Trump administration proposes new rules on prediction markets that would still allow most sports activity

By Marshall Cohen, CNN

(CNN) — The Trump administration on Wednesday proposed a set of new federal regulations for prediction markets that appear to largely leave the booming industry intact.

Importantly, the new rules would continue to allow most sports-related markets. A large majority of trades on prediction sites like Kalshi and Polymarket comes from sports markets that critics say are essentially indistinguishable from traditional gambling.

But the new rules, unveiled by the Commodity Futures Trading Commission, would create a framework where federal regulators could further rein in some sports markets that are especially vulnerable to manipulation.

That includes bets on player injuries and officiating outcomes, according to a copy of the rules. It also includes so-called “first-pitch” contracts for baseball, which seek to predict the type of pitch a pitcher will throw to start a game, literally putting the outcome in the hands of one player, as well as markets about player ejections, and any potential future markets about high school sports.

“The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation,” CFTC chair Mike Selig said in a statement. “This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward.”

The new rules appear to fall far short of the regulations that many stakeholders wanted to see from the Trump administration, which has staunchly promoted the industry since Selig took over in December. State regulators, members of Congress, addiction counselors, casino industry lobbyists and some sports leagues called for stricter rules.

For instance, some wanted the CFTC to raise the minimum age for prediction markets from 18 to 21. Others wanted the CFTC to ban prop bets on individual athletes. Some wanted the agency to revert back to Biden-era rules that tried to ban bets on elections. Wednesday’s proposal does not go that far. Most states have argued in court that all sports bets on these sites should be prohibited, arguing those bets one prediction sites are largely indistinguishable from gambling.

Under current US law, prediction sites are not considered gambling, and the markets themselves do not set betting odds. Rather, they’re structured as financial markets that offer “event contracts.” They are regulated more like futures trading over the price of soybeans – and therefore are overseen by the CFTC instead of states. But instead of focusing on commodities, traders speculate on the outcomes of real-world events like elections, sporting events, awards shows, the weather and more.

CNN has a partnership with Kalshi and uses its data to cover major events. But CNN editorial employees are not allowed to use prediction markets.

Critics pan CFTC proposal

Critics of prediction sites slammed the Trump administration’s industry-friendly approach with its new regulation.

Bill Miller, president of the American Gaming Association, which lobbies on behalf of traditional casinos and sportsbooks, said in a statement that the CFTC proposal was a “remarkable attempt to redefine what constitutes sports betting.”

Connecticut Sen. Richard Blumenthal, a Democrat who has proposed legislation to crack down on prediction sites, posted on X that the new rules are “too slow, too meager & too dangerous,” and said the CFTC is “nothing more than a tool of Kalshi & Polymarket.”

A spokesperson for Polymarket said in an email, “We are fully supportive of the CFTC’s initiative to provide clarity for prediction markets and remain committed to working toward a federal framework that protects the public and supports innovation.”

Representatives for Kalshi declined to comment about the CFTC announcement.

Former CFTC general counsel Robert Schwartz posted on X that he was “impressed” with CFTC’s work and that the 267-page proposal will benefit both the commission and the public.

“The final version ultimately will be challenged in court, but whatever you think about event contracts, the existing rules are problematic,” Schwartz wrote. “The statute is filled with undefined terms whose meaning has been left to the eye of the beholder.”

This story has been updated with additional details.

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