According to CNBC, the new chairman of the Commodity Futures Trading Commission, Michael Selig, announced on Thursday that the agency will craft new, clear rules for prediction markets. He immediately ordered staff to withdraw a proposed rule from 2024 that would have prohibited trades on sports and political events. Selig also directed them to rescind a 2025 staff advisory that urged caution around offering sports contracts. This move directly impacts major prediction platforms like Kalshi and Polymarket, which are currently embroiled in court cases in multiple states over these exact types of event contracts. The chairman argued the previous guidance created harmful uncertainty in the markets.
The Strategy Behind The Pivot
This is a huge strategic win for the prediction market industry. For years, they’ve operated in a legal gray area, especially when it comes to sports. That 2025 staff advisory was basically a warning shot, telling them to tread carefully. Now, the new CFTC leadership is saying, “Never mind, we’re starting over.” It signals a shift from trying to ban or restrict these markets to actually defining how they can operate legally. That’s a much more favorable playing field for Kalshi and Polymarket to argue their cases in court. They can now point to the regulator and say, “See? They’re working on rules for us, not trying to shut us down.”
The Real Battle Isn’t In Washington
Here’s the thing, though. The CFTC stepping back doesn’t mean the coast is clear. The real fight is happening at the state level. State regulators and attorneys general are the ones suing, arguing that sports betting—even in the form of these financial contracts—is their turf to regulate. Tribal nations are also in the mix, protecting their sovereign rights over gambling. So while the federal regulator is backing off, these platforms now have to fight 50 separate potential battles. It’s a classic U.S. regulatory mess. The CFTC providing a federal framework could actually help, giving states a model to work from instead of treating every contract like a rogue sports bet.
What This Means For The Future
Look, the timing here is everything. Prediction markets have boomed, moving far beyond just politics into culture, climate, and yes, sports. They’re positioning themselves as information markets, not pure gambling. The old guard—state lotteries, casinos, sportsbooks—sees them as competition. By proposing clear rules, the CFTC is essentially acknowledging these platforms are a new asset class that needs its own rulebook, not just a footnote under gambling law. The immediate beneficiaries are obviously the platforms themselves, who get a lifeline and a seat at the table. But if you think about it, this could open the door for more institutional participation. And that’s when things would get really interesting. A regulated, clear market for event contracts? That’s a whole new world.
