CFTC chair instructs staff to draft new rulebook for prediction markets

Summary

The new chair of the Commodity Futures Trading Commission (CFTC), Michael Selig, has directed staff to draft a formal rulebook for prediction markets and event contracts, including those linked to sporting outcomes. He ordered the withdrawal of a 2024 proposed rule that would have banned political and sports-related event contracts and also pulled a 2025 staff advisory that warned registrants against offering sports-related contracts while litigation was pending.

Selig said prediction markets have been inside the CFTC’s remit for more than two decades but that regulatory uncertainty has harmed markets and participants. The commission will draft new event-contract rules to provide “clear standards” and legal certainty. He also asked staff to reassess the CFTC’s role in ongoing court cases and said the agency will work more closely with the SEC to clarify the boundary between commodity and security products.

The announcement marks a clear policy reversal and prompted swift criticism from tribal gaming leaders, the American Gaming Association and others who say sports-related prediction markets amount to unregulated gambling that undermines state and tribal authority and consumer protections.

Key Points

Michael Selig (CFTC chair) has instructed staff to draft a new regulatory framework for prediction markets and event contracts.
The CFTC will withdraw the 2024 proposed ban on political and sports-related event contracts and a 2025 advisory that warned against offering sports contracts amid litigation.
The aim is to create “clear standards” and legal certainty for platforms and market participants.
The CFTC will reassess its involvement in ongoing court cases where jurisdictional questions arise.
Selig plans closer cooperation with the SEC to delineate lines between commodity and security products, including swaps and security-based swaps.
Industry platforms such as Kalshi and Crypto.com are currently facing multi-state litigation over the legality of sports-linked event contracts.
Tribal gaming groups, the AGA and IGA have strongly criticised the move, urging Congressional intervention and warning of threats to tribal sovereignty and consumer safety.

Context and relevance

This is a significant policy shift for the regulatory treatment of prediction markets — a space that sits at the crossroads of financial products, betting and crypto innovation. For platforms, operators and compliance teams, the move signals potential for clearer federal rules that could expand or restrict product offerings depending on the final rule text.

The decision also reopens contentious jurisdictional debates between federal regulators and state/tribal authorities. If the CFTC produces rules that tolerate sports-related event contracts, expect renewed legal and legislative pushback from the gaming sector and tribal leaders. Conversely, clearer federal guidance could reduce uncertainty for firms and investors if it balances market integrity with consumer protections.

Why should I read this?

Short answer: because it could change who gets to sell sports-style bets to anyone with a phone.

If you work in iGaming, compliance, fintech, crypto or legal counsel, Selig’s direction could reshape market access, product design and litigation risk. This is a big pivot at a federal regulator — so skim it if you want the gist, but dig into the full piece if your business or clients touch prediction markets.

Author style

Punchy — the story flags a major regulatory reversal that matters to operators, regulators and tribal stakeholders. It’s not just procedural: it could determine whether prediction markets are treated as regulated financial instruments or tantamount to gambling.