The Commodity Futures Trading Commission has moved a proposed rule on prediction-market event contracts into White House review, a key step before public comment. Bloomberg first reported the proposal is now before the Office of Management and Budget. Details remain unpublished but are expected to draw from the CFTC's spring consultation that generated more than 3,000 public responses covering insider trading, barred contracts, market safeguards, and legal structures around event contracts.
CFTC Framework Would Cover Kalshi and Polymarket
If adopted, the rule would create the first comprehensive federal framework for prediction-market contracts in the US. It could reshape how platforms like Kalshi and Polymarket serve American users, especially as they face mounting legal pressure from state regulators. The core question: Should contracts tied to elections, sports, and public events be treated as federally regulated derivatives or as gambling products subject to state law?
Multiple States Target Prediction Market Operators
Nevada, New Jersey, Maryland, Ohio, Montana, Illinois, and other states have taken action against prediction-market operators. State officials argue some contracts resemble sports betting or other gambling products and should follow local gaming, tax, and consumer-protection rules. Kalshi and other operators contend their event contracts are allowed under the Commodity Exchange Act. State regulators have rejected that view in several disputes, saying federal approval should not block enforcement of state gambling laws. Courts are now weighing whether CFTC jurisdiction overrides state gaming authority, with judges split on the issue.
Trump's Intervention Sparks Political Firestorm
President Donald Trump entered the fray Tuesday, publicly backing CFTC exclusive authority over prediction markets. He called the issue "critically important" and framed federal control as necessary for clear national rules. Trump also attacked former New Jersey Governor Chris Christie, New York Attorney General Letitia James, Minnesota Governor Tim Walz, and Illinois Governor JB Pritzker in harsh terms.
Illinois Governor JB Pritzker responded on X, saying his state took action to stop and ban insider trading in online prediction markets. Pritzker accused Trump of trying to block state regulation so people close to him could benefit. Notably, Donald Trump Jr. has ties to the industry — he invested in Polymarket through venture capital firm 1789 Capital and also serves as a strategic adviser to Kalshi.