CFTC receives 1,500 comments on prediction market rule

The Commodity Futures Trading Commission received over 1,500 public comments on a March proposal that would allow the agency to amend or adopt rules for event contracts traded on prediction markets. The comment period closed Thursday and attracted filings from prediction-market operators, crypto firms, consumer groups and state gaming regulators.

The proposal is intended to clarify the CFTC’s authority over event contracts-agreements tied to outcomes such as sports results, elections or geopolitical events-after a series of legal disputes between platforms and state officials.

Industry participants urged the CFTC to affirm and clarify federal oversight. Kalshi co-founder and chief operating officer Luana Lopes Lara wrote that the agency’s existing regulations are “well-designed and effective” and called for guidance “so that the universe of event contracts can continue to be listed, traded, and overseen by the Commission.” Polymarket US chief executive Justin Hertzberg praised Chair Mike Selig for “asserting the CFTC’s longstanding exclusive jurisdiction over prediction markets.” Venture capital firm Andreessen Horowitz argued that state restrictions create “a serious barrier to impartial access.”

State gaming regulators filed opposing comments. Pennsylvania Gaming Control Board executive director Kevin O’Toole wrote that the CFTC was allowing prediction markets “to masquerade as unregulated sportsbooks.” Mary Beth Thomas, executive director of the Tennessee Sports Wagering Council, wrote the council disputes “that sports event contracts offered on prediction markets fall within the jurisdiction of the CFTC at all.” Missouri Gaming Commission executive director Michael Leara wrote that Congress “did not intend futures markets to encompass gambling activities” and urged the agency to reserve jurisdiction over sports event contracts for the states.

Consumer advocates and some lawmakers asked the CFTC to ban certain markets. Dennis Kelleher, chief executive of Better Markets, and a coalition of 12 groups urged the agency to “prohibit event contracts that involve elections or geopolitical events,” saying such contracts could be used to influence government actions or be exploited by those with insider knowledge. Those concerns followed well-timed bets tied to the Iran conflict and a Senate vote that barred members and staff from using prediction markets.

Operators including Kalshi vs Polymarket said they have tightened trading rules to curb insider trading and have restricted or banned some user groups, including politicians. Kalshi, Polymarket and Coinbase have faced state lawsuits over sports prediction offerings and have argued those products fall under federal commodities law. The CFTC has sued at least five state governments that took action against prediction markets, and Chair Mike Selig has warned he would sue any state that moves to block the platforms.

The CFTC will review the submissions as it determines next steps on the proposed rule. The agency’s action follows months of enforcement and litigation that have framed competing federal and state regulatory claims over prediction markets.