Michael Selig, the chair of the U.S. Commodity Futures Trading Commission (CFTC), has launched a proposal for new regulations governing event contracts on prediction market platforms such as Kalshi and Polymarket. He emphasized the significance of these markets in a recent communication, stating, “Prediction markets are one of the most exciting innovations in financial markets. Yet for too long, the CFTC has failed to provide guidance for these markets being used by millions of Americans. This ends today.”

In a Thursday announcement, the CFTC classified event contracts on prediction markets as a financial asset class. The agency also issued an Advanced Notice of Proposed Rulemaking and is now seeking public feedback on the application of the Commodity Exchange Act (CEA) to prediction markets.

Update (March 12 at 8:56 pm UTC): Comments from CME Group CEO Terry Duffy have been added to this article.

Duffy remarked, “The courts have gone both ways here, as we’ve seen — some in favor and some opposed to the prediction markets. I don’t see how it doesn’t go to the Supreme Court for a definition of what is a prediction market on sports, and if that is the same as gambling.”

Selig remains the sole commissioner of the CFTC, following the departure of acting chair Caroline Pham. There are currently no new nominations to fill vacant seats at the CFTC, which results in Selig having the potential authority to approve the prediction markets proposal after the necessary public notices and comment periods. The public will have 45 days to voice their opinions once the proposed rule is officially published.