What the CFTC’s New Prediction Market Rules Mean for Kalshi, Polymarket, and Coinbase

TLDR

• The CFTC issued a staff advisory and started a formal rulemaking process for prediction market oversight on Thursday
• CFTC Chair Mike Selig, the agency’s sole commissioner, says the CFTC has exclusive jurisdiction over prediction markets
• Platforms like Kalshi, Polymarket, and Coinbase now have initial guidelines for U.S. operations
• An Ohio judge recently ruled against Kalshi’s bid to block Ohio gaming authorities, complicating the federal claim
• The public has 45 days to submit comments after the rule is published in the Federal Register

The U.S. Commodity Futures Trading Commission has taken two formal steps toward regulating prediction markets, issuing new operational guidelines and kicking off a rulemaking process that could reshape the industry.

CFTC Chair Mike Selig announced the moves on Thursday. He described prediction markets as “one of the most exciting innovations in financial markets” and said the agency had failed for too long to provide clear guidance.

The CFTC released a staff advisory classifying event contracts on prediction markets as a financial asset class. It also submitted an Advanced Notice of Proposed Rulemaking to the Federal Register, opening a 45-day public comment window.

Prediction markets are platforms where users buy and sell contracts tied to binary outcomes — like who wins an election or a sports game. Platforms like Kalshi, Polymarket, and Coinbase are among those regulated by the CFTC as designated contract markets.

The new advisory tells these firms how to get trading products approved by the regulator. It also says they should only list contracts “not readily susceptible to manipulation.”

For sports-related contracts specifically, firms are told to communicate with relevant sports governing bodies when developing terms, compliance programs, and market oversight rules.

States and the CFTC Are Clashing Over Jurisdiction

The rulemaking comes during an active legal dispute between the CFTC and several state regulators. Multiple states have sued prediction market platforms, arguing they fall under state gambling laws — particularly for sports-related bets.

Selig has pushed back hard, arguing the CFTC holds sole federal jurisdiction over these markets. He has said he will challenge any state that tries to assert authority over prediction market platforms in court.

However, an Ohio judge recently denied Kalshi’s request for a preliminary injunction against Ohio gaming authorities. She ruled that Kalshi had not shown that federal law would necessarily override Ohio’s sports gambling rules.

Selig Is Running the CFTC Alone

Selig is currently the only sitting CFTC commissioner. The agency normally has five members, but seats have been vacant since acting chair Caroline Pham left in December.

Because only a majority quorum is needed to pass a rule, Selig technically has sole authority to approve the final prediction markets rule on his own. As of Thursday, President Trump had not announced any new nominations to the agency.

The rulemaking document runs 32 pages and poses a series of questions to guide the direction of the final proposal. The number of applications for designated contract market registration has more than doubled over the past year, largely from entities focused on prediction markets.

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