Primary federal regulator for event contracts listed on Designated Contract Markets under the Commodity Exchange Act. Administers the Section 5c(c)(5)(C) review framework and the Regulation 40.11 self-certification process.
CFTCRule ChangeHighJul 30
The CFTC issued an NPRM (PR 9274-26) proposing conflict-of-interest rules (amending Parts 37-39 and Regs 1.52/1.55) for market structures where an exchange also owns an affiliated market maker. The proposal would bar the affiliate from seeing non-public order flow or positions, ban preferential fees or matching priority, and require separation of staff, technology, and office space — a company could own a market maker on its own exchange but not a directional proprietary-trading arm. Trade press frames this as targeting the vertically integrated model used by Kalshi and Polymarket. 60-day comment period.
CFTCConflict of InterestVertical IntegrationRulemakingMarket Maker
July 27, 2026 was the deadline for public comments on the CFTC's proposed rule (noticed June 10, 2026) establishing a three-step framework for evaluating whether event contracts involve gaming, war, assassination, or other public-interest-restricted activity. Multicoin Capital and the Hyperliquid Policy Center filed a joint comment letter backing exclusive CFTC federal jurisdiction and urging published reasoning for contract approvals and rejections; Coinbase filed a similar letter July 28.
The CFTC's Division of Market Oversight issued Staff Advisory No. 26-22 (PR 9273-26), reminding designated contract markets that broad, template-style self-certifications combining multiple event-contract variants under one filing are improper under Commission Regulation §40.2, and requiring terms, settlement methodology, and compliance analysis for each contract permutation (closely related contracts may still be certified together as a class). It is the second such warning in 2026 (after CFTC Letter 26-08, March 2026), issued three days before the July 27 comment-period close on the CFTC's broader prediction-markets rulemaking (upd-other-044).
The CFTC issued Press Release 9267-26 staying KalshiEX's own emergency rule change and ordering the company, under the Commission's emergency authority (CEA §8a(9)), to fulfill open Michigan-related trades rather than cancel them as an Ingham County Circuit Court order had directed. Multiple outlets noted this was the first use of the CFTC's emergency authority in 46 years, opening a 90-day Commission review with a 30-day comment window.
Bloomberg and CNBC reported the CFTC is conducting an ongoing investigation into Polymarket's business and social-media marketing practices, broader in scope than the paid-influencer campaign first reported by the WSJ, and coming days after the Curtis-Schiff Senate letter (upd-other-043).
The CFTC issued an NPRM (PR 9261-26, published in the Federal Register July 1, 2026) proposing that fully collateralized event contracts — the Kalshi/Polymarket-style category that has operated under CFTC staff no-action relief since 2017 — report under Parts 15-18 rather than the standard Parts 38/39/43/45 framework used by conventional futures and swaps.
On June 23, 2026, the CFTC filed a declaratory-judgment and injunctive complaint in the U.S. District Court for the Eastern District of Kentucky against Gov. Andrew Beshear, AG Russell Coleman, Department of Revenue Commissioner Thomas B. Miller, and the Kentucky Horse Racing and Gaming Corporation. The suit challenges two simultaneous Kentucky actions: (1) the AG's June 17, 2026 state-court enforcement suits against KalshiEX LLC and Polymarket US for alleged unlicensed sports wagering, and (2) a 14.25% excise tax on all prediction-market transaction fees enacted by the Kentucky General Assembly in April 2026 and already challenged by industry plaintiffs in Coalition for Prediction Markets v. Kentucky. The CFTC seeks a declaratory judgment that both the enforcement suits and the excise tax are preempted by the Commodity Exchange Act, and a permanent injunction barring enforcement of either. Chair Selig stated: 'Kentucky is the latest state attempting to shut down federally-regulated event contracts. The CFTC is firmly committed to maintaining its exclusive jurisdiction over prediction markets.' Kentucky becomes the ninth state sued by the CFTC in 2026 — after Arizona, Connecticut, Illinois, Minnesota, New Mexico, New York, Rhode Island, and Wisconsin — and is the first state with a Republican attorney general to face a CFTC federal preemption suit. The CFTC's brief argued the 14.25% levy 'essentially makes it impossible for prediction markets to operate in Kentucky' and operates as a functional ban rather than a genuine revenue measure.
