Today, June 10, 2026, the Commodity Futures Trading Commission (CFTC) introduced the first proposed framework for prediction markets to determine which event contracts are in the public interest and which violate federal law.
The move comes after President Donald Trump recently said it was “extremely important” that the CFTC assume exclusive oversight of the industry, creating a major legal showdown with several state attorneys general working to protect their own authority over gambling regulations.
CFTC Chairman Michael Selig, who is also the agency’s sole commissioner on what should be a five-member panel, said the proposal provides “a permanent and transparent framework for identifying contracts that Congress has directed us to audit while allowing legitimate markets to move forward,” according to the panel’s report. press release.
What contracts are legal under the new CFTC rules?
The CFTC’s proposed regulation focuses on Section 5C(c)(5)(C) of the Commodity Exchange Act. Clear lines are supposed to be drawn between the categories of event contracts that the CFTC has the right to prohibit.
Anything associated with terrorism, assassination, war, gaming or illegal behavior is on the no-fly list.
The agency proposed a three-step test to determine whether a contract should be blocked.
- Does the contract refer to an actual or potential event?
- Do you fall into any of their restricted categories?
- Does the contract conflict with the public interest?
Instead of setting strict rules, the CFTC proposes a flexible “balance test” for forecast market contracts. Testing involves evaluating various factors such as how useful the contract is to hedge risk, its ability to assist in market price discovery, and whether it may encourage illegal activity.
After finalizing the proposal, the CFTC will allow a 45-day period for public comment on passage of the rule, and the rule will become official 60 days after its final adoption.
The CFTC also applied realistic scenarios for how to distinguish between restrictive and acceptable conditions. For example, any contract based on transporting crude oil through the Strait of Hormuz would not be submitted under the “war” or “terrorism” categories because it does not violate the agency’s restrictions. The settlement of this contract is strictly related to the commercial activity and not to the conflict itself.
What does the government say?
The new framework is part of a larger ongoing struggle between federal and state authorities. Since April 2026, the CFTC has sued states such as Arizona, Connecticut, Illinois, New York and Wisconsin to block their attempts to use local gambling laws to shut down prediction market platforms, according to Cryptopolitan. Tensions worsened last month when Minnesota became the first state to outright criminalize such markets, with Gov. Tim Walz officially imposing criminal penalties on operators.
A coalition of 39 attorneys general, led by Aaron Ford of Nevada and Dave Yost of Ohio, filed a “friend of the court brief” supporting the state of Massachusetts in its ongoing legal fight against Calci’s sports contracts.
according to CryptopolitanThe coalition argued that these platforms were in fact unregulated gambling operations, noting that more than $1 billion was wagered across 3.4 million sports-related bets between January and June 2025, with nearly 90% of that volume directly linked to sports outcomes.
In a May 27 Truth Social post, President Donald Trump identified several state officials, including Chris Christie, Letitia James, Tim Walz, and J.B. Pritzker, as major obstacles to federal oversight of prediction markets. “Other countries are seeking this new form of financial market, and we want to stay on top,” he wrote.
Why the new proposal is causing controversy
The new proposal raises debate about whether the agency’s actions are motivated by real political goals or political influence. according to CryptopolitanSenator Elizabeth Warren issued a formal request to the CFTC on Monday seeking internal records, communications with industry companies and details related to recent employee departures. Its inquiry apparently arose due to a 25% workforce reduction since January 2025 and a reduction in enforcement actions from 58 in FY2024 to 11 under the current administration.
Warren has intensified her scrutiny by pointing to potential problems with conflicts of interest, specifically pointing to financial ties between the Trump family and companies regulated by the Commodity Futures Trading Commission (CFTC). According to the New York Times investigation cited in A Cryptopolitan ReportThese communications include a business partnership between Trump Media and… crypto.comDonald Trump Jr.’s (1789 Capital) investments in Polymarket, and the Winklevoss brothers’ financial support for American Bitcoin Corp, co-founded by Eric Trump.
According to ReutersConcerns about insider trading are further complicating the prediction market landscape with high-profile cases on the rise in recent months. Notable examples include a US Special Forces soldier betting on the arrest of Nicolas Maduro, Jorge Santos betting that he would attend the State of the Union address, and a Google engineer accused of leveraging non-public search trends data for profit. Calci responded this week by implementing tougher oversight by requiring employment disclosure for traders in sensitive markets and reporting more than 20 internal referrals to regulators during the first quarter of 2026. Per Cryptopolitan.
The prediction market segment grew from approximately $30.63 million in monthly trading volume in January 2025 to approximately $479.5 billion in January 2026, according to Devillama. As of this week, the total value locked across prediction market protocols has risen to nearly $500 million, with Calcci and PoleMarket accounting for the bulk of the activity.
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