The Commodity Futures Trading Commission (CFTC) received extensive comment letters in response to its Advance Notice of Proposed Rulemaking (ANPRM) on prediction markets, issued on March 12, 2026. The ANPRM launched the CFTC’s effort to draft new regulations relating to event contracts traded on prediction markets. Event contracts allow participants to trade on the outcome of future events—including economic, political and, increasingly, sports-related outcomes, among many others—and are regulated by the CFTC as swaps. A diverse group of stakeholders, including exchanges and trading platforms, traditional sportsbooks, sports leagues, states, American Indian tribes and blockchain technology companies, submitted over 1500 comments in response to the ANPRM. These comments present a range of opinions regarding the sufficiency of the current derivatives framework, the proper scope of permissible event contracts, market integrity and consumer protection.

Sufficiency of the Existing Derivatives Framework

Market participants—including exchanges and trading platforms—generally agree that event contracts are properly treated as derivatives and fall within the CFTC’s jurisdiction. Accordingly, most commenters do not advocate for a new or bespoke regulatory framework, but instead argue that the Core Principles currently applicable to designated contract markets (DCMs) provide a sufficient foundation for regulating prediction markets. At the same time, commenters recognize that prediction markets have unique attributes and present unique risks warranting tailored rules and guidance. Among other things, commenters highlighted the need for targeted guidance addressing contract design, market integrity and retail participation. This includes defining objective and verifiable settlement criteria, ensuring robust surveillance to detect manipulation and insider trading and implementing safeguards to protect retail users.

Rule 40.11 and the “Public Interest”

A central focus of many comment letters is the CFTC’s approach to Rule 40.11, which governs when the CFTC may prohibit event contracts as contrary to the public interest. Section 5c(c)(5)(C) of the Commodity Exchange Act (CEA), on which Rule 40.11 is based, provides that the CFTC “may” determine that certain contracts—those that involve unlawful activity, terrorism, assassination, war, gaming or other similar activity—are contrary to the public interest and prohibit their listing. Commenters observe that this statutory language reflects a discretionary, case-by-case framework that contemplates individualized Commission judgment rather than categorical decisions. Rule 40.11, in contrast, is widely viewed by commenters as a blanket prohibition on entire categories of contracts.

Several commenters argue that the CFTC should align Rule 40.11 more closely with the statutory framework by adopting an explicit two-step analysis for prohibiting event contracts that are contrary to the public interest. Under this proposed approach, the Commission would first determine whether a contract falls within one of the enumerated categories set forth in Section 5c(c)(5)(C), and only then assess, based on the specific facts and characteristics of the contract, whether it is contrary to the public interest. Commenters contend this framework would allow the CFTC to differentiate among products within the same category—for example, distinguishing between contracts that may facilitate legitimate hedging or price discovery and those that raise substantive policy concerns—rather than applying broad prohibitions.

Diverging Views on Sports-Related Contracts

The most pronounced divergence in the comment record concerns sports-related event contracts. Derivatives industry participants generally favor the CFTC’s oversight of sports-related event contracts trading on DCMs. In contrast, many other commenters, including gambling industry stakeholders, states and tribal governments, argue that sports-related event contracts are functionally indistinguishable from traditional wagering and should be treated as gambling rather than derivatives. These commenters argue that permitting sports-related event contracts would undermine existing state and tribal gaming regimes and transform the CFTC into a de facto national gambling regulator and that the CFTC is not equipped to take on those responsibilities.

Many commenters also noted the absence of a clear definition of “gaming” in Section 5c(c)(5)(C) of the CEA and Rule 40.11. Derivatives industry commenters favor a narrow definition limited to traditional games of chance, which would allow prediction markets to continue to offer sports-related event contracts. Gambling industry stakeholders, states and tribal governments, in contrast, argue that event contracts based on sports fall within the plain meaning of the word “gaming.”

Market Integrity, Insider Trading and Manipulation

Commenters across the spectrum identified market integrity—particularly risks of manipulation and misuse of nonpublic information—as a central concern. A recurring theme is that, while these risks are not unique to event contracts, they may be amplified in certain contexts, especially where outcomes can be influenced by a small group of individuals. In response, many submissions call for enhanced contract design standards, including the use of objective and independent data sources, clear settlement criteria and limitations on contracts tied to highly discretionary or individually controlled outcomes. In addition, commenters broadly support robust surveillance frameworks, including real-time monitoring, position limits and restrictions on high-risk participants, to detect and deter potentially manipulative conduct.