On June 18, 2026, the CFTC filed an amended complaint and a motion for preliminary injunction in its existing Northern District of Illinois lawsuit (originally filed April 2, 2026, PR 9206-26), adding a direct challenge to the per-wager transaction tax Gov. JB Pritzker signed into law that same day as part of the FY2027 omnibus budget (SB 3019). The tax imposes a fee of 1.75% on each sports-event-contract exchange wager for an operator's first 5 million wagers per fiscal year, rising to 3.5% on each wager thereafter; the regime takes effect July 1, 2026. The CFTC argues that, at the 3.5% tier, the levy meets or exceeds the per-trade fees designated contract markets charge their own users, effectively constituting an outright ban on DCM operations rather than a genuine revenue measure, and that the Commodity Exchange Act preempts state-level taxation of federally regulated event contracts. The PI motion creates an urgent deadline: if not ruled upon before July 1, the tax will take effect against all CFTC-registered operators active in Illinois. This is the first time the CFTC has challenged a prediction-market-specific per-wager transaction tax in federal court — a legal theory distinct from the state cease-and-desist enforcement preemption arguments in its eight prior state suits — and runs parallel to the Coalition for Prediction Markets' challenge to Kentucky's 14.25% excise tax (law-coaltn-v-ky). Chairman Selig called the Illinois tax regime "an attempt to drive federally regulated prediction markets out of the state through discriminatory taxation rather than outright prohibition."
On June 16, 2026, the CFTC granted Designated Contract Market registration to Ludlow Exchange LLC, the CFTC-registered entity backing the Novig sports prediction market. The approval, completed in under seven months, allows Novig to offer federally regulated sports event contracts across all 50 states under a single CFTC oversight framework. Novig, which surpassed $5 billion in cumulative trading volume prior to the designation, operates a peer-to-peer model in which users trade directly against each other rather than against a house book. The approval is the second sports-native DCM designation in five days, following ProphetX's DCM and DCO approvals on June 11, 2026 (upd-cftc-047), and reflects the CFTC's continued acceleration of its DCM review pipeline. The approval gives Novig the same federal preemption arguments against state gaming regulators as Kalshi and other CFTC-registered DCMs.
On June 12, 2026, the CFTC filed a declaratory-judgment and injunctive suit (PR 9251-26) against New Mexico in the U.S. District Court for the District of New Mexico, seeking to block the state from enforcing its Gaming Control Act against CFTC-registered prediction-market operators. The action follows New Mexico AG Raúl Torrez's June 4 state-court suit against KalshiEX LLC (law-nm-ag-v-kalshi), which alleged Kalshi operated an unlicensed sportsbook and permitted users as young as 18 to participate. The CFTC argues the Commodity Exchange Act grants it exclusive jurisdiction over event contracts listed on designated contract markets, preempting state gambling statutes. New Mexico is the eighth state the CFTC has sued in 2026, after Arizona, Connecticut, Illinois, New York, Wisconsin, Minnesota, and Rhode Island. Chairman Selig stated the CFTC has "clear and longstanding exclusive jurisdiction to regulate event contracts and the prediction markets on which they trade under the Commodity Exchange Act."
On June 11, 2026, the CFTC approved ProphetX's applications for registration as both a Designated Contract Market (DCM) and a Derivatives Clearing Organization (DCO), making it the first sports-native, directly clearing prediction market exchange in the United States. The dual registration — which ProphetX had been pursuing since filing both applications on November 10, 2025 — allows the platform to trade, clear, and settle event-based sports contracts on a single vertically integrated venue under comprehensive CFTC oversight, without relying on an external clearinghouse. ProphetX, which began as a UK-licensed peer-to-peer sports event trading marketplace in 2018, pivoted away from a sweepstakes model in 2025 to pursue full CFTC regulation. The approval distinguishes ProphetX from existing DCMs such as KalshiEX and Robinhood Derivatives, which clear through the Options Clearing Corporation or third-party DCOs. ProphetX's product strategy centers on an RFQ-based parlay mechanism for sports event contracts.
