CFTC prediction market proposal draws opposition from lawmakers, tribes and regulators

A proposal from the U.S. Commodity Futures Trading Commission to establish federal boundaries for sports and other prediction market contracts has drawn opposition from lawmakers, Native American tribes, consumer advocates, traditional casinos and former agency officials.

A review of public comments available Monday showed that Native American tribes, casino operators and local authorities in 20 states consider sports contracts offered through prediction markets to be illegal gambling that should remain under state and local control, reported Reuters. Sports prediction markets are blocked in jurisdictions including Nevada and Michigan.

The CFTC proposal, released last month, would restrict contracts involving activities identified in federal law, including crime, terrorism, assassination, war and “gaming.” The agency said some of those contracts may fall outside the “public interest.”

The framework would generally allow sports wagering to continue on prediction market platforms such as Kalshi and Polymarket. Contracts based on final scores, win-loss results and advancement through tournaments would likely be permitted, while those involving player injuries, fighting, children’s sports and refereeing would likely be prohibited.

The comments against the regulation are ‌in response to last month’s proposal. While the CFTC faces no timeline for ​issuing any final proposal, it is expected to consider the comments received.

Christopher Dodd, the former Democratic U.S. senator who co-sponsored the landmark 2010 law that gave the CFTC regulatory authority over derivatives known as swaps, said Congress did not intend for the agency to become the national regulator of gambling.

“At the time Congress passed Dodd-Frank, we were well aware of existing federal laws regulating gaming,” he wrote. “We ⁠had no intention of amending those laws.”

Former CFTC Chairman Timothy Massad also criticized the proposal, writing that the CFTC “has lost its way.”

“Although I have not submitted comments on any rule proposal since leaving the agency, I feel it is important ⁠to do so here because the agency has lost sight of its mission and the limits of its own authority,” Massad said.

President Donald Trump and his administration have supported the prediction market industry and have pursued court cases across the country arguing that federal law permits registered markets to offer event contracts. The administration has also argued that state authorities cannot interfere with the trading of those federally regulated derivatives.

Prediction markets allow users to make yes-or-no wagers on outcomes involving sports, elections, economic developments, Wall Street indices and other events.