Consumer Protection

Many commenters emphasize consumer protection, considering the growing participation of retail users in prediction markets. Submissions highlight that, although event contracts share characteristics with traditional derivatives, they are often more intuitive and accessible and thus may attract a broader, less sophisticated user base. Some commenters draw on existing derivatives protections—such as position limits, margin controls and market surveillance. Stakeholders with experience in regulated gambling markets, such as gambling associations, sports leagues, states and tribes, argue that prediction markets should incorporate more robust gambling-style protections, including stricter age restrictions, licensing regimes, responsible participation tools (such as self-exclusion and spending limits) and enhanced compliance oversight.

Sports Integrity

Sports league comments focus primarily on integrity concerns. Their comments emphasize that event contracts tied to game outcomes and discrete in-game events could create new incentives for misconduct, including match-fixing and manipulation of specific plays. Sports leagues argue that these risks reflect the unique structure of sports, where outcomes may be influenced by a relatively small number of identifiable participants with direct control over performance and gameplay. As a result, leagues argue that any regulatory framework permitting such contracts should place integrity considerations at its core, rather than treating these products as functionally indistinguishable from other derivatives.

Consistent with this approach, sports leagues call for a formalized and ongoing role in oversight of prediction market activity tied to their competitions. This includes robust information-sharing arrangements with exchanges and regulators, access to transaction-level trading data for monitoring purposes and the ability to participate in or support investigations into suspicious activity. Leagues also emphasize the importance of restricting participation by individuals with direct or indirect influence over outcomes—such as athletes, coaches, referees and team personnel—through prohibited trader lists and related controls. In addition, they identify certain categories of contracts as presenting particularly high risks of manipulation or misuse of insider information, including player-specific “proposition” markets and contracts tied to discretionary or subjective decisions, such as officiating calls, injuries or disciplinary actions.

Native American Tribal Sovereignty

Tribal governments argue that many event contracts—particularly those tied to sports outcomes—are economically and functionally indistinguishable from wagering, insofar as they involve staking value on the occurrence of uncertain events with the expectation of a payout. In their view, this functional equivalence places such contracts squarely within the category of “gaming,” regardless of how they are structured or traded. As a result, they contend that these products fall outside the intended scope of the CEA’s derivatives framework and should be prohibited.

Tribal commenters also raised concerns about the potential impact of prediction markets on the existing tribal–state gaming ecosystem. They warn that allowing event contracts to proliferate on federally regulated exchanges would undermine the carefully negotiated system of tribal–state compacts and regulatory oversight established under federal law, specifically the Indian Gaming Regulatory Act (IGRA) and that any such event contracts would constitute unlawful Class III gaming on tribal lands in violation of IGRA. Further, they argue that prediction markets could facilitate nationwide participation in wagering-like activity without complying with the licensing, geographic limitations and regulatory safeguards that govern tribal gaming operations. This, in turn, could divert economic activity away from tribal enterprises that were carefully negotiated under tribal-state compacts consistent with the existing regulatory framework under IGRA.

Blockchain and Crypto-Native Perspectives

Blockchain and crypto-native market participants broadly support a technology-neutral, principles-based regulatory approach. These commenters emphasize that prediction markets can use blockchain technology to meet regulatory objectives by improving transparency, auditability and market surveillance, while also reducing settlement and counterparty risk. They advocate for flexibility in how regulatory obligations are satisfied, including recognition that blockchain-based systems may achieve compliance through alternative technological means. In particular, they caution against rules that implicitly assume centralized intermediaries or that could limit the development of decentralized market structures.

Key Takeaways

The comment record reflects broad support for maintaining the existing derivatives regulatory framework while providing targeted guidance to address prediction markets. At the same time, it highlights significant disagreement about how far the CFTC should extend that framework—especially with respect to sports-related contracts. The CFTC now faces a series of foundational policy decisions that will shape the future of prediction markets in the United States. Among the most significant is how broadly to permit event contracts relating to gaming and other categories of event contracts that may be contrary to the public interest. As a next step in the process, the CFTC will likely issue proposed new rules, which will be followed by another period of public comment.