CFTC plans new prediction market rules that could affect Polymarket and Kalshi

The U.S. Commodity Futures Trading Commission has proposed a new framework for reviewing prediction market contracts that could reshape how platforms such as Polymarket and Kalshi operate in the United States.

Summary

• The CFTC is preparing a new framework to review prediction market contracts instead of relying on broad restrictions.
• Platforms such as Polymarket and Kalshi could face additional scrutiny for certain political, sports, and real-world event markets.
• The proposal comes as prediction markets draw increased attention from regulators, lawmakers, and enforcement agencies.

According to a Wall Street Journal report, the CFTC is preparing rules that would establish a formal process for evaluating event-based contracts rather than imposing blanket restrictions on entire categories of markets. The proposal would also outline factors regulators could use when deciding whether a contract serves the public interest.

Prediction markets allow users to trade on the outcomes of future events ranging from elections and economic data releases to sporting events. Trading activity in the sector has increased sharply over the past few years, helping platforms such as Polymarket and Kalshi attract growing volumes and public attention.

The proposal arrives as regulators continue to examine how these markets should be supervised. Earlier this year, members of a U.S. House panel opened an inquiry into insider trading concerns involving prediction market platforms, adding to scrutiny of the fast-growing sector.

Some event contracts could face additional review

Under the framework described by the Wall Street Journal, certain sports-related contracts may receive closer regulatory attention. These include markets tied to player injuries and highly specific in-game events, which regulators may evaluate separately before determining whether they can continue to trade.

Contracts linked to wars, terrorism, political violence, or assassinations could face even stricter examination. According to the report, the CFTC is considering public-interest standards when reviewing these categories, allowing the agency to assess individual contracts on a case-by-case basis rather than relying on broad prohibitions.

The review comes at a time when the agency is taking a more active role in overseeing emerging financial markets.

As crypto.news reported earlier, the CFTC recently warned regulated derivatives venues that 24-hour, seven-day-a-week trading models may work for crypto-native products but may not be appropriate for every traditional asset class.

The agency said exchanges and clearinghouses should carefully evaluate products before extending continuous trading and clearing while maintaining controls designed to prevent market abuse.

Prediction markets face growing legal and regulatory scrutiny

Legal scrutiny of prediction markets has also intensified through enforcement actions and court proceedings.

As reported earlier by crypto.news, a Manhattan court has scheduled a Dec. 7 trial for Army soldier Gannon Van Dyke in what prosecutors describe as the first U.S. insider trading case involving a prediction market.

Federal prosecutors allege that Van Dyke used classified military intelligence connected to an operation involving Venezuelan President Nicolás Maduro to place profitable wagers on Polymarket.

Court filings cited by prosecutors claim he turned roughly $33,000 into more than $410,000 through 13 Venezuela-related bets. Van Dyke pleaded not guilty during his April arraignment.

Meanwhile, regulated prediction and derivatives platforms continue expanding their product offerings. On June 10, Kalshi launched XRP perpetual futures under the XRPPERP ticker, giving U.S. traders access to leveraged XRP exposure through a cash-settled contract with no expiration date.

The launch expanded Kalshi’s crypto derivatives lineup beyond Bitcoin and Ethereum and brought another crypto product into a CFTC-regulated marketplace.