The U.S. Commodity Futures Trading Commission has withdrawn a 2024 notice of proposed rulemaking that would have banned event contracts tied to sports, politics, war and other topics. The move eliminates a Biden-era proposal that classified such contracts as “contrary to the public interest.”
Recently confirmed CFTC chair Mike Selig said the proposal “reflected the prior administration’s frolic into merit regulation with an outright prohibition on political contracts ahead of the 2024 presidential election,” and that the agency does not intend to issue final rules based on it. He added the Commission will instead pursue a new rulemaking “grounded in a rational and coherent interpretation of the Commodity Exchange Act” that supports responsible innovation in derivatives markets consistent with Congressional intent.
The withdrawal affects popular prediction markets such as Polymarket and Kalshi and offerings from firms including Coinbase and Crypto.com. Those platforms have faced state-level legal actions alleging they operate unlicensed gambling businesses; the platforms maintain they are regulated by the CFTC and push back against state claims.
Selig also rescinded a September CFTC staff letter that had reminded regulated entities of their obligations when facilitating sports-related event contracts and advised they prepare for possible litigation. The advisory had urged firms to be ready for “all foreseeable conditions” arising from trading and clearing sports event contracts and noted awareness of various state regulatory actions and lawsuits. It recommended contingency planning, disclosures, and risk management policies, but Selig said the guidance “intended to highlight litigation considerations” had inadvertently created confusion for market participants.
The chair said he looks forward to working with staff on a formal event-contracts rulemaking. The withdrawal signals a shift away from an outright ban toward a rulemaking approach that aims to clarify the CFTC’s stance while permitting regulated innovation in event-based derivatives.
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