CFTC Prediction Market Rules: 3,500 Comments, Two New Drafts
From a March advance notice to two drafts at OIRA in September: a plain-English map of the CFTC's prediction market rules.
Published 2026-11-05 · Regulatory status as of 2026-10-04 · Market & data intelligence · Educational, not advice.
The CFTC opened prediction market rulemaking with a March 2026 advance notice that drew roughly 3,500 comments. In June it proposed a rule that defines gaming and weighs hedging value and sports outcomes when deciding if a contract is against the public interest. Per trade press reports, Kalshi backed it, and 44 state attorneys general and the AGA pushed back. Two related swap-definition drafts reached OIRA on September 28.
Why a rulebook matters to an exchange
A prediction market is an exchange, not a house. Every contract has a buyer and a seller. In the basic model, the exchange matches them and takes a fee rather than taking the other side itself. The price is simply where the most recent buyer and seller agreed, and it moves continuously until the outcome is known.
A sportsbook works differently. It sets its own price and holds the other side of every wager. That difference in structure sits behind everything below. In 2026 the Commodity Futures Trading Commission has been working out which event contracts belong on an exchange, and on what terms.
Step one: the advance notice
The process formally opened with an advance notice of proposed rulemaking titled “Prediction Markets,” published in the Federal Register on March 16, 2026 (91 FR 12516, RIN 3038-AF65). Comments were due April 30.
An advance notice is the earliest stage of federal rulemaking. It proposes no rule text. It asks questions and gathers views. By the CFTC’s own count in its later proposed rule in the Federal Register, the notice drew approximately 3,500 public comments. Those comments were the raw material for what came next.
Step two: the proposal and its gaming test
On June 12, 2026, the CFTC published a notice of proposed rulemaking, “Prediction Markets; Public Interest Determinations” (91 FR 35806, docket CFTC-2026-1189), under the same RIN. Its comment period closed July 27.
The core of the proposal is a framework for deciding when an event contract is contrary to the public interest. Three pieces do most of the work:
- A definition of gaming. The proposal would define “gaming” as an activity typically engaged in for recreation or entertainment, governed by rules, with outcomes depending on participants’ luck, skill or athletic ability.
- A hedging factor. Per the Congressional Research Service, a contract’s reasonable potential to serve a hedging or pricing function would be a significant factor weighing against a contrary-to-public-interest finding.
- A sports factor. CRS also notes that under the proposal, the fact that a contract involves the outcome of a sports event would weigh against such a finding.
The proposal does not let every sports contract through. Per CRS, it names categories likely to be contrary to the public interest: contracts settling on player injuries, officiating decisions, discrete in-game actions, fights, or games below the collegiate level.
Taken together, the design sorts contracts into two groups. Contracts on the outcome of an organized contest sit on one side. Contracts on injuries, officiating or narrow moments inside a game sit on the other.
A second rulemaking ran alongside it. On July 1, 2026, a separate Federal Register notice proposed an alternate data-reporting framework for certain fully collateralized event contracts (RIN 3038-AF73), with comments due July 31.
What the comment record shows
The disagreement over the proposal played out in the comments. Per InGame, Kalshi filed comments urging the CFTC to adopt it. In a supplemental letter, Kalshi’s Sara Slane described five categories of commercial actors with exposure to sports outcomes: sportsbooks, merchandisers, broadcasters, hospitality operators and sponsors. That list speaks directly to the hedging factor.
Opposition came from two directions. As the comment period closed, attorneys general from 44 states filed a letter arguing the CFTC lacks authority to regulate sports-related prediction markets, The Block reported. Per InGame, the American Gaming Association’s Bill Miller urged the agency to withdraw the proposed Rule 40.11 revisions. He argued the gaming definition would let virtually any sports event contract through.
Miller made the argument again in October. Speaking at G2E in Las Vegas, he disputed operators’ hedging rationale, saying a typical Tuesday-night baseball game does not serve an economic purpose, according to iGaming Business.
None of these positions, as reported, is about prices. They are about whether a contract has an economic purpose beyond entertainment. Under the proposal, that question carries much of the legal weight.
The September drafts at OIRA
As of October 4, the newest pieces were not yet public rule text. Per Reginfo.gov, the Office of Information and Regulatory Affairs received a CFTC draft proposed rule, “Further Definition of ‘Swap’ to Include Event Contracts” (RIN 3038-AF82), on September 28, 2026. It is listed as not economically significant. A second Reginfo.gov record shows OIRA received a companion draft the same day, at the interim-final-rule stage: “Further Definition of ‘Swap’ to Exclude Casino-Style Gambling Products” (RIN 3038-AF81). Both were pending review as of October 4. Their status may have changed since.
That record shows only the titles. Going by the titles alone, the two drafts appear to mirror each other. One would bring event contracts into the definition of a swap, and the other would carve casino-style products out. That may resemble the include-and-exclude sorting in the June proposal, but without the text it is not possible to say how closely.
What to watch next
So far the process has moved from open questions, to a proposal, to a contested comment file, to two drafts under review. Each stage shapes what an exchange may list, and that shapes which contracts have buyers and sellers at all. Delta Arc also builds a Prediction Markets product. The next marker is whatever comes out of OIRA review.
Sources: Federal Register (CFTC advance notice, CFTC proposed rule, CFTC data-reporting proposal); Congressional Research Service, Legal Sidebar LSB11441; InGame; The Block; iGaming Business; Reginfo.gov (RIN 3038-AF82, RIN 3038-AF81).
Sources
Outside pages cited in this post, in order of first citation
- Federal Registerfederalregister.gov
- later proposed rule in the Federal Registerfederalregister.gov
- Congressional Research Serviceeverycrsreport.com
- separate Federal Register noticefederalregister.gov
- InGameingame.com
- The Blocktheblock.co
- iGaming Businessigamingbusiness.com
- Reginfo.govreginfo.gov
- second Reginfo.gov recordreginfo.gov
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