The Commodity Futures Trading Commission is set to put forward a proposal that would create new regulatory guardrails for prediction markets, people familiar with the situation say. The draft framework aims to address growing use of these markets and concerns about certain event-based wagers.
Prediction markets allow participants to place binary "yes or no" bets on the occurrence of specific events. These markets have expanded in popularity but also drawn controversy as a result of well-timed trades that preceded major policy announcements by U.S. President Donald Trump - trades that have been linked to potential profits running into the millions of dollars for unidentified traders.
Under the draft approach, some types of sports-related contracts could fall within the regulator's scrutiny. That includes wagers tied to player injuries and bets on matters such as who will throw the first pitch in a baseball game. By contrast, contracts tied to war, terrorism or assassinations would likely be deemed contrary to the public interest and effectively barred from trading.
The proposal reportedly would not impose categorical bans on trading specific event types. Instead, it would set out a set of factors regulators would use to assess particular contracts on a case-by-case basis, giving the agency discretion to permit or restrict offerings depending on how they measure against those criteria.
Last month, President Donald Trump posted on Truth Social that it was critically important for the CFTC to retain exclusive authority over prediction markets. That public statement underscores ongoing interest from political leaders in how these venues should be governed.
Details of the draft remain limited and the final content of any rulemaking could change as the agency moves through the proposal process and considers public comment. For now, the plan appears focused on creating a framework for regulatory review rather than enacting a single sweeping prohibition.
Bottom line: Regulators are preparing a proposal to clarify how prediction-market contracts will be evaluated, potentially curbing certain types of wagers while relying on a case-by-case review standard rather than blanket bans.