The U.S. Commodity Futures Trading Commission (CFTC) has released a draft of new regulations for prediction markets, aiming to further define the compliance scope of event contracts. The draft primarily restricts betting on violent outcomes such as war and assassination, which will directly impact certain controversial markets on platforms like Polymarket and Kalshi.
Bets on foreign leaders stepping down will be restricted.
According to the draft, markets whose outcomes could be achieved through war or assassination would be prohibited. Regulators specifically cited examples such as betting on when a political leader will be removed from power, where the means could involve armed conflict or assassination.
Over the past several months, Kalshi and Polymarket have both launched broadly worded contracts, such as bets on when Iran’s Supreme Leader Khamenei or Venezuela’s President Maduro would “leave office.” The CFTC has now explicitly stated that such markets will not be permitted unless they are restricted to non-violent scenarios.
The draft also specifies an acceptable range. A related market may be considered compliant only if the contract explicitly states that settlement is permitted only under non-violent circumstances, such as electoral defeat, resignation, constitutional removal, negotiated departure, or natural death.
The relevant markets on the platform are currently undergoing adjustment.
Active contracts related to overseas political developments are still available on Polymarket and Kalshi. The report mentions that a Polymarket market on "Who will become Iran's leader by the end of 2026" has generated over $14 million in total trading volume.
Kalshi also has a market on whether Reza Pahlavi, the former Crown Prince of Iran, will assume power in Iran before the end of this year, with trading volume of approximately $1.6 million. If the new regulations proceed in their current form, such products closely tied to regime change and conflict scenarios will face significantly increased compliance pressure.
Some sports event contracts have also been restricted.
In addition to political and war-related markets, the CFTC also plans to restrict certain sports-related prediction contracts, citing that these products are more susceptible to manipulation and may not serve the public interest.
- Betting on whether a player is injured
- Betting on the specific outcome of a referee's decision
- A bet on a specific action, foul, or round
However, the CFTC has not dismissed sports prediction markets themselves. The draft indicates that regulators preliminarily believe event contracts based on overall game outcomes may still comply with existing laws and can operate in the public interest.
45-day public comment period
This draft rule spans 267 pages and has now entered a 45-day public comment period. If formally adopted, prediction market platforms may face stricter scrutiny in product design, wording, and settlement conditions.