The U.S. Commodity Futures Trading Commission (CFTC) has formally withdrawn a controversial proposal that sought to ban event contracts related to sports, politics, and awards ceremonies.
In his first public address as Chair, Michael Selig directed staff on Wednesday to rescind the 2024 notice of proposed rulemaking, which had previously labelled such markets as “contrary to the public interest.” The agency is now pivoting toward a new regulatory framework designed to provide clear standards and promote innovation in the multi-billion-dollar prediction market sector.
The Biden era prediction markets rulemaking was a frolic into merit regulation with an outright ban on political contracts ahead of the 2024 presidential election. The @CFTC is withdrawing that endeavor and will advance a new rule grounded in a rational interpretation of the law. https://t.co/sVrVQJVe8y
— Mike Selig (@ChairmanSelig) February 4, 2026
Resetting the regulatory landscape for event contracts
Chair Selig described the move as a “reset” of the agency’s long-standing approach to prediction markets, which allow participants to hedge risks or speculate on real-world outcomes. He argued that the previous administration’s proposal reflected an “outright prohibition” that contributed to market uncertainty rather than serving the public interest. Along with the 2024 ban proposal, Selig also ordered the withdrawal of a 2025 staff advisory that had cautioned registered entities against offering sports-related contracts due to ongoing legal battles.
The decision directly impacts popular platforms like Polymarket and Kalshi, which have seen a massive surge in trading volume despite facing a patchwork of state-level restrictions. While federal regulators are now backing off from a total ban, platforms still face significant pressure from state gaming boards in Nevada and Massachusetts that argue these markets constitute unlicensed gambling. Selig noted that the CFTC has the responsibility to defend its exclusive jurisdiction over commodity derivatives when such jurisdictional questions arise.
Harmonizing crypto oversight through Project Crypto
This regulatory shift coincides with the launch of “Project Crypto,” a joint initiative between the CFTC and the Securities and Exchange Commission (SEC). Led by Selig and SEC Chair Paul Atkins, the project aims to streamline digital asset oversight by creating a common taxonomy and eliminating duplicative compliance requirements. The goal is to keep innovation onshore, ensuring that products like tokenized collateral and prediction markets can operate transparently under U.S. law.
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