Trump regulators propose new rules for prediction markets

The Commodity Futures Trading Commission is moving forward with a proposed rulebook for prediction markets. The proposal, which entered review at the White House Office of Management and Budget around May 26-27, would allow most sports betting contracts under federal oversight while cracking down on manipulation and fraud.

This is a full reversal of a 2024 ban on various sports-related event contracts, replacing prohibition with regulated permission. Platforms like Kalshi and Polymarket, which have spent years navigating a patchwork of state laws and federal uncertainty, now have a clearer path forward.

Federal authority takes center stage

President Trump publicly endorsed the CFTC’s exclusive federal authority over prediction markets in a Truth Social post on May 26. His remarks emphasized the need to prevent state-level interference and maintain a competitive edge against international prediction market platforms.

The proposed framework builds on an Advance Notice of Proposed Rulemaking issued by the CFTC back in March 2026. That earlier document sought public comments on how event contracts should operate, with particular attention to insider trading and fraud risks. The comment period closed on April 30.

What the rules would actually do

The core of the proposal is straightforward. The CFTC wants to establish what it has called “rules of the road” for prediction market platforms. That means defining clear responsibilities for market operators, outlining what kinds of contracts are permissible, and specifying what constitutes manipulation.

The rescission of the 2024 ban on sports-related contracts is the headline change. Under the previous administration’s approach, contracts tied to sporting events were lumped together with other categories deemed too close to gambling for regulatory comfort. The new framework takes the opposite approach: bring them under CFTC oversight rather than banning them outright.

The platforms positioned to benefit

Two names stand out in this conversation: Kalshi and Polymarket.

Kalshi has been a CFTC-registered designated contract market since around 2020-2021. Federal preemption would remove many of the state-level obstacles that have constrained its growth.

Polymarket, the blockchain-based prediction platform that became a household name during the 2024 election cycle, achieved designated contract market status in 2025. The platform has not yet launched a native POLY token, meaning any regulatory clarity could influence how and when that token comes to market.

What this means for investors

The OMB review process is the next milestone to watch. Once the proposal clears that hurdle, it moves to formal rulemaking, which includes another public comment period and potentially months of revisions before final rules take effect.

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