U.S. regulators are reportedly set to propose a comprehensive set of regulations for prediction markets such as Kalshi and Polymarket. The move is aimed at preventing possible manipulation while still allowing most sports-related bets.
The Commodity Futures Trading Commission (CFTC) is preparing to propose new regulations that are designed to empower the commission to reject prediction wagers that are not in the public interest or are highly susceptible to manipulation, the Wall Street Journal reported on Wednesday.
The rules could affect certain sports-related trading markets, including wagers on player injuries and first-pitch outcomes. Markets tied to war, terrorism, or assassinations would likely be barred, as regulators do not consider them to be in the public interest.
The proposed rules do not outright prohibit any specific event contracts. Instead, they establish a framework for regulators to evaluate certain contracts individually, with the list of permitted activities expected to far exceed the prohibited categories.
Despite opposition from states with their own gambling laws, officials maintain that the intent is to allow the growth of prediction markets, including those focused on sports.
CFTC did not immediately respond to Benzinga‘s request for comments.
Trump Backs CFTC Authority
The proposed regulations come in the wake of President Donald Trump‘s support for the CFTC’s exclusive oversight of prediction markets, arguing that the industry should operate under a single federal framework rather than a patchwork of state regulations. He also criticized several state officials, including Letitia James, Tim Walz, J.B. Pritzker, and Chris Christie, for opposing prediction markets.
In March, California Governor Gavin Newsom issued an executive order banning state officials from using non-public information to profit on prediction markets such as Polymarket and Kalshi.
Oversight Debate Intensifies
Recent events have raised concerns about the potential for manipulation in prediction markets. On Tuesday, prediction market operator Kalshi announced that it would start collecting work information from users attempting to place bets that could benefit from insider information. This move was in response to concerns about “markets with heightened insider or manipulation risk.”
Last month, a group called FairPredicts launched an ad campaign targeting Kalshi, calling for greater accountability in how the federally-regulated platform operates. The campaign was launched across Washington, D.C., in what appeared to be a direct response to Kalshi’s advertising push in the city the previous month.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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