The CFTC released a 267-page Notice of Proposed Rulemaking on June 10, 2026, establishing the first comprehensive federal framework for evaluating which event contracts may be listed on registered DCMs. The NPRM follows the March 2026 ANPRM (PR 9194-26) and OIRA review (upd-cftc-044). Under the proposed three-part test, the Commission determines whether a product qualifies as an event contract; whether it involves a category Congress directed for scrutiny — gaming, war, terrorism, assassination, or unlawful conduct; and whether it is contrary to the public interest, weighing information-aggregation benefits, manipulation risk, and economic utility. Sports-related contracts on final scores, point differentials, win-loss records, tournament advancement, and player statistics are generally permitted. Micro-event contracts tied to single plays — a single baseball pitch, a single hockey shot, a single foul — and contracts on player injuries, officiating decisions, physical altercations, and precollege athletics would be prohibited. Contracts involving war, terrorism, and assassination would be subject to heightened scrutiny and would generally be barred. The Commission will accept public comment for 45 days following Federal Register publication. Chair Selig stated the proposal "gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward."
On May 29, 2026, the CFTC issued an Order for Approval (PR 9240-26) permitting KalshiEX LLC to list the BTCPERP Contract — a perpetual contract referencing the spot price of bitcoin — as a futures contract on a US-regulated exchange, the first of its kind domestically. Kalshi submitted the contract under Regulation 40.3 on May 28; the Commission determined it complies with CEA core principles and Part 38. Simultaneously, the Commission issued a policy statement (PR pr-9242-26) describing its views on the listing of perpetual contracts, noting that the case-by-case Regulation 40.3 review process applies to perpetual contracts referencing asset classes not covered by the Order. The package follows CFTC Staff Letter No. 26-16 (PR 9239-26), a 24/7 trading advisory issued the same day. The BTCPERP approval signals Kalshi's material expansion from event contracts into crypto derivatives and positions a CFTC-regulated DCM to compete with offshore perpetual-futures venues that handle roughly $86 trillion in annual volume.
The CFTC forwarded a proposed rulemaking on event contracts to the Office of Management and Budget for mandatory White House review, as reported May 27, 2026. The rule follows the March 2026 ANPRM (PR 9194-26) that drew more than 3,000 public comments on insider trading, contract prohibitions, and oversight architecture. OIRA review is a required step before a Notice of Proposed Rulemaking can be published in the Federal Register; no details of the rule's substance have been disclosed. The rulemaking, if finalized, would constitute the first comprehensive federal framework for event contracts and could provide statutory preemption footing against pending state legislation in Minnesota, Rhode Island, and other states actively pursuing enforcement.
Hours after Governor Walz signed SF 4760, the CFTC filed a declaratory-judgment and injunctive suit in the District of Minnesota (PR 9233-26) seeking a preliminary injunction to block the law before its August 1 effective date. Chairman Selig called it "the most aggressive move by a state to shut down CFTC-regulated markets and undermine the federal regulatory regime set up by Congress more than 50 years ago," noting the law would criminalize contracts on weather, crops, and war in addition to sports. Minnesota becomes the sixth state the CFTC has sued in 2026, after Arizona, Connecticut, Illinois, New York, and Wisconsin.
The Divisions of Market Oversight and Clearing and Risk issued a supplemental no-action letter granting blanket relief from Parts 43 (real-time public reporting), 45 (swap data recordkeeping & reporting), and Regulations 38.8(b), 38.10, 38.951, and 39.20(b)(2) for fully collateralized binary- and variable-payout event contracts. Initially issued for Gemini Titan / Gemini Olympus but designed as a streamlined market-wide framework other DCMs/DCOs can join without bespoke letters. Major regulatory-burden reduction for all prediction-market DCMs.
No-Action LetterMarket-Wide FrameworkGemini TitanSwap Data
In KalshiEx LLC v. Schuler et al., the CFTC filed a Sixth Circuit amicus brief asserting exclusive federal jurisdiction and warning that "Ohio's jurisdictional overreach into the Commission's sphere threatens regulatory upheaval." The filing follows the OCCC's $5M fine notice (April 14, 2026) and the March 2026 district-court denial of Kalshi's injunction by Chief Judge Sarah Morrison.
