The CFTC has moved a proposed rule for prediction-market event contracts into White House review, as federal and state officials continue fighting over who should regulate the fast-growing industry.
According to Bloomberg, the proposed rule is now being reviewed by the White House Office of Management and Budget before it can be officially released for public comment. Full details of the proposal have not yet been made public.
The rule could become the first major federal framework for prediction markets in the United States. It may also directly affect platforms like Polymarket and Kalshi, which are facing growing legal and regulatory pressure across several states.
The proposal is expected to build on a CFTC public consultation held earlier this year that received more than 3,000 comments. Those comments focused on insider trading concerns, banned contract types, market protections, and the legal structure surrounding event-based contracts.
At the center of the debate is whether prediction-market contracts linked to elections, sports, and public events should be treated as federally regulated financial derivatives or as gambling products controlled by state laws.
Several states, including Nevada, New Jersey, Maryland, Ohio, Montana, and Illinois, have already taken action against prediction-market operators. State officials argue that some event contracts look too similar to sports betting and should follow local gambling, tax, and consumer protection laws.
Kalshi and other companies have pushed back, saying their contracts are legal under the Commodity Exchange Act and fall under federal oversight. State regulators disagree, arguing that federal approval should not stop states from enforcing their own gambling laws.
The issue is now moving through the courts, where judges have already delivered mixed decisions about whether the CFTC’s authority overrides state gaming rules.
President Donald Trump also entered the debate this week by publicly supporting stronger CFTC control over prediction markets. Trump argued that federal oversight is necessary to create clear national rules for the industry.
During his comments, Trump criticized several political figures, including former New Jersey Governor Chris Christie, New York Attorney General Letitia James, Minnesota Governor Tim Walz, and Illinois Governor JB Pritzker.
Illinois Governor JB Pritzker later responded on X, saying Illinois acted to stop insider trading in online prediction markets. He accused Trump of trying to block state regulation so people connected to him could benefit from the industry.
Donald Trump Jr. also has ties to the prediction-market sector. He invested in Polymarket through venture capital firm 1789 Capital and serves as a strategic adviser to Kalshi.
