CFTC ANPRM on Sports Prediction Markets Oversight

April 2, 2026

Double coverage: CFTC, exchanges signal new era of oversight for sports prediction markets

Greg Berson, Thomas Conaghan, Thomas W. McGee, Jake Preiserowicz McDermott Will & Schulte + Follow Contact LinkedIn Facebook X Send Embed

The past two weeks have brought an avalanche of news related to a maturing framework of prediction markets oversight from the Commodity Futures Trading Commission (CFTC), two prominent prediction markets (Kalshi and Polymarket), and US Congress:

• On March 12, 2026, the CFTC issued two significant developments addressing the rapidly evolving landscape of prediction markets: An Advance Notice of Proposed Rulemaking (ANPRM) seeking public comment on the regulatory treatment of event contracts, and a staff advisory outlining compliance expectations for exchanges listing such products.
• On March 19, 2026, the CFTC announced a Memorandum of Understanding (MOU) with Major League Baseball (MLB) to facilitate cooperation and information sharing related to the integrity of professional baseball and event contract markets. That news was followed by a Polymarket-MLB partnership announcement, which includes official data sharing arrangements for contract resolutions.
• Both Kalshi and Polymarket have made additional updates to their rulebooks, providing greater clarity and alignment between federal insider trading rules and their own.
• Opposition within Congress concerning the expansion of prediction markets persists, even as the CFTC advocates for a regulatory framework to oversee and advance the industry. Several Congress members have proposed, or voiced intent to propose, legislation targeting prediction markets and contracts across sports and government industries. These actions were preceded by aggressive CFTC action asserting exclusive jurisdiction over these markets. Taken together, these developments reflect increased regulatory attention to prediction markets, particularly those tied to sporting events, and a growing focus on market integrity, data reliability, and coordination with sports leagues. The ANPRM established a 45-day public comment period, which ends April 30, 2026, providing stakeholders (i.e., anyone who has an interest in, or is impacted in any manner by, prediction markets) with an opportunity to submit comments as the CFTC considers new regulatory approaches.

Key takeaways

• Certain sports-related contracts may face increased regulatory risk. Event contracts tied to individual players, officiating decisions, or other discrete in-game events may be viewed as more susceptible to manipulation, potentially limiting the types of products that can be offered on regulated exchanges. This is on top of the ongoing litigation due to sports-related event contracts sitting at the intersection of federal derivatives regulation and state gaming laws, creating disparate treatment and uncertainty for stakeholders operating across jurisdictions.
• League data and integrity controls are becoming central to these markets. The CFTC is placing increased emphasis on the reliability and security of settlement data, which may elevate the importance of official league data, integrity protocols, and internal controls in supporting these products.
• Sports leagues may play a more direct role in prediction markets. The CFTC is actively encouraging engagement with sports leagues and has begun formal coordination efforts, suggesting that leagues may increasingly act as data providers, integrity partners, and key stakeholders in the development of sports-related event contracts. This was partially prompted by the CFTC urging these markets to consider how contract structure (e.g., team-level vs. player-level outcomes) and data sourcing may affect regulatory viability.
• Prediction markets may begin to resemble regulated sports betting in certain respects. The CFTC’s focus on “gaming” and related concepts indicates that some event contracts, particularly those tied to sports, may be evaluated using frameworks like those applied in traditional gambling and sports wagering regulation.
• Internal policies may need to be revisited. Existing restrictions on betting and use of nonpublic information may not clearly address exchange-traded event contracts, and organizations may wish to review whether personal trading, integrity, and compliance policies adequately cover these products.
• Opportunity to shape the regulatory framework. The CFTC is actively soliciting input through the ANPRM, providing sports industry participants with an opportunity to engage directly with regulators and help influence how these markets develop.

