The CFTC has moved a proposed rule on prediction-markets event contracts into White House review as federal and state officials fight over who should police the fast-growing sector.
Summary
- The CFTC’s proposed prediction-market rule is under White House review before it can be released for public comment.
- The rule could create the first comprehensive federal framework for event contracts and affect platforms such as Kalshi and Polymarket.
- Trump backed CFTC control over prediction markets, while Illinois Governor JB Pritzker defended state action against insider trading.
Bloomberg first reported that the proposal is now before the White House Office of Management and Budget, a step that precedes the Commodity Futures Trading Commission’s release of the plan for public comment. The details have not yet been published.
CFTC pushes toward event contract rules
The proposed rule is expected to draw from a CFTC consultation held in the spring, which attracted more than 3,000 public comments. 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.
At the center of the issue is whether contracts tied to elections, sports, and public events should be treated as federally regulated derivatives or as gambling products subject to state law.
States challenge federal control
Nevada, New Jersey, Maryland, Ohio, Montana, Illinois, and other states have taken action against prediction-market operators. 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. State regulators have rejected that view in several disputes, saying federal approval should not block enforcement of state gambling laws.
The question is now moving through the courts, where judges have split on whether CFTC jurisdiction overrides state gaming authority. Those cases could shape how much room states have to regulate platforms that list event-based contracts.
Pritzker criticizes Trump over prediction markets
President Donald Trump entered the dispute on Tuesday, publicly supporting Brian Selig and arguing that the CFTC should have exclusive authority over prediction markets. Trump said the issue was “critically important” and framed federal control as necessary for clear national rules.
In his post, Trump also attacked former New Jersey Governor Chris Christie, New York Attorney General Letitia James, Minnesota Governor Tim Walz, and Illinois Governor JB Pritzker. Trump said his administration was setting “rules of the road” for states and used harsh language against the officials.
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.
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.
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