CFTC Bans Prediction Markets on Political Leader Removal via War or Assassination
In brief
- CFTC unveiled proposed rules Wednesday governing prediction market sector
- New rules bar wagers on political leader removal when war or assassination could occur
- Polymarket's Iran leader market has attracted over $14 million in trading volume
- Sports markets face limits on wagers tied to individual injuries and discrete player actions
- Rules enter 45-day public comment period
Targeting High-Volume Geopolitical Markets
Kalshi and Polymarket have offered bets on when enemies of the U.S. government, including Iran Supreme Leader Ali Khamenei and Venezuelan president Nicolas Maduro, would be out of office. The markets have sidestepped existing prohibitions on war-related bets by offering vaguely worded resolution criteria.
A Polymarket wager on Iran's leader by the end of 2026 has attracted over $14 million in trades. Mojtaba Khamenei currently leads with 69% odds in the market. On the competing platform, a Kalshi market on Reza Pahlavi taking over Iran by year-end has $1.6 million in trading volume.
The proposed CFTC rules would allow markets on political leader removal only if they specified resolution in non-violent cases: electoral defeat, resignation, constitutional removal, negotiated departure, or natural death. Any path involving conflict would disqualify the wager.
Broader Restrictions on Sports and Event Markets
The sprawling 267-page proposal would also limit certain sports-related markets, including wagers on individual player injuries, referee calls, discrete player actions, and physical altercations. The CFTC believes that event contracts involving aggregate outcomes can be operated consistent with the public interest.
Red and blue states have pushed back hard. They've argued in federal lawsuits that sports-related prediction markets are unregulated betting and should be regulated at the state level, not federally.
The CFTC's proposed prediction market rules now enter a 45-day comment period in which anyone can share their thoughts on the framework.
