The US Commodity Futures Trading Commission has formally withdrawn a proposal introduced during the Biden administration that aimed to prohibit sports, political and other event-based prediction markets. The move signals a regulatory shift for platforms that allow trading on real-world outcomes, which have grown rapidly in popularity across the United States.
CFTC Signals New Direction on Event Contracts
CFTC Chair Mike Selig confirmed that the agency has pulled back a 2024 notice of proposed rulemaking that classified event contracts tied to sports, elections and conflicts as contrary to the public interest. He criticized the proposal as an example of merit-based regulation that attempted to impose an outright ban, particularly ahead of the 2024 US presidential election.
Selig said the commission will not finalize the withdrawn proposal and instead plans to pursue a new rulemaking framework. According to him, the next approach will be grounded in the Commodity Exchange Act and focused on fostering responsible innovation while remaining aligned with congressional intent.
Impact on Prediction Market Platforms
The decision directly affects prediction market platforms that allow users to speculate on sports results and political outcomes. These markets have expanded significantly, attracting users interested in event-based derivatives rather than traditional gambling products. Despite their growth, such platforms have faced legal pressure from several US states, which argue that these offerings constitute unlicensed gambling. Operators maintain that they fall under federal derivatives regulation.
In addition to the proposed ban, the CFTC also rescinded a staff advisory issued in September that warned regulated entities to prepare for litigation risks when offering sports-related event contracts. Selig said the guidance unintentionally created uncertainty and confirmed that the commission will revisit the issue as part of a broader, clearer rulemaking process.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.