The Commodity Futures Trading Commission has issued an Advanced Notice of Proposed Rulemaking seeking public comment on whether new regulations or amendments are needed for event contracts traded on prediction markets.

The consultation examines how these contracts should be treated under the Commodity Exchange Act and related commission regulations.

The consultation follows the CFTC’s withdrawal of a 2024 proposal to ban political and sports‑related prediction markets. Chair Michael S. Selig said the prior advisory “contributed to uncertainty” and would be rolled back. The action coincides with a joint crypto rulemaking effort with the SEC.

CFTC Begins Review of Prediction Markets

In a statement, Selig described the move as the start of a formal review process. He said the action is “an important step” in the commission’s effort to promote “responsible innovation in our derivatives markets.”

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Selig added that the initiative begins rulemaking “grounded in a rational and coherent interpretation of the Commodity Exchange Act” and should reassure the public that the CFTC “will exercise its exclusive jurisdiction over prediction markets.”

Prediction markets allow participants to trade contracts linked to the outcome of future events. The CFTC said the notice asks questions about how statutory core principles and existing regulations apply to these products.

The agency is also seeking views on which types of event contracts could be prohibited as contrary to the public interest. It requested input on cost-benefit considerations related to prediction markets and other regulatory issues.

Division of Market Oversight Issues Advisory to Exchanges

Separately, the CFTC’s Division of Market Oversight issued an advisory addressing the listing of event contracts on exchanges. The division said the notice responds to the “rapid rise in popularity of prediction markets” and aims to encourage “growth and innovation” while reminding exchanges of their regulatory responsibilities.

The advisory highlights obligations for designated contract markets under the Commodity Exchange Act and commission rules.

The division also discussed issues that may apply to sports-related event contracts. It said exchanges, acting as “front-line regulators,” should take proactive steps to ensure their markets develop in compliance with the law and commission regulations.

Consultation Process and Comment Deadline

The CFTC said the information gathered through the consultation could inform possible future actions, including a formal rulemaking process concerning prediction markets.

Public comments must be submitted in writing within 45 days after the notice is published in the Federal Register. Submissions can be made through the CFTC’s public comments portal.