CFTC seeks federal framework for prediction markets under White House review
In brief
- CFTC proposal formalizes oversight of event contracts under White House Office of Management and Budget review
- Framework would establish first comprehensive federal ruleset for prediction markets, potentially preempting state gambling laws
- States including Nevada, New Jersey, and Maryland have pursued enforcement actions against prediction-market platforms
- President Trump said prediction markets should remain under sole CFTC jurisdiction
Building Federal Authority
The CFTC proposal is expected to build on feedback from a spring consultation that drew more than 3,000 responses covering insider trading, contract prohibitions, and prediction market oversight architecture. If finalized, the rulemaking would mark the first comprehensive federal framework for event contracts.
The federal framework could reshape how platforms like Kalshi and Polymarket operate in the US. Operators such as Kalshi maintain their event contracts are legal under the Commodity Exchange Act. But that interpretation has collided with state-level enforcement.
The State-Federal Split
Several states have intensified efforts to classify event-contract platforms as unlicensed gambling operations. Nevada, New Jersey, Maryland, Ohio, Montana, Illinois, and other states have pursued enforcement actions against prediction-market platforms. State regulators contend the platforms should comply with state gambling, tax, and consumer-protection rules.
Courts have split over whether federal CFTC jurisdiction preempts state gaming laws. This regulatory ambiguity has created friction between operators and state authorities, with no clear winner yet.
Presidential Support
President Donald Trump said prediction markets should remain under the sole jurisdiction of the CFTC. Trump vowed to support both the industry and the crypto sector. His position aligns with the CFTC's push for a unified federal ruleset, though the White House review timeline remains unclear.
The outcome will determine whether platforms navigate a patchwork of state rules or operate under a single federal standard.
