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The Commodity Futures Trading Commission is taking a hard look at how prediction markets should be regulated, and it wants the public’s help figuring it out. The agency issued an Advance Notice of Proposed Rulemaking on March 12, soliciting feedback on a framework that could reshape how event contracts are evaluated, approved, and monitored.
The timing is not accidental. Prediction market trading volumes have been surging, with Kalshi alone reporting weekly volumes that climbed from $300 million to $3 billion between September 2025 and March 2026. That kind of tenfold growth in six months tends to get regulators’ attention.
What the CFTC is actually asking
The ANPRM, published in the Federal Register on March 16, covers six key topic areas. These include core regulatory principles, public interest concerns, manipulation risks, insider trading vulnerabilities, and, notably, the integration of blockchain technologies into prediction market infrastructure.
For the uninitiated: event contracts are essentially yes/no bets on whether something specific will happen. You buy a contract, and if the event occurs, it pays out at a fixed value of $1. If it doesn’t, you get nothing.
The CFTC has been overseeing these contracts for over 20 years. But the landscape has changed dramatically. Blockchain-based platforms have introduced new mechanisms for trading, settling, and clearing these contracts, and the existing rulebook wasn’t written with decentralized ledger technology in mind.
The comment period closed on April 30, and the response was substantial. The CFTC received over 1,500 comment letters from a wide range of stakeholders, including exchanges, sportsbooks, and blockchain firms.
By late May, the agency had moved to the next phase, sending its notice of proposed rulemaking to the White House Office of Information and Regulatory Affairs for further review.
The compliance overlay
Alongside the ANPRM, the CFTC issued Advisory Letter No. 26-08, which serves as a reminder that existing prohibitions on fraud, manipulation, and insider trading apply squarely to event contracts. The advisory puts particular emphasis on sports-related event contracts, a category that has drawn scrutiny as the line between regulated prediction markets and sports betting continues to blur.
Why prediction markets are booming
The growth numbers from Kalshi are worth sitting with. A jump from $300 million to $3 billion in weekly trading volume over roughly six months represents the kind of adoption curve that most financial products never achieve.
What this means for investors
The emphasis on insider trading prevention could prove particularly challenging for blockchain-based platforms, where pseudonymous participation is a feature, not a bug.
The sports-related event contract category is another flashpoint. If the CFTC draws the line too broadly, it could inadvertently capture contracts that look more like sports betting than financial instruments, creating jurisdictional conflicts with state gaming regulators.
The White House review of the proposed rulemaking adds another layer of uncertainty. Regulatory proposals can change substantially during interagency review, and the timeline for final rules remains unclear.
One thing is clear from the 1,500-plus comment letters: every corner of the prediction market ecosystem, from traditional exchanges to crypto-native protocols to Las Vegas sportsbooks, recognizes that whoever shapes these rules shapes the future of a multi-billion-dollar market.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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