CFTC Faces Mounting Opposition Over Prediction Market Regulatory Proposal

A bid by the U.S. Commodity Futures Trading Commission to define federal limits for sports and prediction market contracts has sparked widespread pushback from a diverse coalition. Lawmakers, Native American tribes, casino operators, consumer advocacy groups, and former agency officials have all weighed in against the plan.

Public comments reviewed indicate that tribal nations, traditional casino interests, and local authorities across 20 states view the sports contracts offered on prediction market platforms as unlawful gambling. These groups insist such activities should remain under state and local jurisdiction. Several jurisdictions, including Nevada and Michigan, have already blocked sports prediction markets.

The CFTC’s proposal, unveiled last month, would ban contracts tied to activities already deemed unlawful under federal statute, including "gaming," terrorism, assassination, war, and crime. The agency has signaled that some of these contracts may not serve the "public interest."

Under the proposed framework, wagers on final scores, win-loss outcomes, and tournament progression would likely be permitted. However, bets involving player injuries, fighting, children’s sports, or officiating decisions would probably be prohibited. Platforms like Kalshi and Polymarket could continue offering sports-related event contracts within these boundaries.

Former Senator Christopher Dodd, co-sponsor of the 2010 Dodd-Frank Act, stated that Congress never intended for the CFTC to become a national gambling regulator. "At the time Congress passed Dodd-Frank, we were well aware of existing federal laws regulating gaming," he wrote. "We had no intention of amending those laws."

Likewise, former CFTC Chairman Timothy Massad criticized the agency’s direction, asserting that the CFTC "has lost its way."

The Trump administration has taken a contrasting stance, supporting the prediction market industry and arguing in court that federal law allows registered markets to offer event contracts. It has also contended that state authorities lack the power to interfere with these federally regulated derivatives.

Prediction markets enable users to place yes-or-no wagers on outcomes spanning sports, elections, economic indicators, and Wall Street benchmarks. The CFTC has not set a timeline for issuing a final rule but is expected to review the submitted comments.