CFTC Scraps Biden-Era Plan to Ban Sports and Political Prediction Markets

The U.S. Commodity Futures Trading Commission (CFTC) has formally withdrawn a Biden-era proposed rule from 2024 that would have prohibited event contracts tied to political elections, sports outcomes, and certain other categories, deeming them contrary to the public interest. The decision, announced February 4, 2026, by newly confirmed Chairman Michael Selig, also rescinds a related 2025 staff advisory cautioning against sports-related contracts amid ongoing litigation.

The 2024 proposal, published in the Federal Register in June after initial release in May, aimed to restrict platforms like Kalshi and Polymarket from offering such trades, citing risks of manipulation, gambling-like concerns, and threats to market integrity. Selig described it as a “frolic into merit regulation,” particularly the outright ban on political contracts ahead of the 2024 presidential election, and stated the agency will not finalize rules under that framework.

Instead, the CFTC plans new rulemaking grounded in a “rational and coherent interpretation” of the Commodity Exchange Act to promote responsible innovation, investor protection, and clarity in derivatives markets. This shift provides regulatory relief to prediction market operators, allowing continued (or expanded) offerings of event-based contracts under existing oversight rather than blanket prohibitions.

Industry figures and platforms welcomed the move as a win for innovation, arguing these markets deliver valuable insights into public sentiment, serve as hedging tools, and offer data-driven alternatives to polling or traditional betting. Supporters highlight their role in aggregating information on real-world events.

Critics, including some lawmakers and advocacy groups, maintain concerns over ethical issues, potential manipulation incentives, and risks to trust in democratic processes or sports fairness. State regulators have also pressed prediction markets, adding jurisdictional tension.

The reversal reflects broader debates on regulating emerging financial products linked to non-financial events. With the ban shelved, focus shifts to developing balanced guidelines. For now, it marks a significant victory for prediction market participants amid an evolving U.S. regulatory landscape for innovative instruments.