CFTC Says Sports Contracts Involve Gaming but Proposes to Allow Almost All of Them

The CFTC has proposed its first written framework for sports event contracts, formally defining sports markets as “gaming” – then writing definitions under which virtually everything currently traded on Kalshi and its rivals stays legal.

• Key Takeaways:
• • The CFTC proposed a rule June 10 defining sports event contracts as gaming while permitting nearly all of them.
• • Five categories would be banned: injuries, officiating, discrete actions, altercations, pre-college sports.
• • Event contract listings grew from 220 in 2021 to more than 8,000, per the CFTC.

Five banned categories, one legalized industry

The Commodity Futures Trading Commission released the proposed rulemaking on Wednesday, June 10, opening a 90-day comment period on a 267-page framework that would, for the first time, give prediction markets a written federal rulebook rather than case-by-case review. The headline concession to critics is definitional: the agency now says sports outcome contracts do involve “gaming” under the Commodity Exchange Act.

The practical effect runs the other way. Under the proposal, standard sports contracts – game winners, championship futures, and the bulk of what currently trades – would be permitted as serving the public interest. Five categories would be deemed contrary to it and banned: contracts on player injuries, officiating outcomes, discrete in-game actions such as a specific pitch or shot by a named player, physical altercations, and pre-collegiate sports. Casino-style random-chance contracts would likely be found contrary to the public interest as well, while contracts referencing war, terrorism, or assassination would be assessed on facts and circumstances rather than banned outright.

The gaming definition is a reversal. As recently as this spring, the CFTC’s own counsel argued before the Ninth Circuit that sports event contracts do not involve gaming – the position underpinning the industry’s expansion into sports markets. The proposal also marks a personal reversal for CFTC Chairman Michael S. Selig, who in private practice worked on a 2024 comment letter for Kalshi investor Paradigm arguing that treating sports contracts as gaming would be arbitrary and capricious. Selig now frames the rule as a balance:

“The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation,” he said, calling it a “durable, transparent framework… letting legitimate markets move forward.”

The banned categories track closely with what the sports world has been asking for. Players’ associations for the NFL, MLB, NBA, NHL, and MLS petitioned the CFTC on April 30 – the close of an earlier comment window – to prohibit the riskiest contract types, even as leagues like the NHL and MLB signed data deals with Polymarket and Kalshi; injuries and other outcomes were precisely the categories they flagged as integrity threats.

Prediction-market opponents were less accommodating: Mick Mulvaney, executive director of the anti-prediction-market group Gambling is Not Investing, argued the products are sports betting under another name. “A sports bet doesn’t stop being a sports bet just because you call it a contract,” he said. “If it quacks like a duck, it’s sports gambling.”

By the agency’s own count, event contract listings have grown from roughly 220 in 2021 to more than 8,000. A finalized rule would replace the litigation-driven uncertainty that has defined the sector – including the state-by-state court fights and jurisdictional standoffs – with a single federal line between permitted markets and prohibited ones. Comments are due 90 days from publication, putting a final rule on a late-2026-at-earliest track.