The U.S. Commodity Futures Trading Commission (CFTC) is set to bring in new rules on how to govern prediction markets at a time when there is a rise in popularity among users.
Media reports from Wednesday suggest that the market regulator is proposing new rules related to sports-related trading, including bets on player injuries and so-called “first-pitch” gambling, while bets on war, terrorism or assassinations would likely be barred as not in the public interest.
Prediction markets, which allow users to wage bets on an event or possibility with a yes or no, have faced a rise in controversies across the globe. The CFTC oversight comes against the backdrop of the surge in hype and the rise in controversies as well.
The proposed rules from the Commodity Futures Trading Commission would not automatically ban any specific type of prediction market, such as those tied to sports, politics, or other real-world events.
Instead, the agency plans to evaluate certain event contracts individually, using a set of factors to determine whether they could be susceptible to fraud, market manipulation, or conflicts with the public interest.
This case-by-case approach gives the CFTC flexibility to approve legitimate markets while restricting those it considers too risky.
According to media reports, most sports-related contracts could be allowed under the new framework. The proposal also comes amid a broader debate over who should regulate prediction markets in the U.S. Last month, Donald Trump said on Truth Social that it was essential for the CFTC to retain exclusive authority over the sector, signaling support for a federal regulatory approach rather than overlapping oversight.
New proposal comes as prediction markets face scrutiny in the U.S.
The CFTC’s new proposal comes after previous scrutiny for prediction markets in the U.S. Republican politician Bryan Steil had proposed to prevent current and former members of Congress, as well as federal candidates, from betting on political prediction markets.
The idea behind the move was to stop lawmakers and candidates from having access to information that the public doesn’t, giving them an unfair edge when wagering on elections or policy outcomes through platforms like Kalshi and Polymarket.
Steil said he has no issue with lawmakers participating in prediction markets tied to nonpolitical events, such as sports, but believes political contracts raise clear conflict-of-interest concerns. The proposed legislation would draw a line between entertainment-style betting and markets where insider knowledge could influence outcomes and undermine public trust.
Prediction markets face global issues
Prediction markets have been flagged as having the potential for insider trading, manipulation, and commercializing important events, which is being closely scrutinized around the world.
In situations where a politician, government employee or any insider in an industry might have access to inside information, there is a possibility that they might earn from the situation by making a prediction even before everyone else becomes aware.
Another concern is the idea of influencing such situations by creating false rumors.
Apart from concerns regarding market integrity, the ethics associated with betting on important issues like elections, war, natural calamity or public health crises has also come under scrutiny.
While advocates of prediction markets argue that these can be extremely useful in forecasting and predicting certain events, it is difficult for regulators to find a balance between the benefits and concerns.