Background

Prediction markets are trading platforms that allow participants to buy and sell contracts, commonly referred to as “event contracts,” that pay out based on whether a specified event occurs. These contracts often have binary outcomes and may be structured as derivatives subject to regulation under the Commodity Exchange Act of 1936 (CEA), including as swaps or futures contracts. Platforms offering such products to US participants generally must register with the CFTC as designated contract markets (DCMs) and comply with the CEA’s core requirements, including obligations related to market integrity, surveillance, and manipulation prevention.

That historically consisted of traditional derivatives exchanges such as the Chicago Mercantile Exchange (CME) and Intercontinental Exchange (ICE), but dedicated prediction markets (such as Kalshi and Polymarket) and other prediction markets registered in the same capacity. To use a sports analogy: The CFTC is acting as the league and the commissioner and the DCMs as the teams.

While the CFTC has historically limited the utilization of prediction markets, that has changed over the past year. Prediction markets have grown from a monthly trading volume of $1.5 billion in early 2025 to approximately $18 billion today. Additionally, there are now approximately nine different prediction markets offering (or prepared to offer) sports-related event contracts with an estimated more than 15 new DCMs who have submitted applications that expect to do so.

This increase in volume is largely because of an increase in the types of contracts offered, which include sports-related; political; “mention markets”; celebrity-focused (e.g., what words will be said in an interview); and those related to traditional financial markets such as economic indicators, mergers and acquisitions, and biotech. The new DCM entrants range from platforms with broad event contract offerings to dedicated sports exchanges and traditional sportsbook operators.

This has also brought a rise in litigation, with many prediction markets facing challenges from state regulators and others asserting that these contracts are a form of gambling and therefore subject to state laws. CFTC Chairman Michael S. Selig has thrown the CFTC’s hat into the ring by filing an amicus brief asserting the CFTC’s exclusive jurisdiction over these markets.

In Depth

The regulatory fog surrounding sports prediction markets is rapidly lifting, replaced by a dual-track mandate of federal oversight and industry-led integrity. The CFTC’s ANPRM and staff advisory signal that it is actively moving ahead with modifying the existing regulatory framework to accommodate these new markets. By simultaneously formalizing its jurisdiction and facilitating landmark partnerships, such as the MOU with the MLB, the regulator is signaling that compliance expectations for sports-related event contracts are evolving.

We have seen several prediction markets quickly following suit, including Polymarket’s announcement with MLB and updates to rulebook prohibitions on insider and manipulative trading, at times making the requirements even more restrictive than the underlying federal framework they are required to comply with.

Below, we outline the critical pillars of this new framework and what they mean for the future of sports-related event contracts.

Not susceptible to manipulation

DCMs are permitted to only list contracts that are “not readily susceptible to manipulation.” The ANPRM and staff advisory suggest the CFTC is increasingly focused on whether certain sports-related event contracts meet that standard.

A central concern is whether contract outcomes depend on a single individual or small group, or on discrete events that may be more easily influenced. The CFTC highlights contracts tied to player injuries, unsportsmanlike conduct, or officiating decisions as presenting heightened manipulation risks. Contracts tied to the aggregate performance of multiple participants over time are generally viewed as less susceptible to manipulation. This raises questions about the long-term viability of player “prop bet”-type contracts in regulated prediction markets and whether alternative or hybrid structures may be needed. One immediate impact was the announcement of Polymarket’s intention to restrict or remove markets that the MLB deems an “integrity risk,” including contracts related to individual pitches, manager decisions, and umpire performance.

The CFTC also emphasizes the importance of data integrity in the settlement process. Exchanges are expected to evaluate the source of settlement data, whether it can be manipulated or prematurely disclosed, and whether sufficient safeguards exist to ensure accuracy and reliability. The focus is not only on the event itself, but on the entire settlement process.

New contracts on a DCM are subject to CFTC review. Thus, DCMs must provide robust, well-supported analyses demonstrating that they comply with the CEA, including the manipulation standard. The CFTC cautions against overly broad contract specifications, noting that different permutations of a contract may present different manipulation risks. The CFTC may have been implying that the specifications and information provided to date may not be sufficient going forward.

