CFTC Advances New Federal Rules for Prediction Markets

The White House’s Office of Information and Regulatory Affairs has begun a formal review of a proposed Commodity Futures Trading Commission (CFTC) rule concerning prediction markets [1]. This regulatory step aims to establish a broader federal framework for event contracts, including those tied to elections, sports, and gaming, following months of legal and political disputes over the agency's authority [1].

Key takeaways

• The White House review, initiated May 26, follows President Donald Trump’s public endorsement of the CFTC’s exclusive authority over the prediction market sector [1].
• Research suggests that between $10.6 billion and $34 billion in annual trading volume on offshore prediction markets is attributable to U.S. users [2].
• While regulated platforms like Kalshi and Polymarket have seen significant growth, they face ongoing legal challenges from state regulators, including a Nevada court injunction and a pending ban in Minnesota [2].
• Analysts project the prediction market industry could reach $1 trillion in total volume by 2030, though some fear strict federal rules might push more activity to offshore, unregulated venues [2].

Federal Oversight and State Challenges

The proposed rule arrives as the CFTC seeks to solidify its control over event contracts, which have grown rapidly in popularity among American traders [1]. In a March advance notice, the agency requested public comment on which contracts—specifically those involving elections or sports—should be prohibited as contrary to the public interest [1]. This federal push for clarity comes as states like Illinois and New Jersey argue that sports-linked event contracts function as online betting markets, potentially falling outside the CFTC's jurisdiction [1].

Despite the regulatory uncertainty, the market for these contracts has expanded significantly. Kalshi, which has been regulated since 2020, saw its monthly volume rise to approximately $14.81 billion by April 2026 [2]. Meanwhile, Polymarket’s U.S.-regulated platform, which opened in December 2025, has also seen substantial growth, though it remains in a beta phase and is gated behind a waitlist [2, 3]. As these platforms compete for market share, they face a complex landscape where they must navigate both federal oversight and varying state-level restrictions [2].

Why it matters

The outcome of the White House review could determine the future of how Americans interact with event-based financial products. With billions of dollars in volume currently flowing through both regulated and offshore platforms, the establishment of a clear federal framework is intended to provide a consistent standard for the industry [1, 2]. However, the tension between federal authority and state-level opposition remains a significant hurdle. Industry observers warn that if the federal rules are too restrictive, they may inadvertently drive more American users toward offshore platforms that operate beyond the reach of U.S. regulators [2]. As the sector moves toward a projected $1 trillion in volume by 2030, the balance between consumer protection and market accessibility remains the central point of debate [2].