The U.S. Commodity Futures Trading Commission has withdrawn a 2024 notice of proposed rulemaking that would have barred event contracts tied to sports, politics, war and other topics. The decision removes a Biden-era proposal that labeled such contracts as “contrary to the public interest” and ends the Commission’s prior path toward an outright prohibition.
Newly 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 adopt final rules based on that notice. He said the Commission will instead pursue a fresh rulemaking grounded in what he described as a “rational and coherent interpretation of the Commodity Exchange Act” that aims to support responsible innovation in derivatives markets while aligning with Congressional intent.
The withdrawal affects popular prediction market platforms such as Polymarket and Kalshi and offerings from firms including Coinbase and Crypto.com. Those platforms have been the target of state-level legal actions alleging they operate unlicensed gambling businesses; the firms maintain they fall under CFTC oversight and have pushed back on state claims.
Selig also rescinded a September CFTC staff letter that had reminded regulated entities of obligations when facilitating sports-related event contracts and advised they prepare for possible litigation. That advisory urged firms to plan for “all foreseeable conditions” arising from trading and clearing sports event contracts, noting ongoing state enforcement actions and lawsuits. It recommended contingency planning, enhanced disclosures and risk-management policies. Selig said the staff guidance, which “intended to highlight litigation considerations,” produced confusion among market participants and thus was withdrawn.
The agency’s move signals a shift away from an outright ban toward a formal rulemaking process designed to clarify the CFTC’s stance on event contracts while allowing regulated innovation. Selig said he looks forward to working with staff on a structured event-contracts rulemaking to provide legal clarity and consistent supervision for these markets.