By Douglas Gillison and Chris Prentice
WASHINGTON/NEW YORK, March 3 (Reuters) – The U.S. Commodity Futures Trading Commission will soon advance a proposal for regulating prediction markets, the agency’s Republican chairman said on Tuesday, in the latest sign of growing scrutiny of the controversial fast-growing markets.
Trading on platforms such as Kalshi and Polymarket is facing backlash after bets on the potential death of Iran’s Supreme Leader Ayatollah Ali Khamenei sparked threats from U.S. lawmakers to outlaw the wagers.
The CFTC on Monday submitted an “advance notice of proposed rulemaking” (ANPR) to the president’s budget office for review. An ANPR is the preliminary step that allows the agency to sound out stakeholders to help shape the first proposed draft of the rule.
It comes just over two months since CFTC Chairman Michael Selig was sworn in, signaling that the agency is prioritizing prediction market oversight amid long-simmering concerns over the legality and ethics of some prediction market trades, and the potential for insider trading.
“The more we try to block these markets, we saw with crypto, it just goes offshore,” Selig said at an event in Washington on Tuesday. “So my view on this stuff is that we’ve got to set the right rules and regulations for it here in the United States, or otherwise, we’re just going to have black markets offshore.”
Prediction markets have exploded in popularity since the 2024 U.S. election, when their real-time probabilities proved more accurate than polling in predicting Donald Trump’s victory.
They offer tradable yes-or-no contracts that allow users to bet on a wide range of real-world events from sports to politics and the economy. The CFTC is battling for jurisdiction over such markets with state gaming regulators who claim they have oversight.
Selig on Tuesday said the U.S. regulatory regime should set a single standard across all 50 states.
“Our products are very much heavily regulated and have stringent requirements,” he said.
(Reporting by Douglas Gillison in Washington and Chris Prentice in New York; Editing by Michelle Price and Andrea Ricci )
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