CFTC Receives Over 1,500 Comments on Advanced Notice of Proposed Rulemaking Relating to Prediction Markets

May 14, 2026

New Rules Would Establish Guidelines on Protected Behavior and Potential Fraud and Abuse

This past March, the U.S. Commodity Futures Trading Commission (CFTC or Commission) announced an advanced notice of proposed rulemaking, signaling the start of a regulatory process to define how prediction markets—platforms that allow trading on future events—should operate under the Commodity Exchange Act (CEA).

Specifically, on March 16, 2026, CFTC Chairman Michael S. Selig announced an Advanced Notice of Proposed Rulemaking, in which the CFTC sought public comment, with a deadline of April 30, on whether to amend or issue new regulations concerning event contracts traded on prediction markets. Chairman Selig called for comments relating to the application of statutory core principles and Commission regulations to prediction markets, the types of event contracts that may be prohibited as contrary to the public interest, cost-benefit considerations related to prediction markets, and other topics.

The CFTC asserts exclusive federal authority over prediction markets. In this capacity, the Commission is asking stakeholders for comments on whether to amend or issue new regulations concerning event contracts traded on prediction markets, such as rules to address margin trading, prohibiting individuals with inside information from trading event contracts, and prohibiting contract categories allegedly against the public interest.

The response to the CFTC’s advanced notice of proposed rulemaking has been overwhelming. According to Cointelegraph, the Commission received more than 1,500 responses, with some backing the regulator, others favoring state regulation, and others that generally called for a tougher crackdown.

Background on Prediction Markets and CFTC Oversight

A prediction market which offers swaps or event contract derivatives for trading by the general public must register with the CFTC as a designated contract market (DCM). Since the early 1990s, parties have sought guidance from the Commission on prediction markets, but it wasn’t until February 2004 that the Commission first designated a prediction market as a DCM.

Pursuant to statutory authority, the CFTC will prohibit prediction markets registered as DCMs from listing or clearing event contracts deemed contrary to the public interest under CEA § 5c(c)(5)(C), 7 U.S.C. § 7a-2(c)(5)(C), including those involving unlawful activity, such as terrorism, assassination, war, or gaming.

In 2024, the CFTC proposed rules clarifying which contracts fall within this category. In 2026, the Commission withdrew the proposal to reconsider new rules in light of state regulatory actions and litigation concerning the CFTC’s jurisdiction over event contract derivatives and the application of the definition of a “swap” under 7 USC § 1a (47)(A).

Given that applications to register as a DCM with the CFTC have more than doubled in the past year, largely driven by entities seeking to operate prediction market platforms, the CFTC sought public comment on prohibitions and other core principles and regulations.

Below is a Sample of the CFTC’s Questions for Public Comment:

Core Principles and CFTC Regulations: What factors should the Commission consider in determining whether to provide guidance or amend its regulations regarding how the DCM Core Principles in CEA section 5(d) apply to prediction markets? For example:

• How should a determination of whether an event contract is “readily susceptible to manipulation” be made?
• Are there suspicious activity surveillance, compliance, or other practices on which the Commission should focus?
• If there is a dispute regarding how an event contract is resolved or how the trigger event for an event contract is determined, what factors should the Commission consider in setting expectations for DCMs to have rules to resolve the dispute?
• What implications for derivatives clearing organizations should the Commission consider if event contracts were traded on prediction markets on margin?

Public Interest: In general, what factors should the Commission consider in making a public interest determination under this section?

• What factors should the Commission consider in its effort to fulfill the purpose of the CEA, including preventing price manipulation, protecting market participants from fraud or abusive sales practices, and promoting responsible innovation and fair competition, with respect to prediction markets?
• How do event contracts compare to, or substitute for, insurance contracts?

Activities Listed in CEA § 5c(c)(5)(C): What factors should the Commission consider in determining the scope of the five listed prohibited activities?

• Unlawful activity: What types of event contracts could potentially involve such activity?
• Terrorism and assassination: Are the meanings of these terms self-evident? Would event contracts involving cyberterrorism be covered by the terrorism provision?
• War: Does this activity encompass all military actions, or are there military actions that do not constitute war? What factors distinguish war from, for example, civil unrest?
• Gaming: Is gaming synonymous with, or more or less extensive than, the scope of activities covered by State gambling statutes?

Insider Information:

• Is there some public interest utility if people with an asymmetric information advantage on a particular event contract are able to trade on prediction markets?
• Does the public interest utility depend on the type of event in question?
• Are there particular challenges related to cross-market manipulation – for example, where an individual or small group of individuals seeks to move the prediction market to influence another market, or vice versa?

