The CFTC has formally advanced its event contracts proposal to the White House Office of Management and Budget, marking the start of federal rulemaking for prediction markets after years of enforcement battles and jurisdictional disputes. While proposal details remain unpublished, Chairman Michael Selig confirmed in January the agency’s intent to establish formal rules after withdrawing earlier restrictions on political and sports contracts.
The regulatory stakes are significant for brokers, exchanges, and fintech platforms. Enforcement Director David Miller stated in April that prediction markets qualify as swaps under federal law, triggering full compliance requirements including KYC, trade surveillance, and insider trading controls. Platforms are already adapting: Kalshi suspended three political candidates for self-betting, while the CFTC charged a Google employee for alleged insider trading on Polymarket.
A federal-state jurisdictional clash intensifies as Minnesota, New York, Illinois, Arizona, and Connecticut claim these are gambling products under state law. The White House supports federal oversight, with Trump calling prediction markets a major industry requiring unified regulation to maintain U.S. competitiveness.
FXnCO Insight
Firms entering prediction markets should immediately implement derivatives-grade compliance infrastructure regardless of final rulemaking outcomes, as enforcement is already treating these platforms as regulated financial venues.
Source: Finance Magnates