CFTC Chairman Michael S. Selig on June 10 filed a Notice of Proposed Rulemaking under the Commodity Exchange Act that would prohibit event contracts tied to war, terrorism, and assassination, while clearing sports-related prediction bets to proceed.
The proposal introduces a three-part analysis. First, regulators determine whether a product qualifies as an event contract. Second, they assess whether it involves activities Congress specifically listed: gaming, war, terrorism, assassination, or unlawful conduct. Third, the Commission evaluates whether the contract is contrary to the public interest. Under this framework, sports contracts survive; conflict contracts don’t.
The Commission’s reasoning is direct: if you have advance knowledge of an assassination plot, you’re supposed to report it to authorities, not trade on it. “It is contrary to the public interest to profit from the potential assassination of a human being,” the rulemaking states. The CFTC also warns that financial incentives could encourage actors to manufacture the very events those contracts reference.
The proposal lands as the CFTC is fighting on multiple fronts to defend its regulatory turf. In April, the commission sued Arizona, Connecticut, and Illinois after those states moved to regulate or outlaw CFTC-registered prediction market platforms. It then sued New York on April 24 when the state tried to apply gambling laws to federally-regulated contract markets.
If this three-part framework holds, every event contract touching real-world harm faces the same categorical test: civil unrest, political violence, natural disasters. Platforms building into those categories can’t plan around federal restrictions until the comment period closes and a final rule issues.
The 90-day public comment window closes in early September.
—James Okafor