CFTC Withdraws Proposal Against Sports and Political Prediction Markets
The CFTC has retracted a proposal from the Biden administration aimed at banning prediction markets for sports and political events, highlighting a new direction for regulatory oversight.
The U.S. Commodity Futures Trading Commission (CFTC) has taken a significant step by retracting a Biden-era proposal designed to ban sports and political prediction markets, which are among the most sought-after event contracts today.
CFTC Chair, Mike Selig, addressed on Wednesday that the agency has withdrawn a notice proposed in 2024 that aimed to prohibit event contracts covering topics like sports and politics, categorizing them as “contrary to public interest.”
Selig remarked that the initial proposal represented a misguided attempt by the previous administration to impose merit regulation by outright forbidding political contracts ahead of the 2024 elections. He added that the CFTC does not intend to finalize rules based on the previous proposal.
“The Commission is withdrawing that proposal and will advance a new rulemaking grounded in a rational and coherent interpretation of the Commodity Exchange Act that promotes responsible innovation in our derivatives markets in line with Congressional intent,” Selig stated.
This action marks the latest revision in the CFTC’s approach to prediction markets, including platforms like Polymarket and Kalshi, which have gained traction for permitting wagers on various events, particularly sports.
These platforms, including those operated by Coinbase and Crypto.com, have faced legal scrutiny from various states alleging they provide unlicensed gambling opportunities—claims that the platforms contest, asserting they are exclusively regulated by the CFTC.
CFTC Removes Staff Guidelines on Sports Contracts
Selig also noted that the CFTC retracted a September staff letter reminding regulated entities of their responsibilities when facilitating sports event contracts and the necessity to prepare for potential legal challenges. This letter, released prior to a U.S. government shutdown, urged regulated entities to be ready for any foreseeable conditions arising from the trading and clearing of such contracts.
The advisory was meant to emphasize litigation risks but created confusion among market participants, prompting Selig to announce that he is committed to collaborating with staff on developing event contracts regulations moving forward.
