The White House is now reviewing a CFTC proposal aimed at regulating event contracts and prediction markets.
The review centers on an advance notice of proposed rulemaking, or ANPR, that the Commodity Futures Trading Commission submitted back in March 2026. The comment period for that notice closed on April 30, 2026, and the ball has since moved to the executive branch for a broader policy check.
How we got here
The CFTC under its previous leadership had taken a fairly restrictive posture toward prediction markets. That included a proposed rule from June 2024 and a staff advisory from September 2025, both of which signaled skepticism about the legitimacy of event-based contracts.
Then, in February 2026, the agency reversed course. It withdrew both the 2024 proposed rule and the September 2025 advisory, effectively clearing the regulatory slate. A month later, in March 2026, the CFTC published the ANPR currently under White House review.
The new framework treats prediction markets as derivatives, which places them squarely under CFTC jurisdiction. A key emphasis in the March 2026 advisory was anti-manipulation standards, highlighting the agency’s commitment to ensuring fair and transparent trading environments in prediction markets.
The platforms and the politics
Two names dominate this conversation: Kalshi and Polymarket. Both platforms have grown into significant players in the prediction market space, and both fall under the CFTC’s jurisdictional umbrella as swaps and derivatives platforms.
The CFTC has filed lawsuits against several states, including Illinois and New York, over jurisdictional conflicts. The agency is essentially arguing that prediction markets are a federal matter, and states shouldn’t be able to impose their own patchwork of restrictions.
President Trump has backed the CFTC’s position. In May 2026, he stated that the agency must retain exclusive authority over prediction markets.
Democratic lawmakers have pushed back against certain types of contracts. Their concern focuses on event contracts tied to elections, sports outcomes, and government actions where participants don’t have a genuine hedging interest, citing heightened insider trading risks.
What this means for investors
Even if the CFTC wins federal preemption, legal challenges from states like Illinois and New York could take years to fully resolve. In the meantime, platforms operating in those states face operational risk that’s hard to price in.
Polymarket runs on blockchain infrastructure, and how regulators treat on-chain prediction markets will set precedents for other DeFi applications that look like derivatives.