Chairman Selig keynoted FINRA's annual conference, using the appearance to confirm the CFTC is in active talks with every major US professional sports league following the March 2026 MOU with MLB, and to argue prediction markets and sportsbooks are "two separate things — markets versus entertainment." Same-day remarks to Axios reinforced that the CFTC will not defer to state courts.
US District Judge Michael T. Liburdi (D. Ariz.) converted the April 10 TRO into a preliminary injunction blocking Arizona AG Kris Mayes from prosecuting the Maricopa County criminal case and from enforcing state gambling laws against CFTC-registered DCMs. The court rested its decision on three independent preemption grounds (field, conflict, and obstacle preemption). Some coverage characterized the order as "permanent."
ArizonaPreliminary InjunctionField PreemptionCriminal Case Blocked
At Consensus Miami, Chairman Selig defended CFTC's exclusive authority over event-based contracts (sports and political markets), said state actions amount to undermining federal law, and predicted the jurisdictional battle will reach the US Supreme Court. He reiterated the CFTC has already sued "five or six states."
The Divisions of Market Oversight and Clearing and Risk issued a no-action letter modifying CFTC Letter 25-26 to add Bitnomial Clearinghouse as a covered DCO — allowing Railbird to clear Railbird Contracts through Bitnomial on the same terms as QC Clearing — and to remove Condition 6 prohibiting intermediation given Railbird's amended DCM Order.
CFTC issued a Request for Comment on modifications to the Commitments of Traders Reports program — including whether prediction-market platforms now offering agricultural, natural-gas, and lithium contracts should file COT reports like CME/ICE. The action is explicitly driven by Kalshi's commodities expansion. Comments due June 4, 2026.
The CFTC's Advance Notice of Proposed Rulemaking on event contracts (PR 9194-26, published March 16) closed with over 1,500 public comments — the next-highest CFTC rulemaking this year drew nine. Submissions came from operators, sports leagues (NFL, NBA, MLB, PGA), players unions, tribal nations, state AGs, and consumer-protection groups. The CFTC has indicated it will use comments to inform future agency action.
ANPRMComment Period ClosedRulemakingStakeholder Input
The CFTC announced that all electronic public-comment submissions on rulemakings and comment requests issued on or after April 28, 2026 must go through Regulations.gov instead of comments.cftc.gov. The change integrates CFTC dockets with the federal Unified Agenda and is relevant for ANPRM follow-up and any forthcoming event-contracts NPRM.
The CFTC filed federal suit against Wisconsin four days after AG Josh Kaul's civil complaints, seeking declaratory and injunctive relief to block enforcement of state gambling laws against CFTC-registered DCMs. Wisconsin becomes the fifth state CFTC has sued (after AZ/CT/IL on April 2 and NY on April 24). Chairman Selig: "If you interfere with the operation of federal law in regulating financial markets, we will sue you."
The CFTC filed an amicus brief at the Massachusetts Supreme Judicial Court in Commonwealth v. KalshiEx LLC (No. SJC-13906), asserting exclusive federal jurisdiction over event contracts listed on CFTC-regulated DCMs. The filing coincided with a 38-state AG coalition amicus brief filed the same day on the opposite side.
The CFTC filed suit in the Southern District of New York to halt New York State's efforts to apply state gambling law against CFTC-registered designated contract markets. The complaint targets the October 2025 cease-and-desist to KalshiEX, civil suits against Coinbase Financial Markets and Gemini Titan, and asserts CEA preemption. New York becomes the fourth state CFTC has sued, after Arizona, Connecticut, and Illinois (April 2, 2026).
Federal PreemptionNew YorkLitigationExclusive Jurisdiction
The CFTC filed a civil complaint in the SDNY against active-duty US Army service member Gannon Ken Van Dyke, alleging he used classified non-public information about Operation Absolute Resolve (the operation to capture former Venezuelan President Nicolás Maduro) to buy more than 436,000 "Yes" shares on Polymarket for over $404,000 in profits. SDNY simultaneously unsealed a parallel criminal indictment. This is the CFTC's first-ever insider-trading enforcement action involving an event contract and operationalizes the Feb 25 advisory.
