The U.S. Commodity Futures Trading Commission has withdrawn a 2024 proposal that would have barred political prediction market contracts, reversing a late Biden-era push that critics said stretched the agency’s authority and chilled innovation.
In a statement released Wednesday, the CFTC said it would not finalize the proposed “Event Contracts” rule and has also rescinded a 2025 staff advisory warning exchanges about sports-related contracts.
CFTC Chairman Michael S. Selig announced the decisions and also took aim at the agency’s prior approach.
The withdrawn proposal, first published in May 2024, sought to ban contracts tied to political contests and other sensitive topics. At the time, debates over whether prediction markets resemble gambling or legitimate risk-hedging tools ensued. Many in the industry argued the rule would have effectively shut down a growing segment of federally regulated event markets.
“The 2024 event contracts proposal reflected the prior administration’s frolic into merit regulation with an outright prohibition on political contracts ahead of the 2024 presidential election,” Selig said, adding that the commission will pursue a new rulemaking grounded in a “rational and coherent interpretation” of the Commodity Exchange Act.
State regulators loom over event contracts
By abandoning a potential outright ban and signaling a fresh rulemaking, Selig has repositioned the CFTC’s posture amid a widening jurisdictional battle. Indeed, prediction markets face mounting pressure at the state level, even as the CFTC rolled back previous policy.
This week, Nevada’s gaming regulator filed a complaint against Coinbase, alleging the exchange offered unlicensed sports betting through its event-based contracts. According to Coinbase, the lawsuit conflicts with federal law governing derivatives markets.
Coinbase and other platforms argue that Congress granted the CFTC exclusive jurisdiction over listed event contracts, a view echoed by industry lawyers as states seek to apply gaming statutes to products approved or overseen at the federal level.
Early Thursday, Paul Grewal, Coinbase’s chief legal officer, said that a Nevada court declined to halt the company’s offerings without a hearing, while a parallel federal challenge is now underway. Ryan VanGrack, VP of Litigation at Coinbase, also described state lawsuits as a “power grab” in a note shared with The Block.
The CFTC’s shift also follows legal victories for Kalshi, which last year won a court ruling allowing it to list election-related contracts after the agency attempted to block them. Offshore-based Polymarket has also re-entered focus amid renewed U.S. activity, and DeFi-native names like Hyperliquid have also entered the fray.
© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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