The Commodity Futures Trading Commission (CFTC) has moved a proposed rule on prediction-market event contracts into White House review before it can be released for public comment. According to reports from Bloomberg, the proposal is now before the White House Office of Management and Budget (OMB), a step that precedes the CFTC's release of the plan for public comment. In an emailed statement, a CFTC spokesperson confirmed that the commission has sent its notice of proposed rulemaking on event contracts under Section 5c(c) of the Commodity Exchange Act to OIRA through the standard interagency process. The spokesperson added that the agency expects to comment further once the review is complete.
The proposed rule is expected to draw from a CFTC consultation held in the spring, which attracted more than 3,000 public comments. As reported by Bloomberg, those responses covered insider trading, barred contracts, market safeguards, and the legal structure around event contracts. If adopted, the rule would give the US its first full federal framework for prediction-market contracts. It could also affect how platforms such as Kalshi and Polymarket serve US users, especially as the industry faces rising legal pressure from state regulators.
Nearly a dozen other states have taken actions against prediction markets, ranging from cease-and-desist orders to lawsuits and legislative bans. According to Bloomberg reports, state officials have argued that some contracts resemble sports betting or other gambling products and should follow local gaming, tax, and consumer-protection rules. Kalshi and other operators have said their event contracts are allowed under the Commodity Exchange Act, but state regulators have rejected that view in several disputes, saying federal approval should not block enforcement of state gambling laws. Nevada, New Jersey, Maryland, Ohio, Montana, Illinois, and other states have taken action against prediction-market operators. Minnesota earlier this month passed a law making the operation or advertising of certain prediction markets a felony under state law, while Arizona Attorney General Kris Mayes separately filed a 20-count criminal case against Kalshi in March before it was blocked by a federal judge.
President Donald Trump has publicly endorsed CFTC Chair Michael Selig's push for exclusive federal authority over prediction markets, calling the issue 'critically important' and emphasizing the need for U.S. dominance in emerging financial technologies. In a post on Truth Social on Tuesday, Trump said it was essential that the Commodity Futures Trading Commission retain exclusive jurisdiction over prediction markets. Trump also praised CFTC Chairman Mike Selig while attacking Democratic officials who have pushed to restrict or ban the products. His comments came days after a New York Times investigation detailing how the prediction markets and crypto industries gained influence within the agency during the Trump administration, including staff reductions and favorable policy reversals. Rep. James Comer (R-KY) also launched an investigation into insider trading on Kalshi and Polymarket last week. Trump also attacked former New Jersey Governor Chris Christie, New York Attorney General Letitia James, Minnesota Governor Tim Walz, and Illinois Governor JB Pritzker, using harsh language against the officials.
CFTC Chair Michael Selig has pursued legal action against six states — Arizona, Connecticut, Illinois, Minnesota, New York, and Wisconsin — over attempts to regulate the sector under local gaming and gambling laws. However, TD Cowen Washington Research Group Managing Director Jaret Seiberg noted in a Wednesday report that Trump's intervention is unlikely to alter the underlying legal debate over event contracts because the matter is before federal courts rather than regulators or the executive branch. The question of whether contracts tied to elections, sports, and public events should be treated as federally regulated derivatives or as gambling products subject to state law is now moving through the courts, where judges have split on whether CFTC jurisdiction overrides state gaming authority. Illinois Governor JB Pritzker responded on X, saying that Illinois had taken action to stop and ban insider trading in online prediction markets. Pritzker accused Trump of trying to stop states from regulating the sector so people close to him could benefit, referencing Donald Trump Jr.'s ties to the industry through investments in Polymarket through venture capital firm 1789 Capital and his role as a strategic adviser to Kalshi.
