CFTC Proposes Federal Rules for Sports Prediction Markets

⏱ 3 min read

The Commodity Futures Trading Commission (CFTC) published a 267-page proposed rule on June 10, 2026 setting out, for the first time, a written federal framework for sports prediction markets. The proposal would permit most sports event contracts traded on Kalshi and Polymarket, while banning five narrower categories tied to injuries, officiating, and player altercations.

The move matters for every operator watching the prediction-market boom: sports event contract listings have grown from roughly 220 in 2021 to more than 8,000 today, and sports now account for close to 90% of Kalshi's total trading volume. A 90-day comment period is now open, setting up a sharper clash with state regulators who already classify these contracts as sports betting.

What the CFTC Actually Proposed

The Notice of Proposed Rulemaking, published by the CFTC on June 10, 2026, amends Regulation 40.11 and adds a new Appendix F covering event contracts. The agency now concedes sports outcome contracts involve "gaming" under the Commodity Exchange Act — a reversal from its prior stance. But it defines that category narrowly enough that nearly all current sports contracts, including moneylines, spreads, and player props, remain tradable. "Involving" gaming refers to the event being traded on, not the trading itself — a distinction critics have disputed for over a year.

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What Stays Banned

Five categories of sports event contracts would be prohibited under the proposal:

• Contracts tied to player or athlete injuries
• Contracts based on officiating decisions (referee or umpire calls)
• Contracts on discrete in-game actions, such as next-pitch or next-play microbets
• Contracts involving player altercations or misconduct
• Contracts referencing pre-college (youth) sports

Most of these categories were not widely listed on Kalshi or Polymarket to begin with, so the practical impact on current offerings may be limited. The age requirement is unchanged: the CFTC did not raise the minimum trading age from 18 to 21, despite pressure from state regulators who argue this undercuts protections built into licensed sportsbook frameworks.

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The State vs. Federal Standoff

The proposal lands amid an escalating jurisdiction fight. Nevada and Massachusetts hold preliminary injunctions against Kalshi, while a federal appeals court ruled in April 2026 that New Jersey regulators could not bar Kalshi from offering sports-event contracts. Most recently, New Mexico Attorney General Raúl Torrez sued Kalshi and KalshiEX LLC, alleging the platform runs illegal sports betting in the state.

The American Gaming Association estimates prediction markets' sports expansion has cost states over $1 billion in lost betting tax revenue. In March 2026, Senators John Curtis and Adam Schiff introduced a bill banning event contracts resembling sports bets, an issue this proposal does not address.

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What It Means for Operators and Bettors

For licensed sportsbook operators, this is double-edged. A federal "gaming" classification hands state regulators a new definitional hook for further legal arguments. But the broad permission for sports contracts confirms the CFTC has no intention of curbing its fastest-growing registrants — leaving prediction markets as durable, federally sanctioned competitors operating outside state licensing, tax, and responsible-gambling regimes.

Dimension	Licensed Sportsbooks (State-Regulated)	Prediction Markets (CFTC-Regulated, Proposed)
Minimum age	21 in most US states	18 (unchanged in proposal)
Responsible gambling tools	Self-exclusion, deposit limits mandated	Not addressed in proposal
Tax treatment	State sports betting tax applies	Federal derivatives framework, no state betting tax
Injury / officiating bets	Permitted in many jurisdictions	Banned under proposed rule
Microbetting (next-pitch, next-play)	Permitted in many jurisdictions	Banned under proposed rule

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What Happens Next

The 90-day comment period opened June 10, 2026 and closes in early September 2026. A finalized rule is unlikely before late 2026. Expect continued litigation in Arizona, Minnesota, New York, and New Mexico to run alongside the federal rulemaking — and whatever framework emerges to face court challenges regardless of its final form.

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Sources

This article draws on the CFTC's own rulemaking notice alongside independent reporting and legal analysis published within the last week.

The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation.

— Michael Selig, Chairman, Commodity Futures Trading Commission · Statement on the proposed rulemaking, June 10, 2026