CFTC Clears Path for Prediction Markets With Major Rulemaking Reset

TLDR

• CFTC wipes old rules, reopens path for regulated prediction markets
• Federal reset collides with state crackdowns on event contracts
• Courts back prediction platforms as CFTC redesigns oversight
• Legal fight grows over who controls U.S. prediction markets
• New CFTC cycle could redefine political and sports contracts

The CFTC reset its approach to event contracts after withdrawing two major policy actions, and it signaled a new direction for regulated prediction markets. The agency ended the 2024 proposal and removed a 2025 staff advisory, and it opened space for a new rulemaking cycle. The move marked a shift in federal oversight as state actions continue to raise fresh compliance questions.

CFTC Pulls 2024 Proposal and Resets Regulatory Direction

The CFTC withdrew the proposed event contracts rule from 2024, and the decision reversed a previous attempt to block political markets. The agency stated that it will shape a new rule based on the Commodity Exchange Act, and this shift introduced a clearer framework for industry participants. The withdrawal also removed uncertainty that had stalled market development, and it prepared the ground for future regulated activity.

The CFTC also rescinded a 2025 advisory that addressed sports event markets, and staff noted that the document created confusion for some exchanges. They confirmed that the removal will support consistent expectations across platforms and the action aligned with the broader rulemaking reset. This development signaled a coordinated effort to modernize oversight and establish a coherent approach.

The CFTC positioned the reset as part of its commitment to lawful innovation, and this stance reflected growing interest in regulated event markets. The agency highlighted the need for workable standards, and it emphasized the importance of clarity for contract design. The shift opened the door for structured guidance that may define future boundaries for listed prediction markets.

State Actions Intensify as Federal Reset Advances

State regulators acted more aggressively as the CFTC stepped back from its earlier restrictive stance, and legal disputes emerged around jurisdiction. Nevada’s gaming regulator filed a complaint involving Coinbase’s event-based contracts, and the case raised questions about federal preemption. The exchange argued that federal law governs derivatives markets, and this clash added pressure to clarify the boundaries.

Courts have begun weighing the arguments, and early procedural steps showed the dispute will continue through both state and federal channels. Coinbase leaders indicated that the case reflects broader state attempts to apply gaming rules, and industry lawyers echoed concerns about overlapping authority. These actions intensified debate over which entity holds primary oversight power.

The CFTC reset drew attention because state-level enforcement may increase without clear federal rules. The agency’s withdrawal created space for regulatory redesign, and legal teams now track how states respond. This tension underscores the importance of the new federal rulemaking cycle.

Court Rulings and Market Developments Shape New Outlook

Federal courts recently delivered wins for Kalshi, and the rulings allowed the platform to list election contracts. The decisions limited the previous CFTC effort to restrict such offerings, and they strengthened arguments supporting regulated political markets. These outcomes gained new relevance as the agency prepares fresh rules.

Other platforms such as Polymarket expanded their presence, and offshore activity resurfaced as U.S. demand increased. DeFi-native platforms like Hyperliquid also entered the space, and these moves highlighted rapid market growth. The CFTC acknowledged the expanding landscape, and it signaled readiness to craft rules that match market realities.

The next CFTC rulemaking will determine how event contracts operate under federal oversight, and participants now await a structured proposal. The shift aims to balance legal consistency with market innovation, and it seeks to prevent fragmented regulation. With this reset, the CFTC positioned itself to define a modern framework for prediction markets.

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