The U.S. Commodity Futures Trading Commission (CFTC) is preparing a new regulatory framework for prediction markets, a move that could have significant implications for crypto-based platform Polymarket and rival exchange Kalshi.
Rather than imposing blanket restrictions, the proposed rules would create a structured process for reviewing event contracts individually, according to reports. The initiative comes as prediction markets continue to receive attention among traders betting on political, economic, and sports-related outcomes.
Exclusive: Trump regulators are proposing new rules on how they will govern the booming prediction markets, with parameters that will continue to allow most sports-related bets while trying to avoid inviting obvious manipulation https://t.co/giPAB4qDYu
— The Wall Street Journal (@WSJ) June 10, 2026
Is the CFTC moving toward case-by-case oversight?
Under the proposed framework, the CFTC would evaluate whether specific event contracts are in line with the public interest instead of banning entire categories of markets. The agency is expected to state the standards for reviewing contracts and deciding which should be allowed to operate.
The proposal marks a change in regulatory thinking as prediction markets grow in size and popularity. Polymarket has become the largest crypto-powered prediction platform globally, while Kalshi operates as a federally regulated exchange in the United States.
The regulatory review also follows increased scrutiny of the industry, including a recent U.S. House panel investigation into alleged insider trading concerns involving prediction market platforms. U.S. authorities also charged a Google software engineer over an alleged insider trading scheme tied to Polymarket.
Crypto prediction markets face renewed uncertainty
For the crypto industry, the new rules could directly affect Polymarket, whose blockchain-based platform has attracted billions of dollars in trading volume around major global events.
While the proposal does not seek an outright ban on prediction markets, it may subject certain contracts tied to politics, economics, and other real-world developments to closer examination. The framework is designed to give regulators flexibility as new products enter the market.
The timing is significant as Polymarket continues to face regulatory challenges in several jurisdictions outside the United States, including South Korea. The Gangwon Provincial Police Agency is investigating several South Korean residents for allegedly participating in illegal gambling through Polymarket.
Political and sports contracts are under spotlight
According to reports, sports-related contracts involving player injuries or highly specific in-game events could receive additional regulatory attention under the proposed guidelines.
Contracts involving war, terrorism, or political assassinations are also expected to face heightened scrutiny based on public interest considerations. Instead of prohibiting such markets automatically, the CFTC would review them individually before determining whether they should be permitted.
The proposal aligns with recent comments from U.S. President Donald Trump, who said the CFTC’s exclusive authority over prediction market regulation is “critically important,” underscoring the growing importance of oversight as the sector evolves.
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