Key Points
- Federal regulators submitted prediction market regulations to the White House Office of Management and Budget in late May.
- Sports event contracts would receive federal authorization under the new framework.
- The 2024 prohibition on sports-related event contracts faces elimination.
- New standards establish operator obligations and fraud prevention measures.
- President Donald Trump declared support for CFTC-exclusive jurisdiction over prediction markets on May 26.
Federal regulators have submitted comprehensive prediction market regulations while eliminating the 2024 sports contract prohibition. The Commodity Futures Trading Commission forwarded its proposal to the White House Office of Management and Budget between May 26 and May 27. President Donald Trump declared his support for exclusive federal control and rejected state-level intervention through a May 26 Truth Social statement.
Federal Framework Establishes New Prediction Market Standards
The regulatory proposal authorizes sports event contracts under federal jurisdiction while establishing operator responsibilities and anti-fraud protocols. The framework eliminates the 2024 restriction that categorized sports contracts as gambling instruments. Federal regulators would substitute the prohibition with authorized oversight under commodity regulations.
The CFTC released an Advance Notice of Proposed Rulemaking in March 2026 to collect stakeholder feedback. Public commentary concluded on April 30 following the agency’s request for perspectives on insider trading and market manipulation. The submitted draft incorporates stakeholder input and establishes what regulators describe as operational guidelines.
Trump declared the CFTC should maintain sole authority over prediction market operations. He emphasized regulators must block state interference and safeguard American market leadership. His statement reinforced the proposal’s federal supremacy framework.
The regulatory structure identifies acceptable contract types and specifies prohibited activities. It establishes reporting requirements, compliance protocols, and monitoring obligations for platform operators. The framework also defines the agency’s approach to evaluating manipulation allegations and implementing enforcement measures.
Market Operators Prepare for Federal Oversight Transition
Kalshi has maintained CFTC registration as a designated contract market since receiving approval in 2020 and 2021. Federal supremacy would eliminate numerous state-level restrictions that constrained platform growth. The proposed framework would authorize sports contracts through federal channels rather than state regulatory systems.
Polymarket secured designated contract market designation in 2025 following extended legal examination. The platform operates through blockchain technology and attracted widespread visibility throughout the 2024 election period. Regulatory definition could influence its product development and compliance strategy.
Polymarket has refrained from introducing a native POLY token to this point. The organization has withheld any schedule for potential token deployment. The submitted rulebook emphasizes market operations rather than digital asset listings.
Both organizations would assume specific compliance obligations under the proposed regulations. The CFTC would oversee contract offerings and mandate safeguards against insider trading. Enforcement measures would address fraudulent activity and manipulation through established commodity legislation.
The proposal continues under evaluation at the Office of Management and Budget. Following assessment, the CFTC may release a formal notice of proposed rulemaking. The agency has withheld information regarding a publication timeline.
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