The CFTC opened a public comment period on prediction-market regulation after publishing an Advanced Notice of Proposed Rulemaking. The public has 45 days from its Federal Register publication to submit written comments, including on event contracts that may be contrary to the public interest.
The proposed rulemaking could shape which prediction-market contracts are permitted and how they are regulated.
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The CFTC said on 5 November that registered designated contract markets must remove domestic geographic restrictions that conflict with its fair-access requirements within 30 days. Exchanges must also ensure partner intermediaries comply, or explain in writing why they cannot; the guidance comes amid state court orders requiring restrictions in several states.
The CFTC said on 5 November that registered prediction market operators must unblock geoblocked states within 30 days. Under its new interpretative guidance, designated contract markets that cannot comply may instead explain in writing why they cannot.
The CFTC said it has sued Utah to prevent the state from restricting event contracts on CFTC-registered exchanges. The action follows Utah’s lawsuit accusing Kalshi of violating the state’s gambling prohibition; CFTC chairman Michael Selig said the agency was defending its authority over commodity derivatives.
On Tuesday the CFTC announced it had sued Utah, seeking to block the state from limiting the operations of exchanges registered with the agency. The agency's move answers a suit Utah brought against Kalshi, accusing the prediction markets platform of creating a public nuisance by evading the state's 130-year-old gambling ban.
The CFTC’s enforcement director David Miller said policing fraud, abuse and manipulation in prediction markets is an agency priority. He said the agency has investigated and may have open investigations involving candidates trading on contracts tied to their own elections, but declined to discuss specific midterm cases. Two separate insider-trading cases involving prediction-market trades remain pending, and both defendants deny wrongdoing.
Insider trading in prediction markets ranks among the enforcement priorities of the Commodity Futures Trading Commission, according to David Miller, the agency's director of enforcement. Miller, who took the enforcement division post this year after CFTC Chairman Michael Selig appointed him, said his division's focus is on fraud, abuse and manipulation. He recalled that before his appointment, people were uncertain about whether insider trading and market manipulation rules and laws reached prediction markets.
Kalshi chief executive Tarek Mansour warned at DC Fintech Week in Washington that operators could move abroad if courts allow states to regulate prediction markets. Mansour defended Kalshi’s legal position as states argue sports-related contracts fall under gambling laws, while Kalshi and the CFTC say federal commodities law applies. New Jersey has asked the US Supreme Court to review the dispute.
At DC Fintech Week in Washington, Kalshi CEO Tarek Mansour warned that if courts back states' power to regulate prediction markets, operators may relocate abroad. He used the appearance to defend the company's stance in litigation over whether event contracts are governed by federal commodities law or by state gambling rules.
The CFTC submitted two proposals to the White House on 28 September that would revise how event contracts are classified in the United States. One would define them as swaps and go to public consultation; the other would exclude casino-style gambling products and is interim final. Chairman Michael Selig said the swap classification would secure federal exclusivity for the agency.