TLDR The CFTC has submitted a formal proposal to the White House to regulate prediction markets as financial derivatives, not gambling products. Platforms like Kalshi and Polymarket have faced growing scrutiny, including a Google employee charged with insider trading on Polymarket. Kalshi suspended and fined three political candidates who traded on their own election outcomes. Several U.S. states including New York, Minnesota, and Illinois argue prediction markets are gambling and should fall under state gaming laws. The Trump administration has backed the federal approach, framing prediction markets as a financial innovation issue.
The CFTC has submitted a formal proposal to regulate prediction markets as financial derivatives. The move could reshape how platforms like Kalshi and Polymarket operate across the United States.
What the CFTC Is Proposing
The agency submitted its proposal on event contracts to the White House Office of Management and Budget, starting a formal rulemaking process. The full proposal has not been released publicly.
CFTC Chairman Michael Selig said in January that the commission planned to create specific rules for prediction markets. This came after the agency backed away from an earlier proposal that would have restricted political and sports event contracts.
In April, Enforcement Director David Miller argued publicly that insider trading laws apply to prediction markets. His position is that event contracts should be treated as swaps under federal law, not gaming products.
If prediction markets are formally classified as derivatives venues, they would inherit the compliance rules that apply to traditional financial exchanges. That means know-your-customer rules, trade surveillance systems, broker oversight, and recordkeeping requirements.
Enforcement Actions Are Already Happening
Even without final rules in place, enforcement is moving forward.
The CFTC charged a Google employee with using confidential company information to place trades on Polymarket tied to corporate developments. Congressional investigators