CFTC Proposes Formal Rule for Prediction-Market Event Contracts

Overview

• The Commodity Futures Trading Commission published a Notice of Proposed Rulemaking that would amend Rule 40.11 to set a three‑step framework for reviewing event contracts on prediction markets.
• The proposal defines key terms so the agency can decide when a contract “involves” an Enumerated Activity and adds a definition of “gaming” to narrow which products face heightened review.
• The rule distinguishes contracts that settle on unlawful conduct from contracts that settle on lawful outcomes and lays out specific public‑interest factors such as manipulation risk, settlement clarity, and insider information concerns.
• The proposal formalizes a 90‑day review timeline with required CFTC notices to exchanges, opportunities for exchanges to respond, and a mechanism to consolidate similar contract reviews.
• If adopted the rule would reshape crypto and traditional exchanges by removing some listings, raising compliance costs, and triggering public comments and likely legal fights over federal authority versus state and tribal jurisdiction.