TLDR
- The CFTC sent a proposed prediction markets rulebook to the White House Office of Management and Budget in late May.
- The proposal would allow most sports event contracts under federal oversight.
- Regulators plan to rescind the 2024 ban on sports-related event contracts.
- The framework defines operator responsibilities and sets standards against fraud and manipulation.
- President Donald Trump endorsed exclusive CFTC authority over prediction markets on May 26.
US regulators have advanced a federal rulebook for prediction markets and reversed a 2024 sports contract ban. The Commodity Futures Trading Commission sent the proposal to the White House Office of Management and Budget around May 26 and May 27. President Donald Trump endorsed exclusive federal oversight and opposed state interference in a May 26 Truth Social post.
CFTC Proposal Reshapes Prediction Markets Oversight
The CFTC proposal would permit most sports event contracts under federal supervision and would define operator duties and fraud standards. It would also rescind the 2024 prohibition that treated sports contracts as gambling products. As a result, the agency would replace a ban with regulated permission under commodity law.
Earlier, the CFTC issued an Advance Notice of Proposed Rulemaking in March 2026 to gather public input. The comment period closed on April 30 after the agency sought views on insider trading and manipulation. The current draft reflects that record and sets out what the agency calls “rules of the road.”
Trump wrote that the CFTC should hold exclusive authority over these markets. He stated that regulators must prevent state-level interference and protect US competitiveness. His post aligned with the proposal’s federal preemption approach.
The framework outlines permissible contract categories and specifies prohibited conduct. It describes reporting, compliance, and surveillance expectations for market operators. It also clarifies how the agency would evaluate manipulation claims and enforce rules.
Kalshi and Polymarket Position for Federal Clarity
Kalshi has operated as a CFTC-registered designated contract market since 2020 and 2021. Federal preemption would remove many state barriers that limited its expansion. The proposal would allow sports contracts under federal oversight rather than state regimes.
Polymarket obtained designated contract market status in 2025 after years of legal scrutiny. The platform runs on blockchain infrastructure and gained public attention during the 2024 election cycle. Regulatory clarity could shape its product roadmap and compliance planning.
Polymarket has not launched a native POLY token to date. The company has not announced a timeline for any token issuance. The proposed rulebook focuses on market conduct rather than token listings.
Both platforms would face defined compliance duties under the draft. The CFTC would monitor contracts and require controls against insider trading. Enforcement actions would target fraud and manipulation under existing commodity statutes.
The proposal remains under review at the Office of Management and Budget. After review, the CFTC may publish a formal notice of proposed rulemaking. The agency has not announced a publication date.
🚨 Our MAY Stock Picks Are Live!
A new month means new opportunities. Our analysts have just released their top stock picks for May, highlighting companies with strong momentum that rank highly on our KO Score algorithm. We’re also now sharing trade ideas for both long-term and short-term investors, giving you more ways to spot potential opportunities in the market.
Sign up to Knockout Stocks today and get 50% off to unlock the full list and see which stocks made the cut.
Use coupon code Special50 for your exclusive discount!
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
