The US Commodity Futures Trading Commission published its initial proposed rulemaking for prediction markets on Wednesday. The regulatory update establishes a new framework for reviewing contract classifications and opens a 45-day public comment period.
The 267-page document focuses on amendments to CFTC Regulation 40.11 and introduces Appendix F to part 40. Stakeholders may submit feedback once the proposal appears in the Federal Register, a publication step that has not yet occurred. The notice follows a broader regulatory announcement made in March. The commission will use the new guidelines to determine whether specific contracts fall under Section 5c(c)(5)(C) of the Commodity Exchange Act, which covers events involving terrorism, assassination, war, unlawful conduct, or gaming.
Contracts deemed contrary to public interest will face further review.
Contract Classification and Gaming Definition
The term gaming appears 222 times throughout the proposal, reflecting legal disputes over whether sports event contracts constitute gaming. The commission now defines gaming as recreational or entertainment activity governed by rules, where outcomes rely on luck, skill, or athletic performance. Elections and award ceremonies are explicitly classified as contests rather than gaming. The proposal notes that currently listed contracts already reflect this shift, covering aggregate sports metrics such as final scores, point differentials, seasonal statistics, and tournament advancement.According to the CFTC statement, chairman Michael Selig noted that the proposal "gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinise while letting legitimate markets move forward". The regulatory shift addresses previous commission positions on sports event derivatives.
Legal challenges surrounding prediction market classification have increased in recent months, with the commission actively defending its oversight authority in public statements and court proceedings.