Following an internal compliance review, KalshiEX suspended three political candidates from its platform for five years and imposed fines ranging from $539 to more than $6,200 for trading contracts on their own campaigns. The sanctioned candidates are Mark Moran (VA, independent), Matt Klein (MN-2, Democrat), and Ezekiel Enriquez (TX-21, Republican). The action operationalizes the CFTC Enforcement Division's February 25, 2026 insider-trading advisory.
Kalshi and Polymarket announced parallel launches of perpetual futures markets on CFTC-regulated venues, beginning with BTC- and equity-linked perps at up to 10x leverage. Polymarket is routing the product through its recently amended DCM registration (QCX LLC). The expansion pulls both operators into a derivative category historically reserved for offshore crypto exchanges and sharpens the Commission's rulemaking stakes beyond the existing event-contract debate.
A 2-1 panel of the U.S. Court of Appeals for the Third Circuit affirmed Kalshi's preliminary injunction against the New Jersey Division of Gaming Enforcement, holding that Kalshi's sports event contracts are "swaps" under the Commodity Exchange Act and that federal field and conflict preemption apply. The ruling is the first federal appellate decision on the preemption question.
The Commission filed three federal lawsuits seeking declaratory judgments and permanent injunctions against Arizona, Connecticut, and Illinois, arguing state cease-and-desist orders against Kalshi and other DCMs are preempted by the Commodity Exchange Act. On April 10, the District of Arizona granted a TRO barring Arizona from pursuing criminal charges against DCMs.
Federal PreemptionState EnforcementLitigationJurisdiction
The Commission published an Advance Notice of Proposed Rulemaking and Division of Market Oversight Staff Advisory 26-08 addressing event contracts and prediction markets. The ANPRM seeks comment (due April 30, 2026) on core-principle application, public-interest prohibitions, and cost-benefit considerations; the advisory reiterates DCM obligations under Core Principles 3, 4, and 12.
The Division of Enforcement issued a Prediction Markets Advisory alongside two settled enforcement cases against Kalshi traders, identifying three categories of prohibited conduct: misappropriation-based insider trading under Section 6(c)(1) and Rule 180.1; pre-arranged/noncompetitive trading; and wash sales under Section 4c(a). One case involved a political candidate trading contracts on his own candidacy.
Chairman Selig formally withdrew the May 2024 proposed rulemaking that would have prohibited event contracts on elections, sports, gaming, and awards, and rescinded Staff Advisory 25-36. The Commission stated it would advance a new rulemaking "grounded in a rational and coherent interpretation of the Commodity Exchange Act."
The Senate confirmed Michael Selig as Chairman of the Commodity Futures Trading Commission following Caroline Pham's departure. Selig signaled a pro-prediction-markets agenda, including plans to withdraw the 2024 event contracts rulemaking and defend CFTC's exclusive jurisdiction in court.
The Division of Market Oversight issued coordinated no-action letters (including Letter 25-48) giving Polymarket US, Aristotle, Gemini, and LedgerX/MIAX relief from certain swap data reporting and recordkeeping rules for fully collateralized binary option transactions. Two letters also removed prior prohibitions on FCM intermediation.
No-Action LetterSwap Data ReportingIntermediationLetter 25-48
The Commission issued an Amended Order of Designation for Polymarket US (the rebranded QCX LLC), granting full DCM status with permission to operate an intermediated platform. The order enables Polymarket to onboard brokerages and retail customers directly in the United States.
The CFTC's Division of Market Oversight and Division of Clearing and Risk jointly issued Staff Advisory 25-36, cautioning FCMs, DCMs, and DCOs about state-level regulatory risks for sports-related event contracts. The advisory expressly stated the Commission had not determined whether such contracts involve enumerated prohibited activities under the CEA.
The CFTC and SEC held a four-hour joint roundtable featuring industry, state gaming regulators, sports leagues, tribal organizations, and academics to examine event contracts and regulatory harmonization. Kalshi and Polymarket CEOs attended; written submissions exceeded 40 entities.
Aristotle, the operator of PredictIt, received CFTC approval to operate as both a Designated Contract Market and a Derivatives Clearing Organization, ending PredictIt's long-running reliance on the 2014 no-action letter. The new exchange was expected to open for trading in October 2025.
