CFTC Proposes Formal Rules for Prediction Markets: What Gets Banned, What Survives

The U.S. Commodity Futures Trading Commission published a Notice of Proposed Rulemaking (NPRM) today establishing a formal framework for evaluating which event contracts can legally trade on federally regulated exchanges — and which cannot. Published June 10, 2026, as CFTC Release Number 9249-26, the proposal is the most concrete federal guidance on prediction market contract rules since the industry's legal battles with states began in earnest.

The proposal amends CFTC Regulation 40.11 and adds a new Appendix F to Part 40. For traders on Kalshi, Robinhood Predictions, and other regulated platforms, the rules draw a clearer line between contracts that will continue operating without extra regulatory scrutiny and those that must go through a formal 90-day review.

What Is CFTC Regulation 40.11?

Regulation 40.11 governs how CFTC-registered exchanges self-certify new products. When Kalshi or any other Designated Contract Market (DCM) lists a new event contract, it goes through an internal certification process. The current rules allow the CFTC to block certain contracts — but the relevant statutory terms have been ambiguous enough that states like Minnesota, Arizona, and Massachusetts have tried to fill the gap with their own enforcement actions, with some success.

Today's NPRM directly addresses Section 5c(c)(5)(C) of the Commodity Exchange Act, which lists five categories of activities the CFTC must scrutinize: terrorism, assassination, war, gaming, and conduct that is unlawful under federal or state law. These are known as the "enumerated activities." The NPRM is narrowly focused on this one section of the broader March 2026 Advanced Notice of Proposed Rulemaking, though the commission notes the ANPRM may produce additional rulemaking on other topics.

Which Contracts Face Scrutiny?

Under the proposed rules, any event contract that involves one of the five enumerated activities triggers a structured 90-day review. The CFTC then applies a public interest test — even if a contract touches an enumerated activity, it can still be approved if regulators determine it serves the public interest.

Contracts that would clearly be barred under the proposed framework include those referencing:

• Terrorist attacks or acts of terrorism
• Political assassinations
• Active armed conflict or war

According to people familiar with the proposal cited by the Wall Street Journal, these contracts would be prohibited because they are not in the public interest — not merely because they technically involve an enumerated activity.

Sports-related event contracts get more nuanced treatment. The Wall Street Journal reported that certain types of sports trading may face new restrictions, specifically bets on player injuries and "first-pitch gambling" — the type of contract linked to enforcement actions against professional athletes for alleged insider trading. However, the proposal does not issue a blanket ban on any contract type. Every contract near the line goes through the 90-day case-by-case review.

The 'Gaming' Definition: Why It Matters

The most consequential element of today's NPRM may be a definitional one: the proposal formally defines the statutory terms "gaming" and "involve."

States have used the "gaming" classification as their primary legal argument for blocking prediction markets. Arizona's attorney general filed criminal charges against Kalshi arguing it operated an illegal gaming business. Minnesota's SF 3432 treats prediction market sports contracts as gambling. Massachusetts obtained a geofencing injunction on the same theory.

If the CFTC defines "gaming" narrowly — in a way that excludes standard sports event contracts — it would undercut the legal foundation those states rely on. If the definition is broad, it could validate some state enforcement positions. The exact language in the final rule will be litigated extensively.

The word "involve" is equally important: it is the threshold question that determines whether a contract triggers the 90-day review at all. A narrow reading of "involve" means fewer contracts face review; a broad reading means more scrutiny for the industry.

CFTC Chairman Michael S. Selig framed both definitions as providing clarity the market has lacked for years.

"The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation," Selig said in the release. "This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward."

The 90-Day Review Process

For contracts the CFTC determines do involve an enumerated activity, the NPRM establishes a structured 90-day review with "critical procedural protections." During that window, commissioners evaluate a set of public interest factors on a contract-by-contract basis.

The proposal does not require DCMs to pre-clear all contracts — only those the CFTC flags as potentially touching an enumerated activity. The practical effect: Kalshi and other exchanges can continue self-certifying new products in the normal course. Only contracts near the line — player injury markets, first-pitch contracts, anything tied to war or violence — face the new formal review track.

This framework is specifically designed to give the CFTC a defensible administrative record if a contract approval or denial is later challenged in court.

