The CFTC proposed its first written framework for sporting event contracts, formally defining sports markets as “gaming” – then drafting definitions under which virtually everything currently traded on Kalshi and its rivals remains legal.
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Key points to remember:
- The CFTC proposed a rule on June 10 defining sporting event contracts as games while allowing almost all of them.
- Five categories would be prohibited: injuries, refereeing, discreet actions, altercations, pre-college sports.
- Event contract listings increased from 220 in 2021 to more than 8,000, according to the CFTC.
Five prohibited categories, one legalized industry
The Commodity Futures Trading Commission released the proposed regulations on Wednesday, June 10, opening a 90-day comment period on a 267-page framework that would, for the first time, give forecast markets a written federal rule rather than case-by-case review. The concession to critics is definitional: the agency now asserts that sports performance contracts do indeed involve “gaming” under the Commodity Exchange Act.
The practical effect goes in the other direction. Under the proposal, standard sports contracts – game winners, championship futures and most of what is currently traded – would be allowed in the public interest. Five categories would be considered contrary and prohibited: contracts on player injuries, official results, discrete in-game actions such as a specific throw or shot by a named player, physical altercations and pre-college sports. Random casino-style contracts would also likely be deemed contrary to the public interest, while contracts referencing war, terrorism or assassination would be assessed based on the facts and circumstances rather than banned outright.
The definition of play is a reversal. As recently as this spring, the CFTC’s own attorney argued before the Ninth Circuit that contracts related to sporting events do not involve gaming – a position that underpins the industry’s expansion into sports markets. The proposal also marks a personal turnaround for CFTC Chairman Michael S. Selig, who in private practice worked on a 2024 comment letter for Kalshi Investor Paradigm arguing that treating sports contracts like gambling would be arbitrary and capricious. Selig now presents the rule as a balance:
“The CFTC will protect the integrity of our regulated markets without impeding responsible innovation,” he said, calling it “a sustainable and transparent framework… allowing legitimate markets to move forward.”
The banned categories closely match what the sporting world demands. The NFL, MLB, NBA, NHL and MLS players’ associations petitioned the CFTC on April 30 – the close of an earlier comment window – to ban the riskier types of contracts, even though leagues like the NHL and MLB have signed data deals with Polymarket and Kalshi; Injuries and other consequences were precisely the categories they reported as threats to integrity.
Opponents of the predictions market were less accommodating: Mick Mulvaney, executive director of the anti-predictions market group Gambling is Not Investing, argued that the products were sports betting by another name. “A sports bet doesn’t stop being a sports bet just because it’s called a contract,” he said. “If he quacks like a duck, it’s a sporting game.”
According to the agency’s own figures, event contract listings grew from about 220 in 2021 to more than 8,000. A finalized rule would replace the litigation-related uncertainty that has defined the industry — including interstate court battles and jurisdictional standoffs — with a single federal line between permitted and prohibited markets. Comments are due 90 days after publication, setting a final rule on a track no sooner than the end of 2026.
