The U.S. Commodity Futures Trading Commission (CFTC) is preparing to propose new regulations aimed at governing the rapidly expanding prediction market industry, according to a report by The Wall Street Journal. Prediction markets allow participants to place wagers on the outcomes of real-world events through “yes or no” contracts and have gained significant popularity in recent years. However, concerns have emerged over the possibility of traders profiting from advance knowledge of major political and policy developments.
The proposed framework is expected to establish guidelines for how regulators evaluate event-based contracts rather than imposing outright bans on specific categories. According to the report, the rules may address certain sports-related contracts, including wagers linked to player injuries and first-pitch outcomes. At the same time, contracts involving matters such as war, terrorism, or political assassinations are likely to face restrictions on the grounds that they do not serve the public interest.
The move comes amid growing scrutiny of prediction markets following reports that well-timed trades ahead of major policy announcements by U.S. President Donald Trump generated substantial profits for unidentified traders. Last month, Trump emphasized the importance of maintaining the CFTC’s exclusive authority over prediction markets. The agency has not yet publicly commented on the reported proposal, and Reuters said it could not independently verify the details of the plan.
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