Regulator proposes new rules to govern prediction markets

The U.S. Commodity Futures Trading Commission on Wednesday released draft regulations to govern the prediction markets industry, seeking to extend federal oversight over firms that have surged to the forefront of politics and sports betting. CFTC Chair Michael Selig said the proposed rules would protect market integrity “without standing in the way of responsible innovation.” The proposal addresses broad questions about what prediction markets should do, their risks, and how to police user conduct. The proposal arrives as states and Native American tribes push back, arguing that event contracts tied to sports amount to illegal gambling and have sued to block them. Kalshi and Polymarket, along with other sports betting and crypto firms, have joined the industry, which has drawn billions from punters worldwide. Experts tell Reuters that policing this growing pool of insiders may prove a major challenge, and the proposal will be subject to a 45-day notice-and-comment period before finalization. Earlier, the CFTC asked for comment in March on what event contracts are in the public interest and whether wagering on criminal activity and various forms of violence should be prohibited.