Finance

CFTC Drops Sports-Contract Ban, Moves to Rulemaking with SEC Cooperation

The CFTC withdrew its 2024 proposal to ban sports and politics contracts and set a path toward formal rulemaking. Chairman Michael Selig also signaled closer CFTC-SEC cooperation and suggested the agency could engage in federal lawsuits to define whether sports-predictive markets are gambling or federally regulated derivatives.

📅 January 29, 2026
⏱️ 2 min read
CFTC Drops Sports-Contract Ban, Moves to Rulemaking with SEC Cooperation

Key Takeaways

  • Selig ordered staff to withdraw the 2024 rule proposal banning sports and politics trades.
  • The agency is shifting to formal rulemaking for prediction markets rather than an outright ban.
  • Selig indicated the CFTC may participate in federal lawsuits to determine whether such markets are gambling or derivatives.
  • Kalshi and Polymarket have faced court actions across multiple states as regulators tighten oversight.
  • The Coalition for Prediction Markets welcomed the withdrawal and pushed for a clear, comprehensive framework; the CFTC-SEC cooperation on crypto and other innovations will deepen.

People Involved

  • Michael SeligCFTC Chairman
  • Paul AtkinsSEC Chair

Entities Involved

  • KalshiPrediction-market platform
  • PolymarketPrediction-market platform
  • Coalition for Prediction MarketsIndustry advocacy group

MarketMoodz Analysis

For traders and platforms, the shift signals regulatory clarity ahead and potentially more cost-effective compliance, but it also introduces new rules that could affect hedging strategies, liquidity, and product design.

Historically, regulation of prediction markets has swung between caution and expansion. This move follows 2024's ban proposal and 2025 advisory, and the timeline for a finalized rule is uncertain.

Source: Original Article

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