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Gaming Edge’s TL;DR
- The CFTC has proposed a new framework for prediction markets that says sports event contracts involve gaming.
- It also signaled that most sports markets are unlikely to be blocked.
- The 267-page proposal marks a notable shift in how the agency describes sports-related contracts.
The Commodity Futures Trading Commission released a proposed rulemaking on event contracts that would define “gaming” to include sports games, athletic competitions, and recreational games, including games of chance. In the proposal, the agency said sports event contracts involve gaming, reversing the position it had previously taken before the US Court of Appeals for the Ninth Circuit.
The CFTC wrote that “the coherent reading is the one the ordinary meaning of the word naturally supplies: gaming is the game itself.” It also said, “The commission preliminarily believes that the meaning of ‘game’ relevant to the Special Rule encompasses the activities that are games in common parlance – sports games, athletic competitions and recreational games including games of chance.”
Even so, the proposal does not treat all sports contracts the same way. According to the agency, most existing sports event contracts – including contracts tied to game winners, final scores, point differentials, and individual statistics – are unlikely to raise public interest concerns.
Instead, the CFTC identified five categories of sports contracts it preliminarily believes would likely be contrary to the public interest:
- Player injury contracts
- Officiating outcome contracts
- Discrete-action contracts involving specific participants
- Physical altercation contracts
- Pre-collegiate sports event contracts
The proposal also addresses contracts involving random chance, terrorism, assassination, and war. It says contracts involving pure-luck games are likely contrary to the public interest, while poker contracts may still be permitted because poker involves both luck and skill.
Proposal does not relieve state concerns
For US bettors, this is a federal regulatory development with direct implications for prediction markets and sportsbook-adjacent products.
The headline is not that sports event contracts are being shut down. The more important takeaway is that the CFTC is drawing lines between broad sports markets it may tolerate and narrower contract types it may challenge.
That matters because the proposal does not create a blanket safe zone.
The agency said:
“Nothing in the proposal, including the commission’s preliminary belief that such event contracts are unlikely to be contrary to the public interest, is intended to create a safe harbor that any particular contract satisfies the public interest standard, nor does it replace the multi-factor analysis required.”
In practical terms, that means even contracts the CFTC views more favorably would still face factor-by-factor review. It also highlights the continuing tension between federal derivatives regulation and state gambling regulation, especially where sports-related products resemble traditional betting markets.
Critics are already framing the issue in those terms, including the former director of the Office of Management and Budget, Mick Mulvaney.
“The CFTC was created to oversee commodity markets, not to become the nation’s sports betting regulator.”
What’s next?
The proposal now heads into a 90-day review process. That period will be closely watched by operators, regulators, and industry stakeholders because several major questions remain unresolved. Among them:
- Whether the rule will be finalized as written
- How courts may respond to the CFTC’s updated definitions of “involve” and “gaming”
- Which existing contracts could face scrutiny under the new framework
For the broader gambling industry, the proposal suggests the next phase of regulation may be less about whether sports event contracts exist and more about which versions of them survive public interest review.
Based on reporting by Daniel O-Boyle for InGame.
