CFTC withdraws proposal that targeted sports and political prediction markets

Prediction markets have moved from a niche corner of finance into a mainstream growth product, especially for sports and election-style outcomes. That rise has also sharpened a basic question: when an “event contract” is listed on a federally registered exchange, how far can state gambling rules reach?On Feb. 4, the Commodity Futures Trading Commission said it has withdrawn its June 10, 2024 notice of proposed rulemaking titled “Event Contracts” and does not plan to finalize it. The proposal would have expanded the categories of event contracts treated as “contrary to the public interest,” including contracts the agency viewed as involving gaming.

The commission also said staff has withdrawn Staff Letter 25-36, a September 2025 advisory that warned certain registered markets about offering access to sports event contracts while litigation and state enforcement actions were unfolding. 

CFTC Chair Michael S. Selig said the agency will move forward with a new rulemaking grounded in its reading of the Commodity Exchange Act. In remarks last week, Selig said the goal is “clear standards” that reduce uncertainty for market participants and allow lawful innovation.

The Federal Register notice that formally withdraws the proposal explains why the CFTC is hitting reset. The agency said it wants to reconsider the approach in light of state regulatory actions and litigation over the CFTC’s exclusive jurisdiction, including questions about preemption of state gambling, wagering, and gaming laws for sports-related event contracts. The change matters for platforms building around event contracts, including CFTC-regulated Kalshi and crypto-native rivals such as Polymarket. The next milestone is what the new proposal looks like, and whether it narrows the gray area states have been using to challenge these products.