CFTC Event Contracts Reset: Biden-Era Ban Scrapped

In a sweeping reset of oversight for cftc event contracts, the derivatives regulator has scrapped a Biden-era proposal and pledged a fresh rules-based approach.

CFTC withdraws 2024 ban proposal and 2025 staff advisory

The Commodity Futures Trading Commission has formally withdrawn its 2024 proposal to ban event contracts, abandoning plans to prohibit political markets ahead of the 2024 presidential election. Moreover, the agency made clear it will not finalize any rules under the discarded framework.

At the same time, the CFTC rescinded CFTC Staff Letter 25-36, a September 2025 cftc staff advisory that had warned regulated entities to exercise caution when facilitating sports-related event contracts due to ongoing litigation. However, the commission emphasized that new guidance will be grounded more directly in the Commodity Exchange Act.

Chairman Michael Selig sharply criticized the prior effort. He described the 2024 event contracts proposal as the previous administration’s “frolic into merit regulation,” arguing that an outright prohibition on political contracts was politically motivated rather than rooted in statutory limits.

Selig signals new event contracts rulemaking push

The commission now plans to advance a fresh event contracts rulemaking framework anchored in the Commodity Exchange Act. The goal is to establish clear standards for these markets and provide legal certainty for exchanges, intermediaries and market participants operating across prediction-related products.

Selig framed the withdrawal as the first step toward comprehensive reform of event contracts CFTC oversight. “For too long, the CFTC’s existing framework has proven difficult to apply and has failed our market participants,” he said, pledging to fix the system by crafting rules that offer predictable treatment for event-based derivatives.

The announcement followed remarks Selig delivered on January 29 at a joint CFTC-SEC harmonization event with Securities and Exchange Commission Chairman Paul Atkins. Notably, Selig used this first public speech as chairman to outline a broader reset of the agency’s approach to prediction markets and event-linked products.

Focus on jurisdiction and federal court interventions

Beyond the withdrawal, Selig directed CFTC staff to reassess the commission’s participation in pending federal court cases involving jurisdictional questions. That said, the move signals that the CFTC may intervene more aggressively to defend what it views as exclusive authority over commodity derivatives and related event contracts.

This strategic shift comes as legal disputes proliferate across state and federal venues. Moreover, a clearer assertion of federal derivatives jurisdiction could determine how far state gambling regulators can go in challenging platforms that list contracts tied to sports or politics.

In this context, the new framework for cftc event contracts is expected to serve as the central reference point for how prediction platforms structure products, obtain approvals and manage compliance across jurisdictions.

Prediction market platforms grow amid state-level pushback

The CFTC’s reset arrives during a period of booming activity for prediction market regulation. Combined trading volumes on Polymarket and Kalshi, the two largest platforms, reached $37 billion in 2025, highlighting the rapid institutionalization of these venues.

At the same time, kalshi polymarket volumes have attracted interest from traditional crypto exchanges seeking new revenue lines. Moreover, this growth has heightened pressure on regulators to clarify where prediction products sit relative to gambling, securities and commodity derivatives law.

Coinbase entered the sector by launching prediction markets in late January through a partnership with Kalshi, which operates as a federally regulated designated contract market. However, the expansion has coincided with mounting scrutiny from state regulators who view some of these offerings as unlicensed gambling.

Coinbase, Polymarket and others face state gambling lawsuits

The escalation is evident in a series of state gambling lawsuits. Nevada filed a civil enforcement action against Coinbase this week, arguing that event contracts tied to sports amount to unlicensed gambling under state law. Coinbase has responded by suing regulators in Michigan, Illinois and Connecticut over similar claims.

These disputes underscore the blurred line between sports betting vs prediction markets, particularly when contracts focus on game outcomes, player statistics or season-long performance. Moreover, they raise questions about whether state gaming frameworks or federal derivatives rules should dominate oversight.

Polymarket has already navigated one round of federal scrutiny. It returned to the U.S. market in December after receiving CFTC no-action relief, allowing limited operations under specific conditions. Meanwhile, Gemini secured a designated contract market license for its Titan platform, signaling that multiple crypto-native firms see regulated event contracts as a long-term business line.

Sports prediction markets draw NCAA and public interest concerns

The controversy is especially intense around prediction market sports contracts. The NCAA has urged the CFTC to halt college sports prediction trading, warning that such activity exposes student-athletes to integrity risks and operates outside existing state-level safeguards designed for traditional sports wagering.

These concerns mirror broader debates over sports betting and prediction markets, including the potential for data misuse, harassment of athletes and conflicts of interest. However, proponents argue that well-regulated derivatives-style contracts can improve price discovery around sporting events and political outcomes.

Platforms such as Crypto.com have responded by restructuring their offerings. Crypto.com recently spun out its prediction business into a standalone platform called OG, separating those contracts from its core exchange. Moreover, this restructuring highlights how operators are trying to adapt to shifting regulatory expectations.

Balancing innovation and oversight for sports-linked contracts

Market designers continue to grapple with the question of what are sports prediction markets in legal terms. Are they functionally closer to futures contracts, retail betting products or information markets aimed at crowd-sourced forecasting? The answer will influence how intensively they are supervised.

That said, the distinction between prediction markets sports betting products and traditional wagers can be subtle in practice, especially for retail users. Clearer classifications from the CFTC and state regulators could help reduce confusion while providing guardrails for product design.

In parallel, legal scholars and policymakers are examining sports betting prediction markets as a test case for broader questions about retail access to derivatives, consumer protection standards and the limits of federal preemption over state gambling rules.

Project Crypto and the road ahead for event contracts

Selig, who was sworn in on December 22, has tied event contracts to the agency’s broader Project Crypto initiative with the SEC. Although he has not provided a firm timeline for the new rulemaking, he has repeatedly described event-based derivatives as a priority area.

Moreover, coordination with the SEC under Project Crypto suggests that future rules may address overlaps between tokenized prediction products, commodity derivatives and securities-based instruments. This could matter for platforms that tokenize event markets on public blockchains while serving U.S. customers.

In summary, by scrapping the prior ban proposal and rescinding the 2025 staff advisory, the CFTC has opened the door to a more durable framework for event contracts that balances innovation, market integrity and jurisdictional clarity.