CFTC Releases 267-Page Prediction Market Proposal That Would Ban Injury Bets and Pitch-by-Pitch Contracts
Federal regulators have drawn their clearest lines yet on which sports prediction market contracts are acceptable — and which ones could get the axe.
The U.S. Commodity Futures Trading Commission released a sweeping 267-page regulatory proposal on June 10 that would preserve most sports-related event contracts on platforms like Kalshi and Polymarket while banning markets tied to player injuries, officiating decisions, and individual plays such as pitch-by-pitch baseball contracts. The proposal, issued under CFTC Chairman Michael Selig, represents the most comprehensive federal framework for prediction markets to date.
Rather than issuing blanket bans by category, the CFTC framework would evaluate event contracts on a case-by-case basis, though the proposal identifies several types of sports-related contracts that would likely fail a public interest test. The move comes as prediction markets trading volume has exploded — rising from less than $5 billion per month in September 2025 to $24 billion in April 2026, according to Pew Research Center data cited by ESPN.
What Would Be Allowed
Under the proposed framework, the vast majority of sports event contracts would remain permitted. Contracts linked to game outcomes, point spreads, tournament advancement, and overall team performance would generally continue to operate freely. The CFTC argued that sports teams function as economic enterprises and that stadiums serve as regional economic anchors, giving most sports-related event contracts legitimate informational value.
The proposal also offers clearer guidance for political prediction market operators. Election contracts appear to fall outside the specific categories subject to the public interest review process, a signal that political forecasting markets could face fewer regulatory obstacles heading into future election cycles. This distinction could benefit platforms like Kalshi promo code and Polymarket promo code, which operate prediction markets across sports, politics, and entertainment.
What Would Be Banned or Restricted
The proposal draws the line at several types of event contracts the CFTC believes could enable manipulation or rely on information unavailable to the broader market. These include markets on player injuries and the severity of those injuries, officiating decisions, physical altercations during games, and youth sporting events. The framework also casts significant doubt on player proposition markets that involve discrete actions by specific individuals.
Baseball pitch-by-pitch contracts — which effectively let a single pitcher determine the outcome — are specifically flagged as likely contrary to the public interest. The CFTC noted that “event contracts are more likely to be contrary to the public interest when any meaningful information about whether the underlying event will occur is unavailable to the broader market.” Contracts involving war, terrorism, and assassinations would also likely be prohibited under the new rules.
Both the NBA and NFL had previously urged the CFTC to prohibit contracts on injuries, officiating, and other events they believe are susceptible to manipulation. The agency has signed memorandums of understanding with MLB and the NHL to coordinate on regulation and policing of event contracts, and Chairman Selig said the agency continues to work toward similar agreements with other leagues.
What It Means for the Industry
The proposal arrives at a critical juncture for the prediction market industry. Sports-related contracts have become the dominant driver of volume, accounting for roughly 80 percent of Kalshi’s trading activity since mid-2024. Several states including Arizona, Minnesota, and New York are engaged in active legal disputes with prediction market operators over whether these platforms should be regulated as sportsbooks under state law rather than as federally regulated futures exchanges.
In March, Senators John Curtis and Adam Schiff introduced bipartisan legislation that would have prohibited federally regulated prediction markets from offering contracts resembling sports betting products. The CFTC’s proposal does not go that far, but it establishes a framework for the agency to restrict certain contracts through a public interest review process rather than by outright legislative ban.
The CFTC is accepting public comments on the proposed rules for 45 days. Understanding whether prediction markets are legal in each state remains an important consideration for traders, as federal and state regulatory frameworks continue to evolve. Platforms like Kalshi and fanduel-predicts/”>FanDuel Predicts will need to evaluate how the final rules affect their product offerings.