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Gaming Edge’s TL;DR
- The CFTC has proposed new federal rules for prediction markets, a fast-growing sector sitting at the intersection of finance and gambling law.
- For sports-focused markets, the key takeaway is clear: broad sports event contracts would generally be allowed, while micro-event contracts tied to specific plays or moments in a game would be banned.
The Commodity Futures Trading Commission (CFTC) has released a 267-page notice of proposed rulemaking laying out how event contracts on prediction market platforms could be treated under federal law.
The agency said it has seen a sharp increase in both the number of contracts being listed and the range of events tied to them.
In the proposal, the CFTC said:
“The commission has recently observed a significant increase in the number of event contracts listed for trading on prediction markets, as well as in the diversity of events underlying such contracts.”
The agency also said trading volume across federally regulated prediction markets topped $25 billion in 2025, underscoring how quickly the category has grown. Platforms mentioned in the discussion include Kalshi and Polymarket.
At the center of the proposal is a basic question with major gaming implications: Are these contracts financial market products governed by the Commodity Exchange Act or are they closer to gambling activity that should fall under state oversight?
Micro-betting would be banned under proposal
The most important detail for gamers is how the proposal treats sports-related contracts.
Under the proposed rules, sports event contracts would generally be permitted. That could include markets tied to:
- Final scores
- Point differentials
- Win-loss records
- Tournament advancement
- Individual or team performance statistics
But the proposal would draw a line at micro-event contracts. Those markets, tied to specific plays or moments during a game, would be prohibited.
That distinction could matter for bettors, operators, and regulators alike. It suggests the federal government may be more comfortable with broader outcome-based sports markets than with rapid-fire, highly granular contracts that look more like in-game wagering.
It also keeps pressure on state regulators and gambling authorities, which are already scrutinizing prediction markets that offer contracts on real-world events. For the gaming industry, this is not just a product question. It is a jurisdiction question.
No longer a niche issue
For now, this is a proposal, not a final rule.
Key open questions remain, including whether the rules will be finalized, when that could happen, and how state regulators and gambling authorities may respond.
There is also uncertainty around which event contracts beyond sports would ultimately be allowed or prohibited, and how platforms such as Kalshi and Polymarket would be affected in practice.
What is clear is that prediction markets are no longer a niche issue. With trading volume rising and sports contracts explicitly addressed, the CFTC’s proposal could become a major reference point in the broader debate over where financial regulation ends and gambling regulation begins in the US.
Based on reporting by Rena Rowe for the Washington Examiner.
