TLDR
The CFTC has scrapped its proposed ban on many prediction market contracts and will instead write new rules, a major shift for event markets linked to crypto.
- Newly installed CFTC Chair Michael Selig has withdrawn a 2024 proposal to ban political and sports event contracts and rescinded a 2025 staff advisory, signaling support for lawful prediction markets.
- The agency plans a new rulebook for event contracts, which could benefit platforms like Polymarket, Kalshi and crypto exchanges such as Coinbase and Gemini that are entering prediction markets.
- Details are still unknown, and state level gambling rules plus upcoming CFTC rulemaking will determine how accessible and compliant crypto linked prediction markets become in the US.
Deep Dive
1. What The CFTC Actually Changed
According to multiple reports, the CFTC has formally withdrawn its 2024 proposal that would have prohibited political and sports related prediction contracts and has canceled a 2025 staff advisory warning against sports contracts on these platforms. Chair Michael Selig said the previous approach created uncertainty and instability, and that the commission will instead build a clearer regulatory framework that supports lawful innovation in prediction markets. This shift is framed as part of a broader move toward clear rules rather than de facto bans, with Selig emphasizing that prediction markets are no longer niche and need modern oversight rather than blanket prohibitions.
The headline reflects a real policy reversal at the proposal level, replacing a near total federal ban attempt with a commitment to write rules for these markets instead.
2. Impact On Crypto Prediction Platforms
Crypto native and hybrid platforms such as Polymarket and Kalshi, which already see billions in event contract volume, are direct beneficiaries of this shift toward a new rulebook for prediction markets. Coverage notes that Coinbase and Gemini have launched or are launching prediction products, leaning into this trend as part of broader exchange strategies. A clearer federal path could make it easier for these platforms to serve US users with compliant products, potentially onshoring volume that currently routes offshore or through workarounds.
If the final rules are permissive but structured, prediction markets could move from legal gray area to a recognized product class within the regulated US derivatives and crypto ecosystem.
3. What To Watch Next
Selig has directed staff to draft new event contract rules and coordinate with the SEC, while also situating prediction markets inside a wider regulatory agenda that includes Project Crypto and market structure reform. Key uncertainties include which event types will be allowed, how the CFTC will address insider trading and manipulation, and how federal rules will coexist with state gambling laws that still treat many contracts as betting. Market participants will be watching the first draft rules, court outcomes involving Kalshi and Polymarket, and how aggressively large exchanges choose to expand into onshore prediction markets.
The ban proposal is gone, but the real constraints will be set by the forthcoming rule text and state responses, so the regulatory tailwind is real but not yet unconditional.
Conclusion
By dropping its proposed ban and committing to a new rulebook, the CFTC has turned prediction markets from a near shutdown risk into an area where compliant innovation is explicitly invited. For crypto, this opens the door for onchain and exchange hosted prediction products to mature inside the US rather than at its edges, with the ultimate impact hinging on how strict the final event contract rules and state level responses prove to be.
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