact includes regulatory clarity and continued market support. Event contracts sustain investor interest with clearer oversight. These actions signal towards a period of adjustments in legal frameworks impacting prediction market operations. State regulators previously treated prediction platforms as sports betting. The CFTC’s actions aim to resolve such jurisdictional disagreements, offering market-friendly guidelines.

While direct financial data remains unreported, prediction markets see potential revitalization. Market participants anticipate stable regulatory conditions, with opportunities for innovation and growth. Historical patterns, such as CFTC’s actions in 2022, suggest upcoming litigation may be resolved. Selig pledges market-friendly rules, benefitting legal clarity and participant reassurance.