The Commodity Futures Trading Commission on June 10 released a 267-page proposed regulatory framework for prediction markets that would allow most sports-related event contracts to continue while restricting markets tied to player injuries, officiating calls, and individual play outcomes. CFTC Chairman Michael Selig described the proposal as providing "a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward."
The proposal comes as prediction market trading volume has surged dramatically, rising from under $5 billion per month in September 2025 to $24 billion in April 2026, according to Pew Research Center data. Sports-related contracts have fueled much of that growth, accounting for roughly 80 percent of Kalshi's trading volume since mid-2024.
Game Outcomes Stay, Injury and Prop Markets Face Restrictions
Under the proposed rules, the CFTC would permit contracts linked to game outcomes, point spreads, tournament results, and overall team performance. The agency argued that sports teams are economic enterprises and that most game-related contracts have legitimate informational value for market participants.
However, the proposal identifies several categories of contracts that would likely be deemed contrary to the public interest. These include markets based on player injuries, officiating decisions, physical altercations during games, and events involving youth athletes. The framework also raises questions about the future of individual player proposition markets, particularly those involving discrete actions by a single participant — such as pitch-by-pitch baseball contracts, which are specifically flagged as manipulation-prone because a single pitcher controls the outcome.
Industry Context and What Comes Next
The proposal reflects months of input from professional sports leagues. Both the NBA and NFL had urged the CFTC to prohibit contracts involving player injuries and officiating outcomes. The agency has signed memorandums of understanding with MLB and the NHL on policing event contracts and is working toward similar arrangements with other leagues.
Beyond sports, contracts involving war, terrorism, and assassinations would also be prohibited under the proposed rules, addressing concerns raised by an insider trading case earlier this year involving classified information and geopolitical prediction markets. Election-related contracts appear to fall outside the categories subject to the public interest review process, potentially providing clearer ground for political forecasting platforms to operate.
Several states including Arizona, Minnesota, and New York are currently in legal disputes with prediction market operators over whether these platforms should be regulated as sportsbooks under state gambling law. The CFTC's proposal does not resolve those state-level disputes but provides the clearest federal signal yet about what categories of sports contracts the agency considers permissible. A 45-day public comment period follows the release of the proposal before any final rules are implemented.
