The U.S. Commodity Futures Trading Commission proposed a framework on June 10 that establishes a 90-day review process for certain event contracts submitted by registered exchanges. The framework, designated Release No. 9249-26, amends Regulation 40.11 and adds Appendix F to Part 40, replacing a 2024 proposal that attempted to define gaming broadly enough to ban most sports and political event contracts. The 2024 proposal was withdrawn in February 2026 after drawing criticism for overreach. The new approach provides registered platforms like Kalshi with a predictable submission and review process, while offshore platforms like Polymarket may benefit from reduced regulatory uncertainty as the CFTC signals a preference for building a supervised prediction market ecosystem rather than pursuing prohibition.
CFTC Proposes 90-Day Review Process for Event Contracts
The June 10 rulemaking is narrowly tailored to address one aspect of a broader Advance Notice of Proposed Rulemaking on prediction markets the Commission published in March 2026. When a registered exchange submits an event contract that might fall under Section 5c(c)(5)(C) of the Commodity Exchange Act, the Commission will apply a 90-day review process and a set of public interest factors to determine whether the contract involves one of the enumerated activities and whether it is contrary to the public interest. The proposal also defines key statutory terms, including "involve" and "gaming," which have been contested in prior rulemakings.
"The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation," said CFTC Chairman Michael S. Selig. "This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward."
Section 5c(c)(5)(C) Restricts Contracts on Five Categories
Section 5c(c)(5)(C) was added to the Commodity Exchange Act through the 2010 Dodd-Frank Act. Lawmakers focused on five categories: terrorism, assassination, war, gaming, and activity unlawful under federal or state law. In a Senate floor colloquy at the time, Sen. Blanche Lincoln, who helped author the provision, explained that the goal was to prevent the creation of futures and swaps markets that would allow citizens to profit from devastating events and to prevent gambling through futures markets. Sen. Lincoln specifically cited sporting events, stating that contracts tied to outcomes like the Super Bowl or Kentucky Derby would serve no real commercial purpose and would be used solely for gambling. That legislative history shapes the current rulemaking.
Kalshi Gains Clarity While Polymarket Faces Indirect Impact
For CFTC-registered platforms like Kalshi, the new framework offers long-sought clarity. Exchanges now have a predictable submission and review process instead of facing enforcement uncertainty. Standard sports outcome contracts, such as game winner markets tied to major events, appear likely to find a viable approval path under the framework. More speculative micro-bet contracts, such as those tied to specific in-game events with higher manipulation risk, face greater scrutiny.
For crypto-native and offshore platforms like Polymarket, the impact is indirect. These platforms operate outside direct CFTC registration and have faced questions about jurisdiction, suspicious trading patterns, and insider information. The NPRM signals the agency's preference for building a legitimate, federally supervised prediction market ecosystem rather than pushing for prohibition. That posture could reduce legal overhang and support volume growth. War, terrorism, and assassination contracts remain the clearest candidates for prohibition under the framework.
Public Comment Period Opens for 30 to 90 Days
The NPRM opens a public comment period, expected to run 30 to 90 days per the Federal Register notice. Industry participants, legal teams, and academics are expected to weigh in heavily on the definitions of "gaming" and "involve," as well as on the public interest factors the Commission will apply. Further rulemaking stemming from the broader March 2026 Advance NPRM on prediction markets is also expected. Once the framework is finalized, registered exchanges will test it through new contract filings.
FAQ
What did the CFTC propose on June 10?
The CFTC proposed a framework that establishes a 90-day review process for certain event contracts submitted by registered exchanges. The framework, designated Release No. 9249-26, amends Regulation 40.11 and adds Appendix F to Part 40.
Why did the CFTC withdraw its 2024 proposal?
In 2024, the agency proposed sweeping amendments to Regulation 40.11 that would have defined gaming broadly enough to effectively ban most sports and political event contracts from CFTC-registered platforms. That proposal drew sharp criticism for overreach and was withdrawn in February 2026.
How does the new framework affect Kalshi and Polymarket?
For CFTC-registered platforms like Kalshi, the framework offers a predictable submission and review process. For offshore platforms like Polymarket, the impact is indirect, as the CFTC's preference for building a supervised prediction market ecosystem could reduce legal uncertainty and support volume growth.
