The U.S. Commodity Futures Trading Commission has withdrawn a Biden-era proposal to ban sports and political prediction markets. Recently confirmed CFTC chair Mike Selig announced the withdrawal, calling the proposal a “frolic into merit regulation.” The agency also rescinded a staff letter that warned regulated entities about potential legal risks from facilitating sports event contracts.
The U.S. Commodity Futures Trading Commission has withdrawn a proposal that sought to ban betting on sports, politics, and war. The 2024 notice of proposed rulemaking had aimed to classify such event contracts as contrary to the public interest.
Recently confirmed CFTC chair Mike Selig stated the agency will not issue final rules on that proposal. “The Commission is withdrawing that proposal and will advance a new rulemaking grounded in a rational and coherent interpretation of the Commodity Exchange Act,” he said.
Selig called the withdrawn proposal a reflection of “the prior administration’s frolic into merit regulation with an outright prohibition on political contracts ahead of the 2024 presidential election.” This move directly affects prediction markets like Polymarket and Kalshi, which have grown popular.
Platforms including offerings from Coinbase and Crypto.com face state legal challenges alleging unlicensed gambling. The companies argue they are regulated exclusively by the CFTC. The agency also withdrew a September staff letter concerning sports event contracts.
That letter had reminded CFTC-regulated entities of their obligations when facilitating such contracts. It advised them to prepare for litigation and state regulatory actions, noting staff awareness of various lawsuits.
Selig stated the advisory “intended to highlight litigation considerations,” but it created confusion. He looks forward to working with staff on a new event contracts rulemaking. The withdrawal marks a significant shift in the regulatory approach to prediction markets.