One possible outcome is that contracts that do not meet the standards described above may be deemed ineligible for a DCM, perhaps resulting in certain platforms utilizing a hybrid model (e.g., a prediction market for acceptable CFTC contracts and a traditional sportsbook for others).

Engaging with sports leagues

The top sports leagues are well known for seeking a level of control, or at least insights, into any endeavor that involves their products. This engagement not only helps the leagues better manage tampering and competitive issues that may relate to such endeavors but also gives service providers valuable insight into how to collaborate effectively with the leagues. When approached jointly, this dynamic helps both sides build a more aligned, sustainable framework that strengthens the external product while protecting the leagues’ core interests.

In the staff advisory, the CFTC encouraged exchanges to engage with sports leagues and other governing bodies, including through information-sharing arrangements and reliance on official league data sources for contract resolution, where possible. The agency has also indicated that it is already engaging with certain leagues on settlement integrity issues.

This emphasis is reinforced by the CFTC’s MOU with the MLB, which provides for ongoing cooperation and information sharing related to both the integrity of professional baseball and event contract markets. The agreement contemplates coordination on issues of mutual concern, including where developments in one market may impact the integrity of the other.

This reflects the CFTC’s flexibility in attempting new approaches for new markets; such arrangements have historically not been utilized, given the scope and decentralization of the underlying data source (e.g., global supply of a certain commodity). The MOU also signals that the CFTC is not only encouraging engagement between exchanges and leagues but is also taking a more direct role in coordinating with sports organizations. This may include leveraging league data, integrity frameworks, and investigative capabilities in connection with event contracts tied to sporting outcomes.

Contrary to public interest: Section 5c(c)(5)(C)

Section 5c(c)(5)(C) of the CEA permits the CFTC to prohibit event contracts that are “contrary to the public interest,” including those involving “unlawful activity” or “gaming.” However, since the statute’s codification more than 15 years ago, the CFTC has yet to implement regulations providing a definitive framework for this authority.

The ANPRM indicates that the CFTC is actively reassessing how this authority should apply to prediction markets. The CFTC is broadly considering what factors should inform a public interest determination, including how event contracts align with the CEA’s objectives of market integrity and participant protection.

Gaming and public interest

The ANPRM places particular focus on “gaming,” asking whether such products raise unique concerns related to manipulation, customer protection, or market integrity. In doing so, the CFTC appears focused on determining which event contracts fall within the scope of “gaming” in the first place, including whether that term should align with existing state and federal gambling laws or be defined more broadly.

The CFTC further explores whether characteristics commonly associated with gambling, such as chance, entertainment value, or participant behavior, should inform its analysis, as well as whether responsible gaming safeguards (e.g., limits and disclosures) should be considered. While the CFTC almost certainly continues to view those instruments as within the scope of their regulatory authority, this line of questioning suggests that certain sports-related event contracts may increasingly be evaluated through a regulatory lens like traditional gambling.

Other considerations: Personal trading policies

These developments may have implications for personal trading and betting policies adopted by teams, leagues, and ecosystem partners. To the extent such policies prohibit betting on sporting events, as is common in the top sports leagues, organizations may wish to evaluate whether those policies are broad enough to capture other forms of economic exposure, including event contracts.

Event contract platforms have taken steps over the past two weeks to provide further protection from insider trading and manipulation. While CFTC prohibitions regarding such types of trading have always applied to DCMs, over the past week certain DCMs took this a step further by expounding on those restrictions in their own rulebooks. For example, certain platforms expanded the prohibition on trading from just “decision makers” to also include those with a position of authority or influence. Additionally, certain platforms do not require “intent” as a factor in determining whether an individual engaged in manipulative activity (e.g., manipulating the event outcome). This is a step beyond federal regulations.

Looking ahead

The ANPRM was published in the Federal Register on March 16, 2026, and the CFTC is accepting responsive public comments until April 30, 2026. We will continue to closely follow any developments.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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