The Commodity Futures Trading Commission (CFTC) has concluded its 45-day public commentary period on proposed rulemaking centered around prediction markets, having received responses from the Coalition for Prediction Markets, NBA and Democratic lawmakers.
In a letter signed by multiple Democratic lawmakers, politicians requested the CFTC introduce heightened regulations to help prevent insider trading, as well as restrict events contracts on elections, military activity, government actions and sports.
“We strongly encourage you to use your authority to preserve the intent of prediction markets, and congressional intent behind the Commodity Exchange Act, by issuing a rule that prevents insider trading and corruption in the market and prohibits event contracts on the outcome of elections, war and military actions in the US or abroad, sports and government actions without a valid economic hedging interest,” the letter said.
Oregon Senator Jeff Merkley, who previously introduced the Stop Corrupt Bets Act on March 23, called on the CFTC to address the “rapid erosion of integrity” from prediction markets such as Kalshi and Polymarket.
Kalshi currently serves as a member of the Coalition for Prediction Markets, which responded to the CFTC by stating the definition of swaps is “certainly broad enough” to include sports event contracts.
The Coalition referenced a Third Circuit Court decision which ruled the “outcome of a sports event certainly can be associated with a potential financial, economic or commercial consequence.”
Operators involved with the Coalition requested the CFTC apply its “principals-based regulatory framework” to cover what can or cannot be offered as a contract.
Current rules prohibit operators from offering contracts on terrorism, assassination, war, gaming or an activity which is unlawful under any state or federal law, although the Coalition believes an outright ban on the potential trading would go against the CFTC’s requirements.
The NBA declared prediction markets should be subject to “robust and comprehensive regulations” to protect the integrity of respective sports leagues and asked the CFTC to impose tighter restrictions on players, game officials and team staff.
Despite calling for stricter regulations than those introduced for the MLB, NHL and UFC, all of which have partnered with respective prediction market entities, the NBA also held advanced discussions with Kalshi and Polymarket on potentially forming a new collaboration on April 16.
The NBA originally began talks with both parties during 2025, but the election of Michael Selig as Chairman of the CFTC in December helped discussions gain additional momentum.
Kentucky Governor Andy Beshear chose to veto HB 904 on April 14, which looks to prohibit operators licensed in the state from offering event contract trading and regulate peer-to-peer DFS
