Federal regulators' draft rule to limit some types of prediction market wagering has drawn robust opposition from a range of stakeholders, according to a review of public comments available on Monday. The proposal from the U.S. Commodity Futures Trading Commission (CFTC) seeks to draw boundaries around markets that allow yes-or-no trading on events spanning sports, elections, economic indicators and other outcomes.
Under the commission's proposal, certain categories of wagers would likely be curtailed. The CFTC identified a class of activities in statute - including crime, terrorism, assassination, war and what it characterizes as "gaming" - that it believes may fall outside the "public interest." At the same time, the agency indicated that many sports-related markets would remain permissible, with contracts tied to scores, win-loss outcomes and tournament advancement expected to be acceptable, while markets based on player injuries, fighting, children nd refereeing likely would be disallowed.
That distinction is reflected in public reaction. Lawmakers, Native American tribes, traditional casinos and consumer advocates have lodged objections, arguing that sports wagering conducted through prediction market platforms amounts to illegal gambling and should be regulated by state and local authorities. The comments note that some jurisdictions already block sports prediction markets - the review cites examples such as Nevada and Michigan - and they press for local control over wagering to be preserved.
Former U.S. senator Christopher Dodd, who co-sponsored the 2010 law that expanded the CFTC's oversight of certain derivative contracts, wrote in his submission that Congress did not intend to make the commission the nation's gambling regulator. He observed that when Dodd-Frank was enacted lawmakers were aware of existing federal gaming laws and had no intention of amending them through that statute.
In a separate comment, former CFTC chairman Timothy Massad said the agency had "lost its way," noting that he had not previously filed comments on rule proposals since leaving the agency but felt compelled to do so in this instance because of concerns about mission and authority.
The administration in Washington has generally taken a favorable stance toward the prediction markets industry, according to the comments review, with President Donald Trump's team supporting the sector and pursuing litigation across the country asserting that federal law permits registered markets to offer trading in derivatives known as event contracts and that states should not interfere with registered market activity.
Representatives of two prominent prediction market platforms named in public filings did not immediately respond to requests for comment. The CFTC has no set deadline for issuing a final rule; it will consider the public comments submitted as it evaluates next steps.
Conclusion
The CFTC proposal has catalyzed wide-ranging opposition that highlights tensions between federal regulatory interpretation and existing state and local authority over gambling. Stakeholders question the scope of the CFTC's remit and the potential for prediction market activity to be treated differently depending on the category of event wagered upon.