Types of Event Contracts and Other Issues:

• What aspects of prediction markets are relevant to whether event contracts should, or should not, appropriately be classified as swaps? What aspects, if any, distinguish event contracts from swaps?
• How are event contracts similar to, or different from, other types of commodity options?
• What aspects of prediction markets are relevant to whether event contracts should, or should not, appropriately be classified as futures contracts?

Response to the CFTC’s Proposed Rulemaking

Given the rise in popularity of prediction markets, sports betting, and attempts by lawmakers, and states to rein in and define allowable event contracts, it’s not surprising that more than 1,500 respondents submitted comments.

Notable comments came from Kalshi, which reportedly derives roughly 90% of its trading volume from sports-related contracts and faces legal challenges from several state attorneys general alleging it operates unlicensed sports betting markets traditionally regulated by states. In comments to the CFTC, Kalshi co-founder and COO Luana Lopes Lara, supported the agency’s efforts to clarify event-contract regulation while arguing that casino-style gambling falls outside the CFTC’s jurisdiction. Kalshi emphasized it “refrains from” offering casino-style game contracts and urged the agency to define “gaming” narrowly to cover only games of pure chance, such as lotteries, slot machines, and casino games.

Similarly, Polymarket and venture capital firm Andreessen Horowitz backed the CFTC’s exclusive authority over prediction markets. By contrast, gambling regulators in Tennessee, Missouri, and Pennsylvania criticized the agency’s assertion of authority over sports event contracts.

Meanwhile, Senator Elizabeth Warren called on the CFTC and the Office of Government Ethics to issue government-wide guidance reminding federal employees they are barred from using nonpublic information to profit from prediction market trades, while also seeking stronger oversight, enforcement, and transparency around potential insider trading.

A final rule from CFTC should be forthcoming in the next few months, as many of these comments will require thoughtful review and analysis.

Why this Matters?

Prediction markets are quickly becoming an integral part of the global economy. Preventing fraud in the market is critical to ensuring the integrity and longevity of predictive trading. Once these rules are finalized, market participants will have clear guidelines on protected trading, at least until litigation filed by the states and the CFTC, against the other, is resolved, most likely before the U.S. Supreme Court.

In addition, until such litigation is resolved, the CFTC’s final rules will impact whistleblowers, hopefully encouraging them to come forward, as they will have guidelines in determining suspicious activity in predictive trading practices.

Whistleblowers Play an Important Role

Whistleblowers play a critical role in ensuring the integrity of the U.S. and global financial markets. The CFTC relies on whistleblowers to help them enforce violations of the Commodity Exchange Act. If you have witnessed violative activity, consider blowing the whistle.

What to Do if You Have Witnessed Fraud:

1. Speak with an Experienced Whistleblower Attorney: Contact an experienced whistleblower attorney who understands the CFTC whistleblower program. These consultations at Cohen Milstein are confidential and free of charge. Counsel can guide you through the process and assist in preparing and submitting your Tip, Complaint, and Referral (Form TCR) to the CFTC.
2. Gather Your Information: Along with your personal observations and a completed Form TCR, the CFTC requires supporting information that is original and not in the public sphere.
3. Understand the Potential for a Whistleblower Award: If your information leads to a successful CFTC enforcement action resulting in more than $1 million in monetary sanctions, you may receive an award ranging from 10-30% of any amount collected.

The  CFTC’s Whistleblower Program provide comprehensive guidelines on reporting fraud and the whistleblower process. Access the Tip, Complaint or Referral (TCR) forms: CFTC Form TCR.

About the Author

Christina McGlosson, special counsel in Cohen Milstein’s Whistleblower practice, focuses exclusively on Dodd-Frank Whistleblower representation. She is the former acting director of the Whistleblower Office in the Division of Enforcement at the U.S. Commodity Futures Trading Commission. She was a senior attorney in the SEC’s Division of Enforcement, where she assisted in drafting the SEC rules to implement the whistleblower provisions of Dodd-Frank and served as Senior Counsel to the Director of the SEC’s Division of Enforcement and to its Chief Economist.

Christina represents whistleblowers in the presentation and prosecution of fraud claims before the SEC, CFTC, FinCEN, a bureau of the U.S. Treasury, the Department of Justice, and other government agencies.

Contact Christina:

E: cmcglosson@cohenmilstein.com

T. 202-988-3970

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