The U.S. Commodity Futures Trading Commission (CFTC) published a Notice of Proposed Rulemaking on Wednesday, laying out a structured, contract-by-contract review process for event contracts that may involve terrorism, war, gaming, or other restricted activities under federal law.
Key Takeaways:
CFTC proposed a June 10 framework with a 90-day review for certain event contracts.Kalshi gains clearer rules, while Polymarket may benefit from reduced regulatory uncertainty.CFTC’s comment period runs 30-90 days; new contract filings are expected next.The move replaces an approach that prior CFTC leadership had tried and failed to advance. In 2024, the agency proposed sweeping amendments to Regulation 40.11 that would have defined “gaming” broadly enough to effectively ban most sports and political event contracts from CFTC-registered platforms. That proposal drew sharp criticism for overreach and was withdrawn in February 2026.
What the New Framework DoesInstead of categorical prohibitions, the CFTC is proposing a defined evaluation process. When a registered exchange submits an event contract that might fall under Section 5c(c)(5)(C) of the Commodity Exchange Act, the Commission will apply a 90-day review process and a set of public interest factors to determine two things: whether the contract “involves” one of the enumerated activities, and whether it is contrary to the public interest.
The proposal also defines key statutory terms, including “involve” and “gaming,” which have been contested in prior rulemakings.
“The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation,” said CFTC Chairman Michael S. Selig. “This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward.”
Why Congress Restricted Certain Event ContractsSection 5c(c)(5)(C) was added to the Commodity Exchange Act through the 2010 Dodd-Frank Act. Lawmakers focused on five categories: terrorism, assassination, war, gaming, and activity unlawful under federal or state law.
In a Senate floor colloquy at the time, Sen. Blanche Lincoln, who helped author the provision, explained the concern directly. The goal, she said, was to prevent the creation of futures and swaps markets that would allow citizens to profit from devastating events and to prevent gambling through futures markets. Sen. Lincoln specifically cited sporting events, stating that contracts tied to outcomes like the Super Bowl or Kentucky Derby would serve no real commercial purpose and would be used solely for gambling.
That legislative history shapes the current rulemaking. The new framework operationalizes those original concerns with defined terms and procedural guardrails.
What It Means for Kalshi and PolymarketWar, terrorism, and assassination contracts remain the clearest candidates for prohibition under the framework.
What Comes NextThe NPRM opens a public comment period, expected to run 30 to 90 days per the Federal Register notice. Industry participants, legal teams, and academics are expected to weigh in heavily on the definitions of “gaming” and “involve,” as well as on the public interest factors the Commission will apply.
Washington Aims to Tighten the GateFor free-market advocates, however, the deeper concern is not whether the CFTC has created a more transparent review process, but whether federal regulators should be deciding which voluntary contracts deserve a place on regulated markets in the first place. It can be argued that every restriction on event contracts limits freedom of exchange, narrows opportunities for price discovery, and substitutes bureaucratic judgment for the collective decisions of willing buyers and sellers.