From ANPRM to NPRM: The Regulatory Timeline

Today's proposal is the result of a process that started when Chairman Selig took office under President Trump in January 2026. In March 2026, the commission published an Advanced Notice of Proposed Rulemaking requesting public input on how to structure prediction market rules. That ANPRM drew submissions from prediction market operators, venture capital firms including a16z, and legal experts — nearly all arguing for CFTC exclusive jurisdiction as the only way to prevent fragmented regulation.

The NPRM published today is, as the commission notes, "narrowly tailored to address one aspect" of that ANPRM. Separate rulemaking may follow on broader topics like exchange listing standards and market integrity requirements.

President Trump supported the CFTC's position in a post on Truth Social last month, calling it critically important that the commission maintain exclusive authority over prediction markets.

Integrity: A Parallel Track

Today's rulemaking arrives alongside a separate industry push on market integrity. On June 9, Kalshi announced it would begin collecting employment information from customers trading in markets with heightened insider trading risk — the first formal KYC expansion the platform has announced since its launch.

"By implementing these new integrity measures, we continue to lead the industry on the issue of market integrity among federally regulated prediction markets," said Robert DeNault, head of enforcement at Kalshi, in a statement cited by the Associated Press.

The announcement followed several high-profile investigations: former Congressman George Santos allegedly betting on his own State of the Union attendance, and a U.S. Army soldier charged in April with using classified information to profit on Polymarket. Kalshi has made at least 20 referrals to law enforcement or securities regulators for market manipulation or insider trading cases across the industry, according to reporting by the Washington Times.

What Comes Next

The NPRM opens a new public comment period — the exact deadline will be published in the Federal Register. After comments close, the CFTC will finalize or amend the rule and return it to the White House for review. Commissioners then vote before it becomes enforceable law. The process will take months.

For most traders, nothing changes today. Every event contract currently trading on Kalshi, Robinhood Predictions, or any other CFTC-registered exchange continues to operate under existing rules during the comment and finalization period.

Once rules are in effect, traders should expect:

Unaffected: Major sports championship odds, game-result contracts, economic indicators (Fed rate decisions, inflation), political elections, award shows, and weather events.

Subject to 90-day review: Sports contracts tied to individual player performance data that could be traded on inside information — specifically injury markets and first-pitch outcomes.

Likely prohibited: Contracts on terrorist attacks, political assassinations, active armed conflict, or other activities the commission determines are contrary to the public interest.

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FAQ: CFTC Proposed Rules and Prediction Markets

Will Kalshi or Polymarket have to shut down? No. The proposed rules are a framework for reviewing specific contract types — not a ban on prediction market platforms. The platforms themselves are unaffected. Most active contracts would continue operating without any change.

When do these rules take effect? Not yet. After a public comment period, the CFTC finalizes the rule, the White House reviews it, and commissioners vote. Enforcement-ready rules are likely many months away.

Which sports contracts are most at risk? Per Wall Street Journal reporting, the most scrutinized contracts would involve player injuries and first-pitch gambling — markets where athletes or team staff could have material non-public information. Standard game-outcome markets (who wins the NBA Finals, who wins the Super Bowl) are not at risk.

Why does defining 'gaming' matter so much? Because most state enforcement actions against prediction markets rest on the argument that event contracts are "gaming" under state gambling law. If the CFTC's formal definition of "gaming" excludes typical sports event contracts, states lose their primary legal hook for enforcement actions and criminal charges.

How does this affect the ongoing state lawsuits? The NPRM itself doesn't resolve pending litigation in Minnesota, Arizona, Massachusetts, or elsewhere. Those cases continue in federal court. However, once finalized, the CFTC's formal rules would be cited as powerful evidence that event contracts are CFTC-regulated derivatives — not gambling — in every jurisdiction.

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Sources & Verification

• CFTC NPRM published June 10, 2026 (Regulation 40.11, Appendix F): CFTC Press Release 9249-26 — verified June 10, 2026
• Chairman Selig quote: CFTC Press Release 9249-26 — verified June 10, 2026
• Player injuries, first-pitch gambling, war/terrorism prohibitions, Trump post, case-by-case framework: Reuters, June 10, 2026 citing Wall Street Journal
• Kalshi employment verification announcement (June 9): Associated Press via WSLS, June 9, 2026
• Robert DeNault quote, 20+ law enforcement referrals: Washington Times, June 9, 2026
• George Santos investigation: Washington Times, June 9, 2026