The Commodity Futures Trading Commission took a big step Wednesday toward letting people legally bet on sports results through regulated markets. At the same time, the agency proposed new guardrails for election-related contracts, aiming to draw a clear line between permissible hedging and outright gambling. A 90-day public comment period is now open.
What the proposal covers
The CFTC's two-part rulemaking would formally allow derivatives tied to sports outcomes — think futures or options on whether a team wins a championship — to trade on designated contract markets. Currently, most sports betting in the U.S. operates under state law and is run by casinos and online operators. The agency's move would bring prediction markets under federal commodity oversight, giving them the same legal footing as agricultural or energy derivatives.
Separately, the proposal aims to shut the door on election contracts that the CFTC has long viewed as contrary to the public interest. In recent years, platforms like PredictIt and Kalshi have offered contracts on congressional races and presidential elections, drawing scrutiny from regulators. The new rule would explicitly ban such contracts unless they meet narrow exceptions — for example, a hedge by a media company that depends on a candidate's victory for its advertising revenue.
The rationale behind the change
CFTC officials say the sports-prediction push responds to growing demand from exchanges and traders. Without federal clarity, some venues have operated in a gray area, risking enforcement actions. By laying out clear criteria, the commission hopes to encourage innovation while maintaining market integrity.
Election contracts, by contrast, raise concerns about manipulation and the perception that money is being wagered on democratic outcomes. The CFTC previously blocked Kalshi from listing election contracts, and the new rule would codify that position. “These contracts undermine the integrity of our elections,” the commission said in the proposal.
Industry reaction is mixed
Prediction-market advocates have long argued that these contracts provide valuable forecasting data and allow people to hedge political risk. Critics counter that they commodify elections and could invite bad actors. The 90-day comment window gives both sides a chance to shape the final rule.
Sports betting companies and derivatives exchanges are likely to weigh in, as the proposal could create a new asset class. But the CFTC has warned that it won't approve every contract — any market must demonstrate it's not easily manipulated and that the underlying event has a clear, verifiable outcome.
What happens next
The commission will accept public comments for the next three months. After that, it will review the feedback and issue a final rule, which could take months or even longer. Any changes to the election contract ban would require separate rulemaking. For now, the status quo on PredictIt and similar sites remains uncertain — the CFTC has already signaled it will continue enforcement actions against unregistered election markets.