Polymarket agreed to acquire QCX LLC (CFTC-registered DCM) and QC Clearing LLC (DCO) for $112 million, providing a regulatory pathway back into the U.S. market after its 2022 enforcement settlement. The deal bypassed the multi-year greenfield DCM registration process.
The Department of Justice and the CFTC formally closed parallel civil and criminal investigations of Polymarket — which had been examining whether the offshore platform accepted U.S. users in violation of its 2022 settlement — without filing charges. The probe had included an FBI raid of CEO Shayne Coplan's apartment in November 2024.
The Commission voluntarily dismissed its appeal of the district court's ruling in favor of Kalshi's Congressional Control Contracts, leaving the pro-Kalshi decision intact. Both sides agreed to bear their own costs; Kalshi waived litigation claims. The dismissal effectively settled the federal question on political event contracts.
Kalshi filed its third Commodity Exchange Act preemption suit against a state regulator, targeting Maryland's cease-and-desist order over sports event contracts. The Maryland court later denied Kalshi's preliminary-injunction motion in August 2025, creating a split with earlier NJ and Nevada rulings.
Acting Chair Pham announced the Commission would convene a public roundtable approximately 45 days after closing a request for information on sports-related event contracts. The stated goal was to build an administrative record drawing from industry, gaming regulators, tribal organizations, and academics.
The Commission issued a formal request to Robinhood Derivatives LLC to withdraw customer access to the Pro Football Championship event contract (offered via Kalshi) two days after the retail rollout. Robinhood suspended the product but publicly criticized the Commission's reversal after prior engagement.
KalshiEX filed a Rule 40.2 self-certification for binary "Will the chosen team win?" contracts covering Super Bowl LIX and the AFC/NFC championship games. Trading launched January 23; reported volume exceeded $1.8 million within 24 hours and the CFTC declined to invoke a 40.11 review.
Following the inauguration of President Trump, Commissioner Caroline Pham was designated Acting Chair. Pham had dissented from the 2024 event contracts proposal and signaled a more accommodative stance toward prediction markets, event contracts, and financial innovation.
The Commission voted to commence a Regulation 40.11(c) review of Crypto.com's sports event contracts and requested a voluntary suspension of listing during the 90-day evaluation period. Crypto.com publicly declined the Commission's request to pause trading.
Crypto.com's CFTC-registered DCM subsidiary (Derivatives North America, formerly Nadex) listed binary yes/no contracts on the outcome of Super Bowl LIX, becoming the first platform to list sports event contracts on a nationwide basis. The contracts were structured with notional caps to align with CFTC rules.
KalshiEX submitted a Rule 40.2(a) self-certification for binary "Will this film win?" contracts on Academy Award outcomes — the first entertainment-awards event contracts listed on a U.S. DCM. The CFTC took no action to block the filing and the contracts were listed for trading.
The U.S. Court of Appeals for the D.C. Circuit denied the CFTC's emergency motion to stay the district court ruling pending appeal, finding the agency failed to show irreparable harm. The decision cleared Kalshi to list election contracts for the November 2024 U.S. elections — the first federally regulated election prediction market.
Judge Jia Cobb of the U.S. District Court for D.C. ruled that the CFTC exceeded its statutory authority in prohibiting Kalshi's Congressional Control Contracts, holding the contracts do not involve unlawful activity or "gaming" under Section 5c(c)(5)(C) of the Commodity Exchange Act. The decision vacated the CFTC's September 2023 disapproval order.
ForecastEx LLC, an Interactive Brokers affiliate, began operations as a CFTC-registered Designated Contract Market and Derivatives Clearing Organization for forecast contracts. The launch introduced a second intermediated venue for federally regulated event contracts focused on economic and climate outcomes.
Commissioner Summer Mersinger issued a dissent arguing the Commission's proposal exceeds its statutory authority under the Commodity Exchange Act and improperly substitutes the agency's judgment for that of market participants. She warned the rule would stifle innovation and drive activity to offshore venues.
The Commission voted 3-2 to issue a Notice of Proposed Rulemaking amending Regulation 40.11 to specify that event contracts referencing elections, sports outcomes, gaming, awards, terrorism, assassination, or war are contrary to the public interest and may not be listed on CFTC-registered DCMs. Commissioners Mersinger and Pham dissented.
