CFTC moves to replace its 2017 prediction-market "band-aids" with actual rules

In two June rulemaking proposals, the Commodity Futures Trading Commission proposes how event contracts get reported — and a framework for deciding when sports and other "gaming" contracts are contrary to the public interest.

The CFTC spent June putting out two Notices of Proposed Rulemaking (NPRMs) that, taken together, sketch how the agency intends to regulate event contracts — the "will X happen by Y date" instruments better known as prediction markets — after nearly a decade of governing them through informal staff letters. Both are proposals open for public comment, not final rules, and both come from a Commission now led by Chairman Michael S. Selig.

What each proposal actually does

The reporting proposal (Release 9261-26, June 25). This NPRM would amend Parts 15, 16, and 17 of the CFTC's regulations to create what the Commission calls "an alternate framework for reporting of data for certain fully collateralized event contracts." Per the release, these contracts "have been the subject of staff no-action letters since 2017" — meaning that for roughly nine years, market participants have relied on CFTC staff promising not to recommend enforcement rather than on rules written for the product.

Mechanically, the proposal would move reporting for these contracts out of the swaps- and futures-oriented Parts 38, 39, 43, and 45 and into Parts 15 through 18. It would add a new §16.03, titled "Covered Event Contracts," to Part 16 (which governs "Reports by Contract Markets and Swap Execution Facilities"), and provide for reporting under §16.00, §16.01, Part 17, and Part 18. The entities affected: "certain reporting markets, futures commission merchants, clearing members, and foreign brokers."

Chairman Selig's framing was blunt: "Under my leadership, the CFTC will no longer regulate market participants through a patchwork of no-action letters, which serve as band-aids for unworkable regulations. This proposal is an important step in future-proofing the regulatory framework for event contracts."

The enumerated-activities proposal (Release 9249-26, June 10). This NPRM would amend CFTC Regulation 40.11 and add a new Appendix F to Part 40. Its purpose is to give the Commission a structured way to evaluate whether an event contract "involves an activity enumerated in Section 5c(c)(5)(C) of the Commodity Exchange Act." Per the release, those enumerated activities are: "terrorism, assassination, war, gaming, or conduct that is unlawful under federal or state law." If a contract involves one of those, the framework then asks whether the contract "is contrary to the public interest."

The release explicitly ties this to the market's recent trajectory: the Commission says it "has continued to observe growth in the number and variety of event contracts listed for trading by CFTC-registered entities, including contracts referencing sporting events." The proposal sets out a 90-day review process, "critical procedural protections," a set of public-interest factors applied "on a contract-by-contract basis," and — notably — definitions of the statutory terms "involve" and "gaming."

The June 10 release also situates itself in a longer sequence: "In March, the Commission published an Advanced Notice of Proposed Rulemaking relating to prediction markets." This NPRM, it says, is "narrowly tailored to address one aspect of that ANPRM," and the ANPRM "may lead to further rulemaking."

How the two fit together

The releases corroborate a single throughline: the CFTC is converting an ad-hoc regime into codified rules across the whole lifecycle of an event contract. The March ANPRM opened the broad question; the June 10 NPRM narrows in on the gatekeeping question (is this contract permissible at all?); and the June 25 NPRM addresses the plumbing (how is trading data reported once contracts are live). Selig's name and "responsible innovation" posture appear in both. Neither release conflicts with the other on any figure — there are, in fact, very few hard figures in either.

Key facts

• June 25, 2026: CFTC publishes NPRM (Release 9261-26) proposing to amend Parts 15, 16, and 17 and add §16.03 "Covered Event Contracts," moving reporting for fully collateralized event contracts out of Parts 38/39/43/45 and into Parts 15–18. (Source: CFTC press release 9261-26)
• Since 2017: The affected event contracts have operated under CFTC staff no-action letters rather than formal rules. (Source: CFTC 9261-26)
• June 10, 2026: CFTC publishes NPRM (Release 9249-26) amending Reg 40.11 and adding Appendix F to Part 40, establishing a framework to evaluate whether event contracts involve activities enumerated in CEA §5c(c)(5)(C) — terrorism, assassination, war, gaming, or unlawful conduct — and whether they are contrary to the public interest. (Source: CFTC 9249-26)
• 90-day review process and contract-by-contract public-interest factors are built into the enumerated-activities proposal, which also defines "involve" and "gaming." (Source: CFTC 9249-26)
• March 2026: CFTC published an Advanced NPRM on prediction markets; the June 10 NPRM addresses "one aspect" of it. (Source: CFTC 9249-26)
• Both remain proposals seeking public comment, not final rules. (Sources: CFTC 9261-26, 9249-26)

The real-world read

A regulator formalizing what it already tolerated. The single most telling admission is in the June 25 release: these contracts have run on "no-action letters since 2017." That is nine years of a product trading under staff assurances rather than rules. Selig's "band-aids for unworkable regulations" line is a direct — if diplomatic — repudiation of how his own agency operated for the better part of a decade. Read plainly: the CFTC is not cracking down on prediction markets so much as regularizing them, giving existing venues a durable rulebook instead of a letter that could be withdrawn.

The "gaming" definition is where the real fight is, and the release doesn't tip its hand. The June 10 NPRM points at "contracts referencing sporting events" and then says it will define "gaming." Whether sports event contracts count as "gaming" — and therefore face the public-interest test — is the contested question that has dogged this market. The release announces that a definition is coming but does not state what it is. That is the whole ballgame, and it's conspicuously left to the rule text the press release summarizes rather than quotes.

"Responsible innovation" is regulator framing — note it as such. Both releases lean on the language of protecting market integrity "without standing in the way of responsible innovation" and "letting legitimate markets move forward." That is the Commission characterizing its own posture favorably; it is not a neutral description of outcomes. A 90-day, contract-by-contract review with public-interest factors is also a mechanism that could be used to block contracts as easily as to wave them through — the release frames it as a green light, but the text describes a gate.

What's unsaid: Neither release names a single company, venue, or specific contract, despite the sports-contract reference that clearly has particular operators in mind. Neither states the length of the public comment period or an effective date. And neither quantifies the "growth" it cites — there are no volume, open-interest, or venue-count figures to check. The proposals are described in terms of statutory citations and framework, not market size.

Opinion, and whose

• Chairman Michael S. Selig (CFTC): that no-action letters are "band-aids for unworkable regulations" and that the reporting proposal "future-proof[s] the regulatory framework for event contracts"; and that the enumerated-activities framework lets the CFTC "protect the integrity of our regulated markets without standing in the way of responsible innovation." These are the Chairman's characterizations of his own proposals.
• The CFTC (institutional): that the enumerated-activities framework is "durable" and "transparent" and identifies "the contracts Congress directed us to scrutinize." That is the agency's stated intent for a rule not yet finalized.

No view is taken here. Both documents are proposals; what matters is the rule text and the comment record, neither of which is settled.

Sources

• CFTC Press Release 9261-26 (June 25, 2026) — primary source. Provided the reporting NPRM's scope (Parts 15/16/17, new §16.03), the shift out of Parts 38/39/43/45, the "no-action letters since 2017" history, affected entities, and Chairman Selig's quotes. Not marketing; official regulator announcement.
• CFTC Press Release 9249-26 (June 10, 2026) — primary source. Provided the enumerated-activities NPRM (Reg 40.11, Appendix F to Part 40), the CEA §5c(c)(5)(C) activity list, the public-interest test, the 90-day review process, the "involve"/"gaming" definitions, the sports-event-contract reference, and the March 2026 ANPRM context. Not marketing; official regulator announcement.

This is information, not financial or legal advice; it does not recommend buying, selling, or trading anything.