Does Rule 40.11 ban all sports contracts?

No. The NPRM does not propose banning election-style sports winner markets (who wins the championship, World Series champion, etc.). The proposed 'disfavored' categories target specific micro-market structures: player injuries, officiating decisions, discrete in-game actions, physical altercations, and pre-collegiate sports. Game-winner and championship contracts are not listed as disfavored in the NPRM text.

What is the difference between a proposed rule and a final rule?

The July 27 comment deadline closes the public-comment phase of the rulemaking. After reviewing comments, the CFTC may revise the proposal, publish a final rule, or take no further action. Until a final rule is published in the Federal Register, the existing CEA §5c(c)(5)(C) framework governs — the proposed three-step test is not yet law. Federal rulemaking under the Administrative Procedure Act typically takes 6–18 months from close of comment to final rule.

What is self-certification and why did the CFTC warn about it?

Under CEA Regulation 40.2, designated contract markets (DCMs) can list new event contracts without waiting for CFTC pre-approval by 'self-certifying' that the product complies with the Commodity Exchange Act and CFTC rules. The CFTC issued advisories in March 2026 and July 24, 2026 warning that exchanges were submitting broad, template-style certifications covering many contract variations without the required per-contract terms, settlement analysis, and compliance documentation. The advisories do not eliminate self-certification — they require that each submission meet the statutory detail requirements.

Are Kalshi and Polymarket affected by the proposed rule?

Yes. Both are CFTC-registered designated contract markets. All DCMs operating under CFTC jurisdiction would be subject to the three-step review process for contracts in the enumerated categories if the rule is finalized as proposed. The rule does not name specific platforms. The July 24 self-certification advisory also addressed DCMs broadly, not specific companies.

What does 'gaming' mean in the NPRM?

The NPRM proposes to define 'gaming' within CEA §5c(c)(5)(C) as applying to contracts that function like wagering or lottery-style instruments — where the primary economic function is gambling rather than price discovery or risk transfer. Under the NPRM's proposed framework, elections, awards shows, and sporting event winners are placed outside the 'gaming' definition. The CFTC's proposed definition would evaluate gaming contracts case by case rather than banning entire contract categories in advance.

Will my existing open contracts be affected?

No final rule has been adopted. Until a final rule takes effect, contracts already listed and trading are not affected by the proposed rulemaking. If a final rule is eventually adopted, it would govern the listing of new contracts going forward. Contract resolution procedures for existing open positions would be subject to exchange rules, not the proposed 40.11 amendments.

Guide

CFTC Rule 40.11 & Prediction Markets

Regulatory

CFTC

Proposed Rule — Not Yet Final

CFTC Rule 40.11: The Three-Step Framework for Prediction Market Contracts

The CFTC's proposed amendments to Rule 40.11 (RIN 3038-AF65) would create a structured, three-step public-interest review for event contracts tied to gaming, war, terrorism, assassination, and similar activities. The public comment period closed today, 2026-07-27. Here is what the rule proposes, which contracts are at risk, and what the path to a final rule looks like.

Status as of 2026-07-27: This is a proposed rule only. No final rule has been adopted. The existing CEA §5c(c)(5)(C) framework remains in force during the rulemaking process.

RIN

3038-AF65

FR Citation

91 FR 35806

ANPRM Comments

3,500+

Review Period

90 days

The Three-Step Public-Interest Framework

Under the proposed rule, the CFTC would apply this sequence to any event contract that may involve an enumerated activity. All three steps must be satisfied before a contract can be blocked or conditioned.

Is it an event contract?

Assess whether the agreements, contracts, transactions, or swaps qualify as event contracts (based upon an occurrence, extent of an occurrence, or contingency).

Does it involve an enumerated activity?

Determine whether the event contracts involve an activity enumerated in the Special Rule (gaming, terrorism, assassination, war, or unlawful activity) or similar activity.

Is it affirmatively against the public interest?

If they involve such activity, undertake a public interest analysis and determine whether the event contract is affirmatively against the public interest.

Source: 91 FR 35806 — Federal Register

Contract Risk Tiers Under the Proposed Rule

Risk tiers are based on the NPRM text and the enumerated activities in CEA §5c(c)(5)(C). “Review required” tiers reflect contract categories the NPRM identifies as disfavored — they are not automatically banned, but face heightened scrutiny in a finalized rule.

The Self-Certification Warning: A Second Regulatory Strand

CFTC Advisory — Release CSL 26-08 (July 24, 2026)

On July 24, 2026, the CFTC's Division of Market Oversight issued its second advisory of 2026 on self-certification practices. The agency warned that many exchanges have been submitting broad, template-style certifications without the required per-contract terms, settlement methodology, and compliance analysis.

“Broad, template-style certifications should not be submitted.”
— CFTC Release CSL 26-08, July 24, 2026

What the advisory requires: Each self-certification must include complete per-contract terms and conditions, settlement methodology, underlying commodity description, and a concise compliance analysis — not a single template covering open-ended permutations.

Self-Certification Is Still Permitted

Under CEA Regulation 40.2, designated contract markets may still list event contracts without prior CFTC approval — as long as each self-certification includes complete per-contract terms, settlement methodology, source data description, and a concise compliance analysis.

What Is No Longer Acceptable

Bundling multiple contract variations (different settlement sources, methodologies, or underlying events) into a single template certification. The CFTC said such filings prevent staff from reviewing manipulation controls, settlement reliability, and individual contract compliance.

Sources: CFTC Release CSL 26-08 (Jul 24, 2026) · CFTC Release 9193-26 (Mar 12, 2026)

What Happens After the Comment Deadline?

Comment Period Closes — 2026-07-27

The public comment period closed July 27, 2026. CFTC staff begin reviewing submissions; the Commission may request additional comment, hold meetings, or revise the proposal before any final rule.

CFTC Staff Review

CFTC staff and commissioners review all submitted comments. The agency may hold public meetings, request additional comment, or issue a revised proposed rule before finalizing. The volume of comments — the ANPRM received 3,500+ — typically extends review timelines.

Final Rule (If Adopted)

If adopted, a final rule typically takes months to more than a year after the comment period closes, then takes effect on a date set in the Federal Register publication. Until a final rule is published in the Federal Register and takes effect, the current CEA §5c(c)(5)(C) framework applies.

Current Status

As of July 27, 2026 the NPRM comment deadline has passed. No final Rule 40.11 amendments have been adopted; existing CEA §5c(c)(5)(C) and staff advisories continue to apply.

Source: 91 FR 35806 — Federal Register

Frequently Asked Questions

Primary Sources

NPRM — Federal Register

91 FR 35806 (June 12, 2026)

Self-Certification Advisory (Jul 24, 2026)

CFTC Release CSL 26-08

First Self-Certification Advisory (Mar 12, 2026)

CFTC Release 9193-26